https://bipartisanpolicy.org/wp-content/uploads/2019/03/Budget-Deficit.jpg
Even as the U.S. economy expands, the federal government continues to run large and growing budget deficits that will soon exceed $1 trillion per year.
Bipartisan Policy Center

 

·  The BPC Deficit Tracker reports a $1.4 trillion cumulative federal deficit through June 2026 (3% higher than prior year), driven by rising net interest payments (+13-36% YoY), entitlements, and other spending—highlighting persistent fiscal expansion that could pressure monetary policy.

bipartisanpolicy.org

·  This fiscal backdrop partially contradicts Warsh's credibility gains by creating structural inflation risks (e.g., debt monetization fears or higher long-term rates), yet aligns with his hawkish stance of refusing to accommodate deficits via easy policy, as seen in rate holds and 2% target reaffirmations.

·  Warsh's emphasis on Fed independence and "regime change" to deliver price stability directly addresses the credibility threat from unchecked deficits, positioning the Fed as a counterweight rather than enabler, consistent with the post's positive assessment despite ongoing fiscal deterioration.

·  De Giorgio's post defends Fed Chair Warsh by arguing central bankers should ignore long-end yields ("losing the long end") amid market backlash, attributing issues to fiscal profligacy and war-mongering rather than monetary policy.

@degiorgiod

·  This aligns closely with the BPC Deficit Tracker's data: $1.4T FY2026 deficit through June (up 3% YoY), with net interest payments surging $98B (13%) due to higher debt and rates, validating fiscal recklessness as the driver of bond market stress. The post's reference to the Iran conflict exacerbating the "world's public debt haystack" is reinforced by tracker-noted spending pressures and elevated interest costs, shifting blame from Warsh's hawkish stance to unsustainable deficits and geopolitical shocks.

 

 This is a list of old/recent posts De Giorgio has used to warn against Central Banks perceived Omnipotence and the perils for Market Participants to dismiss the nefarious consequences of Fiscal Dominance:

 

Here his latest commentary

https://dalla-realta-al-mercato-dal-mercato-alla-realta.ghost.io/lambiguita-costruttiva-di-warsh-ha/

 

 Degiorgiod’s stance (encapsulated by this sentence "In the age of reckless fiscal profligacy and of careless war-mongering blaming the CB is sloppy.") aligns with the works of bipartisanpolicy.org

·  De Giorgio consistently blames reckless U.S. fiscal profligacy and the Iran conflict (Strait of Hormuz disruption) for igniting bond vigilantes, surging short-end BEIs, higher term premia, and debt haystack risks—while praising Warsh's "constructive ambiguity" for anchoring expectations and shifting tightening burden to markets without CB overreach.

·  This stance aligns strongly with bipartisanpolicy.org's Deficit Tracker, which factually documents the $1.4T FY2026 deficit (up YoY), surging net interest outlays (+13-36%), entitlement growth, and structural deterioration—providing non-partisan evidence of the fiscal dominance he criticizes as the root cause rather than monetary policy.

·  Both highlight how fiscal and geopolitical shocks (not CB actions) drive higher long-end yields and interest burdens, supporting his view that scapegoating the Fed (Warsh) is "sloppy" amid evident spending and debt dynamics.

 

·  De Giorgio argues that persistent U.S. fiscal profligacy and geopolitical shocks (e.g., the unsolicited war with Iran disrupting the Strait of Hormuz) have overloaded public debt dynamics, awakening bond vigilantes through higher short-end BEIs, term premia widening, and elevated long-term yields—evidenced in his May 2026 posts on yield curve bear-flattening and debt haystack risks.

·  This view is directly supported by the Bipartisan Policy Center Deficit Tracker, which reports a $1.4 trillion FY2026 deficit through June (3% higher YoY), with net interest payments rising sharply ($98B or 13% YoY) due to larger debt and rates, alongside entitlement and defense spending growth, confirming fiscal dominance as the core driver.

·  Consequently, De Giorgio defends Fed Chair Kevin Warsh's hawkish "constructive ambiguity" and rate policy as appropriate for anchoring inflation expectations and letting markets enforce discipline, deeming blame on the central bank "sloppy" when fiscal recklessness and war-mongering are the primary culprits behind bond market stress.

 De Giorgio has extensively written on this point in the past already:

Thread by @degiorgiod on Thread Reader App
@degiorgiod: ECB’s #RatesCancelCulture, France’s Spending Profligacy, and Italy’s No-Spend/No-Growth Wonder: a long thread Over the years I have repeatedly argued that the ECB’s excessively prolonged interventions t...…
Thread ReaderDomenico De Giorgio, EU. Capre Diem (not a typo).

 The case of Japan where the new Prime Minister initiated a strong campaing of Fiscal Spending has simultanously sunk the Yen and unhinged the medium-long end of JGBs.
Germany is no different, as well as are France and Italy.