Ultimately what happens is "Fiscal Dominance" once the government can't meet its obligations it issues new debt at artificially low interest rates. And then of course lots of inflation. It happened in WW2.
Spot on. When the debt-to-GDP ratio gets this high, monetary policy basically gets hijacked by fiscal necessity. Central banks lose true independence because they’re forced to monetize the debt to prevent default
It’s even worse than that. Top 0.1% holds nearly 30 trillion of it. Top 1% holds nearly 60 trillion of it. Top 3% holds 100 trillion of it. Focusing on just top 0.5% would fix almost all problems. They’re hoarding it and not contributing to anything with it. Worse, they’re trying to push us into fascistic feudalism with it.
When you are using assets AS collateral on that scale, most of the time you arn't selling the asset in question. You are either trading it to them directly, or you can convince a 3rd party to put up a loan, with the benefit where if you default on the loan you get the asset in question.
The bank/lenders normally don't want to dump the value of the asset, especially if it's a bunch of stocks, by having to sell them. They would rather trade them at the current valuation, versus sell several million stocks that would flood the market with stocks (increase supply) which would potentially lower prices if demand for said asset stays the same.
The reason why having to liquidate these assets, especially intangible ones such as stocks, is such a very, very bad idea in many thought circles, is because so much of our economy is leveraged to the tits, and if you created a mechanism where EVERYONE had to start selling off a portion of their assets to create liquidity for tax purposes, it might create a feedback loop where many entities are forced to be margin-called, which would create more feedback loops that amplify, etc. etc.
So in theory, taxing the top .1 and .01% that have many assets is a great idea. In practice, no one really does it because the $$$ are in assets will kick the GDP of a country in the balls by massively slowing down liquidity for business lending. And if you genuinely knew how much businesses relied upon short and medium term loans to make payroll (it's a LOT of them, since keeping $$ sitting in the bank is, in a good environment, a poor financial decision) then you understand why people are hesitant. Basically you don't want capital flight out of your public markets.
Are they? This gets said a lot, and then assets get leveraged into loans to create liquidity. This is why there's no such thing as "unrealized gains" for the wealthy.
Who cares? Oh no, if they're forced to sell it rather than horde it it'll crash the stock market.
First, no it won't. Even if Elon had to liquidate 3% of his holdings in any or all of his companies in a single day it would be a high volume day on the market but only about double volume. Spread out over a year and it wouldn't move the needle.
Second, if it actually would move the needle then that's a fantastic argument for why the stock is wildly overvalued in the first place. The only "value" it actually has is its ability to be traded for other things. If actually trading it destroys that value then it hardly had it in the first place, now did it?
Median household net worth is ~$192,000 in the US. Tax everything above 10x that value at 3%. Done. Hell, you could literally eliminate the income tax if you did that.
I mean most of it? How else are they having assets? Zucks 20 homes that he lives in sometimes or his facebook stock? Am i supposed to not count it? Does bezos 600 million yacht not count as an asset cause he would have to sell it?
The US post WW2 economic growth was simply down to three major things we don't have today. The US was a manufacturing economy and Europe/Russia were rubble.China was basically a country of peasants at that point and was responsible for sub 1% of global exports in the late 40s. The US was setup to build and there was no competition, only buyers.
Nothing like that will happen again in modern history and the most likely scenerio is the US service economy collapsing, aka 60%+ of the jobs. There's a saying that manufacturing builds and rebuilds nations, something the US doesn't have at large. Even if we did we'd be competeting with nations like China, who have 30+yrs of high tech investment with ungodly economies of scale on their side.
I’ve seen this argument before, that postwar devastation alone explains US economic dominance, and it had nothing to do with fiscal taxing and spending. The trouble with the argument is that high US tax rates and investment into manufacturing capacity and infrastructure started a full decade before the war. The US built much of its manufacturing capacity during the Great Depression, not during and after the war.
The U.S. economy was in the shitter a decade before the war. That's pretty good evidence that it was the war that pulled it out of depression and not tax or industrial policy.
You need both supply and demand to get a transaction. The devastation of WW2 provided the demand.
Goering is quoted as saying the only thing America could manufacture was refrigerators and razor blades. Of course, as nearly always, he was being an ass, but he also seemed to genuinely believe his own BS. German wartime policy seemed to make the same assumption as a whole: that German manufacturing's superior tanks, planes, rifles, rocket engines, and ships would completely outmatch American mass produced garbage. Goering wasn't just wrong in retrospect though: he was wrong at the time too. America's industrial capacity had grown enormously over the 1930s, and it already stood poised to completely dwarf Axis output.
Agreed that WWII spending closed the demand gap and ended the Depression, but WWII spending did NOT develop most of the industrial capacity it took to win the war, become the world's main economic superpower, and create the great American middle class. Most of that capacity was built during the Depression. Industrial capacity during the Great Depression grew at a rate never matched before or since, as you can see in this chart where 75% of manufacturing output growth was in before the US finally entered the war in 1942.
A discussion here attributes the growth to three main factors: industrial electrification (largely in the 1920s), R&D spending, and infrastructure investment (highways, dams, airports, bridges, rural electrification).
But we don't need to replicate all of the growth, what we need to replicate is the growth of the working class to be commensurate with the rate of wealth hoarding by the wealthiest top 3%.
