Blain’s Morning Porridge August 20th, 2026“There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy.”With US debt about the breach $40 trillion, Scotty Bessent intervened to stem rising long-end yields. The market loved it, but the reality is that distorting interest rates has all kinds of consequences. That includes the risk an economy focused entirely on financial returns isn’t spotting or addressing real world threats to jobs, growth, conflict, the environment and climate. Maybe it’s time to let rates normalise? Key TakeawaysRising normalised Bond yields may be a cure rather than a crisis for overly financialised Western Economies.Cheap money distorts asset values, and economic behaviours.Bessent’s pump priming of the Long-End is market pleasing, liquidity enhancing, and confirmation the Fed Put is still there… but it’s like another round of Columbian marching powder at a slowing party.The legacy of 18 years of post 2008 GFC policy has been financial asset inflation, market froth, speculation and undeliverable market narratives that get buried in the expectation low rates will drive markets forever.Financially Sovereign Nations don’t default, but bad, financialised policy leading to inflation may ultimately unravel bond markets and make them unsustainable.Financial speculation, encouraged by policy distortions, distracts from the real-world requirements to enhance defence, infrastructure, housing, energy and resilience.Interesting day in Bonds. As I write this morning, the US Debt Clock (the total the US Government owes) stands at $39.46 trillion – tomorrow it will the crash through $40 trillion.You can read the Morning Porridge by subscribing on ⁠www.morningporridge.com⁠, and have it delivered fresh to your inbox every morning!

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