Every time there is a budget debate, politicians from both parties will discuss the deficit and spending as if the first one did not matter and the latter could only increase. However, the main problem of the US budget in the past four decades is that total outlays rise significantly faster than receipts no matter what the economic growth or revenue stream does. For example, in the fiscal years 2018 and 2019 total outlays rose mostly due to mandatory expenses in Social Security, Medicare, and Medicaid. No tax revenue measure would have covered that amount.

The slump in energy commodities and copper shows the fragility of the global economy and the risks to the consensus’ reflation trade. It is easy to blame the recent fall of commodity prices on the coronavirus outbreak, but the weakness was already evident before the outbreak.