The US is already at the top, but the distribution is wildly uneven. Forcing the redistribution of wealth wouldn't collapse the service economy, except perhaps in luxury items.
Don’t imply causation where it doesn’t exist. There is precious little link between “high tax rates cause growth” if anything it is the reverse that is likely true that high growth allows for high tax rates to be imposed.
The US post-war economy is a singular example of a political and military superpower basically dominating global growth and trade in an era of crazy high levels of economic growth.
The conditions for the US to repeat that growth story are simply not there unless you believe the current AI growth story being another singularly American story. Even if you believe part of the potential productivity gains are true you have to believe that they ALL accrue to the US and not be distributed across all the other global firms/countries chasing the same thing.
Capping income, which is essentially what the 90% tax rate did, on CEOs and major investors did not harm the USA economy and greatly contributed to the reduction in wealth inequality so why shouldn't it be considered again? A simple income tax increase would not work today because that's not how the super wealthy get their spending money so it would take a complete restructuring of the taxes to accomplish especially since the super wealthy have eroded their taxes over the decades.
I didn’t say it harmed it. I said not to make such a reductive implied link that high taxes somehow caused the growth. Investment and general economic growth stems from many variables and existing conditions such that it is just wrong to say either “high taxes good” or the reverse.
To a large extent, it depends on how the taxes are applied.
If taxes are high on income and dividends, then it encourages rich people to grow their wealth primarily through capital gains. This usually causes company profits to get reinvested, with a push towards long term growth instead of short term stock prices. That is more likely to benefit the overall economy.
(though, nothing is ever guaranteed. There's just too many variables)
The biggest income acquisition would be not so much individuals but companies. The entire concept that low business taxes would equate to increased jobs output and a better economy for workers is of course a sham, it resulted in stock buy backs CEO bonuses and higher dividends. Actually taxing corporations wouldn’t hinder growth it would harm the stock market at a trade off of an immense amount of money coming into governments world wide.
The effective rate was generally higher, nowhere near 90% tho. For people at the very top the effective rate was around 5-10 percentage points higher than now
Read the whole comment before you comment and then read it again to make sure you didn't miss anything. If you had done that you would have noticed that I said: "The effective rate was higher back then tho, so there is certainly room to raise taxes"
The US needs buyers of their bonds, not some clever scheme. In world war 2 they could resort to appealing to people's patriotism through extensive marketing.
Correct on banks and corporations, but retail investors were bigger buyers than the federal Reserve. Some 85 million Americans bought the government war bonds. Granted, the federal reserve made a formal promise to guarantee the interest rate, but they mostly only needed to act on their promise to a limited degree. They mainly ended up buying the short term 90 day T-bills due to the fact the competing war bonds were more profitable for institutional investors. They never had to bail out the entire yield curve. The demand was there, but due to the fact the government price fixed both the war bonds and 90 day t-bills, arbitrageurs completely lost interest in the less profitable choice. They sold of all the T-bills they had and bought more profitable war bonds instead. So there was no lack of demand in general for US treasuries. Without the artificial arbitrage opportunity, the Federal Reserve would likely not have had to do anything.
But the crisis and situation now is entirely different. Back then the US was the biggest creditor nation in the world. Now it's one of the biggest debtor nations. The trust in the ability for the US government to repay its debt without devaluing the dollar was massive. That trust is what's eroding now. Whereas war bonds was a very profitable low risk opportunity for institutional investors back then, the same does not apply in the current crisis that's founded in a general distrust of the US government. Good luck convincing profit seeking banks and corporations to do the same in the current environment.
And the FEDs hands are more tied now than in world war 2. With the reduced trust they would likely be forced to act significantly on any formal promise to back the entire yield curve, not just serve as a back stop for profit seeking arbitrageurs. But that would erode foreign trust in the dollar even more, during a crisis that seems to be starting due to lack of trust in the US. A formal promise to back US treasuries would be an excellent opportunity for foreign investors to cut their losses and reduce their exposure.
Until the US government very strongly signals that they have another plan than devaluing the dollar, I don't see a reasonable way out of this.
It was only a few days ago when Scott "I am the house now" Bessent was attempting to bully the gorilla in the room, aka the bond markets. The gorilla just showed Bessent who is in charge.
Inflation and therefore yields are up because of gasoline and diesel prices, not the debt. But yes, I agree that you can overinflate the economy at a certain level of spending and the inflation impact should be the real focus not the overall debt outstanding.
Well, we sort of do, which was the problem with Bretton Woods. Somehow there was always more “gold” to pay Koreans to slaughter Vietnamese with Japanese equipment.
There's no such thing as a free lunch. If they choose that route there will be a run on US treasuries and a financial crisis on the scale the world has never seen before.
That would signal to the entire world that the only plan the US has is inflation and devaluation. Would be a great opportunity for foreign holders to cut their losses.
You just said there would be a run on Treasuries. That would be a crisis and the Fed would step in like they did every other time there has been crisis. Please read up on how the monetary system works. There are certainly risks but not as you described.
The fed can back stop interest rates in a normal financial crisis. But if the crisis stems from a lack of trust in US treasuries themselves, and the FED steps in without any significant fiscal policy change that clearly signals the US government is taking the problem seriously, then they will inevitably just erode trust in treasuiries further.
I.e. the more the FED steps in to soak up liquidity, the more liquidity they will need to soak up, because everyone will take it as an opportunity to cut their losses and get off the train. The liquidity crisis would become a currency crisis. The US government can bail out banks, but they can't bail out themselves.
The problem is made even worse by the likely coming inflationary shocks from Trump's tarriffs and the oil supply shock. "Providing liquidity" in an already inflationary environment where trust in US treasuiries are at an all time low is nothing but a recipe for an even bigger disaster.
Have you forgotten quantitative easing when they buy up Treasuries to keep yields low? They can buy up to infinity.
And why would anyone lose trust when the US government literally can’t default (except for some idiotic debt ceiling debacle). And where are people moving their money to in
this situation?
And do you realize that inflation and dollar strength are separate things? Dollar vs other currencies are actually up not devalued.
>Have you forgotten quantitative easing when they buy up Treasuries to keep yields low?
Was 2008 a sovereign solvency crisis or a private sector liquidity crisis? Using QE to unfreeze private credit markets is fundamentally different from using it to monetize a structural government deficit.
>And why would anyone lose trust when the US government literally can’t default (except for some idiotic debt ceiling debacle).
Because foreigners want their purchasing power back, not just the nominal dollar value.
And the world is already losing trust in the US government and treasuries. Major pension funds in both Sweden and Denmark have fully or almost fully divested from US treasuries. Norwegian central bank is talking about diversifying away from US treasuries and sent a formal recommendation to their Parliament. Other financial institutions around Europe are making similar moves to various degrees. Not all of them, but quite a few.
If the US government signals they will just print money to pay their debts, this trend is guaranteed to accelerate. While the US government may not technically be able to default, printing money to pay foreign Treasury holders is essentially a soft default.
>And do you realize that
In general I tend to stop talking to people when they start their arguments with "you do realize that..." Speak like an adult and state your argument without condescending bullshit. I've shown respect to you despite disagreement. Show it back.
>inflation and dollar strength are separate things?
Separate but related.
>Dollar vs other currencies are actually up not devalued.
And one way to very quickly change that would be to try pay off sovereign debts by printing money. Many countries have gone down that road before, and it hasn't ended well once.
But I don't think I need to convince you. The US government seems hellbent on going down that path regardless, so my bet is you might even get to experience it first hand.
About 75% of treasuries are US owned. There has never been a crisis where the US risked default. It is not possible. If some countries diversify from treasuries that’s a not a crisis. Yields are up from supply side inflation, from the Iran war. Has nothing to do with the debt. Anticipation of the raising rates is what’s leading to higher yields at the end of the curve. You aren’t regaining purchasing power by selling treasuries. Countries can make their rates higher to stimulate demand for their currency but would slow the economy. We have demand for dollars because we are the biggest consumer in the world and because all oil trades in dollars. If you are in Europe for example, you need to buy dollars to buy oil. Nothing to do with the debt.
4.7 to 5.2% are likely the "new normal" on the 10 year treasury yields, regardless of the fed; maybe even slightly higher. Structural $2T deficits on $40T in debt with no serious deficit reduction plan (inclusive of tax increases especially on the wealthy, reining in healthcare costs plus these wars and our military budget in general), compounded by $80-100 oil is the problem.
If the deficit were instead down to $1T immediately with some expectation it'll hover around that for the next 10 years, we'd be looking at treasury yields going down considerably.
Problem is $2T deficits now turn into $3T in 7-10 years.
Not to mention the current $1.2trn interest payments will become $2trn by 2035 which will be impossible to grow out of. Inflating away the debt is the only solution
You'd suddenly see most of the 1% have little to nothing. You'd also see the assets of retirement accounts and the like resetting to what they actually can produce - which, in the US, is not too much.
Debt would be interesting. You'd be seeing massive deflationary pressurs . . . but also the vast majority of debt would be noncollectable to say the least, and suddenly there's no money to pay the cops to seize things (cops themselves are suddenly broke).
Shay's Rebellion, or St Petersberg 1917? You don't have large amounts of veteran, but there are a whole bunch of guns.
The only solution? The person you replied to gave several other solutions, saying all we can do is increase inflation is not only wrong it's just disastrous.
Whatever the path we take for solving this problem the administration to do it will be ousted and then we’ll be right back to doing this until we crash and burn. Voters are stupid and politicians want to keep their job.
The only problem is energy and even parts of real estate are also facing their own bubbles. Energy has been up due to expected AI demand - but if that bubble pops, then . . .
For the short term, yes, long term no. Gold will drop as soon as the recession hits, losing a good portion of its value. At least traditionally it has. Gold will get a tick up in value until the stock market has a crash, at least that’s what happened in 2008. By 2010, gold dropped significantly in value.
Nothing for now. There’s a lot of risk out there to be focusing too much on the short term. What you should be focusing on is long term investment, such as healthcare and renewable energy. Playing the short run game right now will leave you vulnerable to the changes of the stock market. The stock market can remain irrational longer than you can be insolvent.
Gold as an inflation does work in an segmented non global world economy.
Current global economy has a drawback which is, when one is down, almost everyone follows.
US discretionary spending is a trivial amount of money. We spend the great bulk of our money on entitlements like SS and Medicare and interest payments.
What we need to do is hike taxes substantially. But then we need to do that in a way that is very targeted, so as not to harm the real economy of goods and services.
The defense spending needs to be cut but most of the cost cuts will come once the people are willing to destroy the medical cartel that is milking the federal government.
That’s what $1Trillion to zero down any defense for the country? Our deficit is $2T and will be 3T with rising raises. You need another $1T at minimum- what else would you cut?
Problem is our government is not trustworthy to maintain a rules based global order, rule of law within its own borders, and the distrust of the american people globally wont go away after trump, his reelection was an indictment on the competence, intelligence, and reliability of the american worker.
That is why we are fucked.
If we were still in the era of american seriousness, we would be fine. We could navigate this.
💯 that is the behavior and "policies" underpinning it all. We're basically unreliable as a global partner now and more so resemble the neighborhood or school bully.
The big problem Trump is just a symptom, combined with feckless and mediocre opposition (Democrats).... Democrats may retake office the next 4-6 years, but inevitably they'll not only fail to roll back much of whats happening but inevitably they'll be their mediocre selves, get voted out by 2030-2032, and we'll be right back to the same Republicans we have now if not worse.
We are at $3T deficits. Used to be 2 when we paid $400 billion on interest expenditures. Now we pay $1.2T for interest expenditures. So the Government has to borrow the extra plus the new war cost. Also to note. We are at $3T and not even in a recession. Any major issue we run into will cause deficit spending to soar.
the actual increase in the gross national debt is out pacing the number you have, it is actually rising by an estimated $2.7 trillion for 2026. Will reach $3 trillion next year or higher. Look at how much Debt goes up in a year, not the official government deficit number year-over-year
The average yield on the 10 yr since 1970 is about 6.4%. We are still below that. People have a distorted view of inflation and interest rates because of the 25 years of artificially low interest rates since the dot com bubble.
So you think they should be higher but you stated that 4.7-5.2% was the new normal like it was a big change from historical levels. I’ve been waiting for rates to normalize for 25 years. The post COVID bump was the beginning of the return to normal.
The housing market has to correct from the run up created by 2-3% mortgages. My neighborhood is down 6-7% over the past year. Pricing is still absurd.
I certainly wouldn’t rule it out. The government didn’t care about the expansion of spending to 24% of GDP when they were financing the debt at 0.5%. That is coming home to roost and both parties have gone full on populist. Not a good combination.
That may be true but the demand for capital from the AI craze is causing rates to rocket. Once the AI investments moderate there will be plenty of capital again. The capex rate is unsustainable. Everyone knows this but it’s a big game of chicken. It’s worse because these aren’t assets like infrastructure with a 50-100 year life. Instead they have a 5-6 year life at best (other than the physical construction of the data center). That is why it will eventually crumble. I don’t know if that’s 1 year, 2 years or 4 years away. When it does capex dries up, economy contracts (since AI capex was propping everything up), and long rates fall because demand is much less.
The rule of thumb is that if your tax collection is lower than the interest you pay on your debt (forget about returning any portion of the capital amount), you are in serious trouble. You are digging a deeper and deeper hole, endlessly. There is no way out, only way into deeper mess.
The problem with scenario is that the economy is $1T smaller if you don’t manage it correctly. That’s why this is such an intractable issue. Cut spending by $1T and induce a recession, which will last until shortly after everyone in government is kicked to the curb.
Now, find $1T in taxes from exclusively wealthy people, and you might be able to pull it off. Most of their money is invested because they are mechanically incapable of spending it all. But they’re politically influential as well.
What does printing money really mean? In simple terms, it means borrowing money from some source, whether people, some institutions, or sovereign governments. If they refuse to part with their ‘real money’, the printed money is just a supposed promissory note… nothing else! Whether it gets honored or not becomes the real issue!
So the way we print money is to create a debt off set. While the U.S. government owes something for every dollar printed, its true effect is to prevent money printing from becoming inflationary.
If a debt obligation is made for every dollar this means someone is removing the ability to spend by purchasing securities.
So in essence for every dollar printed, past the deficit is a dollar that ends up being in a savings account.
But the borrowed money, by the government, is spent by the government… in a wise, or not so wise manner, so how does it exactly help? Unless the spending is curtailed or the taxes hiked, where it really needs to be hiked, this approach does not help.
> 4.7 to 5.2% are likely the "new normal" on the 10 year treasury yields, regardless of the fed
That's absolutely not true. Everything is a function of Fed policy. When there is inevitably another recession and rates are cut and treasury yields plummet alongside that, then all these people panicking about debt, deficits, and yields getting out of control will get very quiet.
The market is pricing the expected trajectory of the policy rate, it's not responding to the size of the debt or deficit. Yields do not correlate with debt levels.
Sure is. In forming its long-run projections of the interest rate on 10-year Treasury notes, the Congressional Budget Office estimates that a 1 percentage-point increase in the projected ratio of debt to gross domestic product raises average long-run interest rates by 2 basis points (bps).
So it's a lagged effect and positive relationship over time.
https://www.cbo.gov/publication/60314
Plus there's supply and demand of treasuries. Having to issue an increased supply of treasuries without commensurate demand pushes yields to further.
"The agency’s expectation that average long-run interest rates are, in part, determined by the debt to-GDP ratio is based on the implications of a theoretical model. In the standard neoclassical
growth model based on an aggregate production function for the economy, government debt
“crowds out” productive physical capital, which results in higher interest rates in the long run.
In that model, an increase in government debt (roughly speaking, a budget deficit) is associated
with an increase in interest rates."
Financial crowding out isn't real. Government spending increases the money supply and bond issuance to cover the deficit simply neutralizes that change to the money supply. However it's an asset swap, which leaves the additional wealth in the non-government sector higher. Public deficits make the private sector richer, after all, where do you think that money is going? Their model doesn't understand actual institutional operations and sectoral balances.
Additionally, investment isn't a function of other people's savings. Loans create deposits. Banks don't lend out other people's money, they simply create the money out of thin air. Reducing savings doesn't reduce the capacity of the financial sector to lend, and therefore doesn't push up interest rates. This make believe market where government deficits force the private sector to compete for fewer and fewer funds available for investment doesn't exist in the real world. It's a fiction in shitty economics textbooks.
You can torture the numbers and use shit models to argue that the 60+ year negative correlation I showed you is actually positive causation if you want to, but that's just ideological bias and refusing to give up on a model that doesn't reflect reality.
On the point of supply and demand for treasuries, well again government spending increases the money supply. The demand comes from the deficits. It's self funding, especially when the Fed is targeting a rate because they will always add liquidity when needed to prevent the policy rate from rising above target. Ultimately, wherever those USD savings end up is where the demand for treasuries will come from because there is no aggregate alternative.
There will be no debt spiral. When the Fed inevitably cuts in the future due to the next recession then yields will plummet despite the fact that the recession will cause a surge in the deficit and debt levels.
Lol correlation isn't causation, and lagged effects are an actual thing 🤷♂️.
Incidentally, unrelated, if I take a medicine now....but it doesn't impact my headache until 40 minutes later, by your logic the medicine doesn't reduce my headache 🤷♂️
I can use lags to 'prove' that sunsets cause the sky to get brighter, so who cares? You need a mechanism. How does increasing the non-government savings stock actually cause interest rates to rise? Crowding out isn't it. That's not how banks work.
Also it's more than a half century long correlation. How long is your damn lag? It's nonsense. How long do increasing debt levels have to not result in some kind of crisis for you to start questioning the model?
>by your logic the medicine doesn't reduce my headache
That's not my logic at all. You can demonstrate a mechanism for how medicine causes an effect.
I refer you back the empirical research on the topic, which you're ignoring. If you're still confused, maybe contact the CBO who put it together rather than looking at two lines on a chart, and concluding no relationship 🤷♂️
I'm not ignoring it. I literally quoted some of it for you to explain why their theory and model is bullshit.
Here's more:
"In our preferred specification, we control for changes in Federal Reserve and foreign holdings of
U.S. Treasury securities, as well as changes in several other macroeconomic variables."
They're trying to get rid of any effect Fed holdings have on yields. If they don't do that then they actually measure that rising debt levels correlate with falling yields. Then you can look at their results table an see that once controlling for Fed holdings that effects dwarfs the size of the debt effect.
The biggest reason I responded was your "regardless of the Fed" statement. Your own source disagrees with that. Fed policy dominates. Always has, always will. Even if you want to reject any heterodox criticisms on the theory, it's still found by the CBO that Fed actions dominate any debt level impacts. You can't apply their ceteris paribus finding to our non-ceteris paribus world where the Fed does things.
Social Security adds nothing (more accurately a negligible amount) to the deficit, plus cutting people's retirement at this juncture, with record wealth and record profits concentrated at the top would be a huge slap in the face...let them eat cake moment.
> Social Security adds nothing (more accurately a negligible amount) to the deficit
100% wrong, Social Security and Medicare are the biggest drivers of projected deficits in the medium and long term. That is an indisputable and easily verifiable fact.
Social Security is entirely self funded and by law cannot pay out more than it takes in/has in the trust fund. The only amount it adds to the national debt is the miniscule amount it costs to sell, roll over, or convert treasury bonds when it has to in the trust fund, and the administration of it.
Medicare though is not fully funded (pays out more than it takes in) and is a big deficit driver.
My dude, the trust fund runs out in about 2032. The projections I mentioned make the assumption that they will change the law and keep benefits as they are without actually changing the revenue source or benefit.
So you are cool with a potential across the board 26% social security cut when the trust fund runs out?
> existing actual law over the last 90 or so years
You do know they have changed that law during that time frame right? You really aren't so uneducated on this topic that you think the benefit formula hasn't been changed since FDR, correct?
You do know for the entire 90 years of it's existence through today, social security statutorily cannot pay out more than it takes in or has in the trust fund?
You don't make the projections? The only projection we have is the actual law, which will drive automatic cuts by 2032 (because statutorily it cannot pay out more than it takes in). I'm not interested in your hypothetical imaginary laws. This is the actual law 🤷♂️🤦♂️
If you’re going to trot out your hobby horse into this discussion you could at least give us enough details to talk about it. You mean to maintain current benefits once the trust funds run out, we’ll have to back the program up with discretionary spending, don’t you?
Imagine calling the biggest or second biggest driver of our medium and long term debt a 'hobby horse' lmao
> You mean to maintain current benefits once the trust funds run out, we’ll have to back the program up with discretionary spending, don’t you?
Every projection on this topic assumes that they are not going to change the law and not cut benefits when the trust fund runs out. You should know this
From the article: Soaring Treasury yields aren’t just bad for the government and its $40 trillion debt. They also threaten to raise borrowing costs, hitting everyone from homeowners to credit card users, while providing limited help to savers and potential benefits to banks.
Government debt costs leaped higher Wednesday, the product of multiple factors including a fresh report showing higher inflation pressures, surging expectations for a Federal Reserve rate hike in October, and an auction for 5-year notes showing that Treasury demand was weak. Competition from hyperscaler debt issuance also is seen as an aggravating factor.
Normally investments in equities would transition over to bonds but no one trusts the government to rein in spending so probably just more inflation until a crash.
The House just needs to buy some more treasuries. No big deal. The house always wins, not worried.
On a more serious note, yields are about to fuck everyone in the coming months. Risk free 5% is going to bring equity valuations back to historical levels.
And we all know that using the past to predict future performance is dead nuts accurate every time! The world is a bit different today than it was during the times of “historically average PE ratios”. The technological breakthroughs in the past 5 years are incredible, let alone the past 3 decades.
Reversion to the mean. But overall borrowing costs become more expensive, money moves slower, growth slows. Equities don’t necessarily need to go down, but returns are muted for some time. Instead of 7-10% average returns we may see 2-5% for example. Stop drinking the kool aid thinking that we’re in a new paradigm. That’s what everybody thought every time before they were humbled by reality
> we all know that using the past to predict future performance is dead nuts accurate every time
it's fun to reflexively recite bumperstickers, but people invest in stocks because of the equity risk premium, that is the excess return that investing in the stock market provides over a risk-free rate. as treasury rates (the risk-free rate) increase, folks are less willing to buy equities because the expected equity risk premium is lower, and due to supply and demand, a lower demand means prices go down.
so it's less people trying in vain to tell the future, and more understanding cause and effect.
I think they mean back to historical levels relative to the real economy of goods and services. Never before has the price of an asset had so little relationship to what the asset can produce.
No, but a) they’re on a perpetual upward march, and b) they’re comparable to times that precipitated economic crises, after which we all acknowledged that they were way too high. What’s concerning is that each year brings a higher level and we’re all just kind of ok with that.
It’s a higher level because the associated profits continue to climb. It’s not irrational. Compare current ratios to something like the .com bubble show it’s not at all similiar.
The world is a technological marvel compared to what it was in 1970. Spending, innovation, population, technology have all massively increased compared to what we saw even two decades ago.
It’s a pointless sentence that means nothing. Historical levels could imply yesterday.
No one has any idea what is going to happen, but I think we know for damn sure that the innovation is not going to stop.
The problem is that the innovation is apparently not productive. It’s not yielding more goods and services for less capital. It’s doing the opposite. It takes more investment to do most things now.
We might think you’re right. After all, that’s what we have learned, and observed, over the years.
Nah. I don’t think anything that we might see as a “fundamental” or even a simple truth, operates the same way anymore. We flooded the world with US dollars. Obligations. Now, we have to inflate everything to keep the dance doing.
Unfortunately, we may need true demand destruction to get things back to equilibrium. It has been almost 20 years since the last recession that pressed the reset button. Yeah I know the technical definition of a recession.
Although, even with a recession and the job losses that come with it, AI may make the traditional path to recovery unavailable. Time will tell
inflation is rising! what should we do? let's slow the economy down somehow... can we increase borrowing costs? ...but that will slow down the economy!?
btw - one way out of debt is to inflate it away. if/when the economy slows and if Warsh can soft land like the JPow, the debt will actually be in a better place adjusted for inflation.
If inflation is high and will stay high as a strategy to inflate away debt, then bond buyers want a better rate otherwise the bonds themselves are negative value — that’s what we’re seeing here
Are you saying gas and tariffs aren’t causing inflation?
I’ll give you an anecdotal data point. I am the treasurer for a manufacturer. Our prices are up 11% from a year ago and 15% from two years ago. But with that, our margins are slightly more than half of what they were two years ago.
Tariffs and fuel surcharges on our freight are killing us and we can’t raise prices fast enough to keep up.
Report_Last | 12 hours ago
Ultimately what happens is "Fiscal Dominance" once the government can't meet its obligations it issues new debt at artificially low interest rates. And then of course lots of inflation. It happened in WW2.
Individual_Limit_701 | 11 hours ago
Spot on. When the debt-to-GDP ratio gets this high, monetary policy basically gets hijacked by fiscal necessity. Central banks lose true independence because they’re forced to monetize the debt to prevent default
Report_Last | 11 hours ago
Some Economists believe that when the 30 year Bond yield goes over 5.5% we will be there.
absat41 | 11 hours ago
I think when US debt is at Japan %'s , then we can start to worry. 186% here we come.
HumorAccomplished611 | 10 hours ago
The top 10% have 125 trillion in assets. I think doing a little taxing could help matters.
grandmawaffles | 9 hours ago
I’m sure you’d find the bulk of that 125t is with 1-3%
blibbityblop | 6 hours ago
It’s even worse than that. Top 0.1% holds nearly 30 trillion of it. Top 1% holds nearly 60 trillion of it. Top 3% holds 100 trillion of it. Focusing on just top 0.5% would fix almost all problems. They’re hoarding it and not contributing to anything with it. Worse, they’re trying to push us into fascistic feudalism with it.
akie | 4 hours ago
Historically there are only two scenarios in which economic inequality is addressed: war, and revolution.
Properly taxing the rich is the responsible thing to do.
dostoevsky4evah | 4 hours ago
But... they.. don't wanna!
MySoWholesomeReddit | 9 hours ago
What are you a commie?
/s
vegienomnomking | 9 hours ago
Assets is different from liquidity.
HumorAccomplished611 | 8 hours ago
Sure. But if elon can come up with 40 billion to buy twitter when he was worth 200 billion then he can figure out a way to pay taxes.
Personally I think another tier of capital gains at 35% above 5 million and 45% above 25 million would help quite a bit
Or even just treat it as regular income
vegienomnomking | 8 hours ago
Elon didn't buy Twitter with his own liquidity. 50% was from loans, and the other 50% was from Tesla stock.
HumorAccomplished611 | 8 hours ago
so again, he was able to get 40 billion together when he was worth 200 billion very easily. so 0 excuses not to pay tax.
wubwubwubwubbins | 7 hours ago
When you are using assets AS collateral on that scale, most of the time you arn't selling the asset in question. You are either trading it to them directly, or you can convince a 3rd party to put up a loan, with the benefit where if you default on the loan you get the asset in question.
The bank/lenders normally don't want to dump the value of the asset, especially if it's a bunch of stocks, by having to sell them. They would rather trade them at the current valuation, versus sell several million stocks that would flood the market with stocks (increase supply) which would potentially lower prices if demand for said asset stays the same.
The reason why having to liquidate these assets, especially intangible ones such as stocks, is such a very, very bad idea in many thought circles, is because so much of our economy is leveraged to the tits, and if you created a mechanism where EVERYONE had to start selling off a portion of their assets to create liquidity for tax purposes, it might create a feedback loop where many entities are forced to be margin-called, which would create more feedback loops that amplify, etc. etc.
So in theory, taxing the top .1 and .01% that have many assets is a great idea. In practice, no one really does it because the $$$ are in assets will kick the GDP of a country in the balls by massively slowing down liquidity for business lending. And if you genuinely knew how much businesses relied upon short and medium term loans to make payroll (it's a LOT of them, since keeping $$ sitting in the bank is, in a good environment, a poor financial decision) then you understand why people are hesitant. Basically you don't want capital flight out of your public markets.
VeteranSergeant | 5 hours ago
Are they? This gets said a lot, and then assets get leveraged into loans to create liquidity. This is why there's no such thing as "unrealized gains" for the wealthy.
Killfile | 4 hours ago
Who cares? Oh no, if they're forced to sell it rather than horde it it'll crash the stock market.
First, no it won't. Even if Elon had to liquidate 3% of his holdings in any or all of his companies in a single day it would be a high volume day on the market but only about double volume. Spread out over a year and it wouldn't move the needle.
Second, if it actually would move the needle then that's a fantastic argument for why the stock is wildly overvalued in the first place. The only "value" it actually has is its ability to be traded for other things. If actually trading it destroys that value then it hardly had it in the first place, now did it?
Median household net worth is ~$192,000 in the US. Tax everything above 10x that value at 3%. Done. Hell, you could literally eliminate the income tax if you did that.
nochinzilch | 4 hours ago
Liquidating stock like that would really only be a problem if the underlying value of the stock was overstated. (Which they are.)
TonyFMontana | 6 hours ago
Are you a communist?!
HumorAccomplished611 | an hour ago
'our assets'
freexe | 8 hours ago
How much of that is the houses they live in and the businesses they own?
HumorAccomplished611 | 8 hours ago
I mean most of it? How else are they having assets? Zucks 20 homes that he lives in sometimes or his facebook stock? Am i supposed to not count it? Does bezos 600 million yacht not count as an asset cause he would have to sell it?
Tee999 | 9 hours ago
So noon-ish???
greywar777 | 9 hours ago
Looks like a bit before noon actually as its still going up 5.453 currently.
Unique-Egg-461 | 4 hours ago
watching these just over the last two days has been fucking wild. 5.49 now......
June1994 | 6 hours ago
I like how this is now a "when" and not an "if."
Troubling times getting more troubling.
IllustratorMurky2725 | an hour ago
Thank djt and musk. Should have impeached over the Iran war, but unfortunately every last republican is a coward
Parasin | 5 hours ago
As someone with little understanding of how this works at scale, can you ELI5? What does this mean for everyday people?
Biggest-Benjamin | 5 hours ago
How does this affect political actions and initiatives then once that happens?
dart-builder-2483 | 11 hours ago
90% top tax rate followed
Report_Last | 11 hours ago
And an era of unprecedented economic growth.
ArmedWithBars | 10 hours ago
The US post WW2 economic growth was simply down to three major things we don't have today. The US was a manufacturing economy and Europe/Russia were rubble.China was basically a country of peasants at that point and was responsible for sub 1% of global exports in the late 40s. The US was setup to build and there was no competition, only buyers.
Nothing like that will happen again in modern history and the most likely scenerio is the US service economy collapsing, aka 60%+ of the jobs. There's a saying that manufacturing builds and rebuilds nations, something the US doesn't have at large. Even if we did we'd be competeting with nations like China, who have 30+yrs of high tech investment with ungodly economies of scale on their side.
3_Thumbs_Up | 10 hours ago
And most likely with the US political climate as it is today, the government is more likely to resort to some highly destructive policies in response.
Awkward-Ring6182 | 9 hours ago
Like an illegal war and illegal tariffs for example?
iceburg47 | 9 hours ago
For starters.
jetpacksforall | 9 hours ago
I’ve seen this argument before, that postwar devastation alone explains US economic dominance, and it had nothing to do with fiscal taxing and spending. The trouble with the argument is that high US tax rates and investment into manufacturing capacity and infrastructure started a full decade before the war. The US built much of its manufacturing capacity during the Great Depression, not during and after the war.
nostrademons | 3 hours ago
The U.S. economy was in the shitter a decade before the war. That's pretty good evidence that it was the war that pulled it out of depression and not tax or industrial policy.
You need both supply and demand to get a transaction. The devastation of WW2 provided the demand.
jetpacksforall | an hour ago
Goering is quoted as saying the only thing America could manufacture was refrigerators and razor blades. Of course, as nearly always, he was being an ass, but he also seemed to genuinely believe his own BS. German wartime policy seemed to make the same assumption as a whole: that German manufacturing's superior tanks, planes, rifles, rocket engines, and ships would completely outmatch American mass produced garbage. Goering wasn't just wrong in retrospect though: he was wrong at the time too. America's industrial capacity had grown enormously over the 1930s, and it already stood poised to completely dwarf Axis output.
Agreed that WWII spending closed the demand gap and ended the Depression, but WWII spending did NOT develop most of the industrial capacity it took to win the war, become the world's main economic superpower, and create the great American middle class. Most of that capacity was built during the Depression. Industrial capacity during the Great Depression grew at a rate never matched before or since, as you can see in this chart where 75% of manufacturing output growth was in before the US finally entered the war in 1942.
A discussion here attributes the growth to three main factors: industrial electrification (largely in the 1920s), R&D spending, and infrastructure investment (highways, dams, airports, bridges, rural electrification).
VeteranSergeant | 5 hours ago
But we don't need to replicate all of the growth, what we need to replicate is the growth of the working class to be commensurate with the rate of wealth hoarding by the wealthiest top 3%.
The US is already at the top, but the distribution is wildly uneven. Forcing the redistribution of wealth wouldn't collapse the service economy, except perhaps in luxury items.
HerroCorumbia | 10 hours ago
>Nothing like that will happen again in modern history
Not that I want it to happen but I do think that this scenario can be recreated through another world war.
pernetrope | 9 hours ago
The US was harder to reach with weapons back then too though
JMer806 | 9 hours ago
The US manufacturing base is no longer large enough as a percentage of employment for it to be replicated
Gamer_Grease | 9 hours ago
That’s not really related.
Report_Last | 9 hours ago
That is how we came out of fiscal dominance in WW2, Not saying this will be the case in our current situarion
drop-o-matic | 10 hours ago
Don’t imply causation where it doesn’t exist. There is precious little link between “high tax rates cause growth” if anything it is the reverse that is likely true that high growth allows for high tax rates to be imposed.
The US post-war economy is a singular example of a political and military superpower basically dominating global growth and trade in an era of crazy high levels of economic growth.
The conditions for the US to repeat that growth story are simply not there unless you believe the current AI growth story being another singularly American story. Even if you believe part of the potential productivity gains are true you have to believe that they ALL accrue to the US and not be distributed across all the other global firms/countries chasing the same thing.
Ketaskooter | 10 hours ago
Capping income, which is essentially what the 90% tax rate did, on CEOs and major investors did not harm the USA economy and greatly contributed to the reduction in wealth inequality so why shouldn't it be considered again? A simple income tax increase would not work today because that's not how the super wealthy get their spending money so it would take a complete restructuring of the taxes to accomplish especially since the super wealthy have eroded their taxes over the decades.
drop-o-matic | 9 hours ago
I didn’t say it harmed it. I said not to make such a reductive implied link that high taxes somehow caused the growth. Investment and general economic growth stems from many variables and existing conditions such that it is just wrong to say either “high taxes good” or the reverse.
MimeGod | 4 hours ago
To a large extent, it depends on how the taxes are applied.
If taxes are high on income and dividends, then it encourages rich people to grow their wealth primarily through capital gains. This usually causes company profits to get reinvested, with a push towards long term growth instead of short term stock prices. That is more likely to benefit the overall economy.
(though, nothing is ever guaranteed. There's just too many variables)
Linkeq200 | 10 hours ago
The biggest income acquisition would be not so much individuals but companies. The entire concept that low business taxes would equate to increased jobs output and a better economy for workers is of course a sham, it resulted in stock buy backs CEO bonuses and higher dividends. Actually taxing corporations wouldn’t hinder growth it would harm the stock market at a trade off of an immense amount of money coming into governments world wide.
Richandler | 5 hours ago
Because the US was the only country in the world that could still make anything after the entire infrastructure of the world had been destroyed.
Flintly | 11 hours ago
Ahhh the good years. No way that happens again
morbie5 | 10 hours ago
Only like 5 people with the worst accountants in the world even paid close to 90%. That 90% rate had more holes in it than swiss cheese.
The effective rate was higher back then tho, so there is certainly room to raise taxes
ConLawHero | 4 hours ago
The effective rate was pretty much on par with today's effective rates because there were so many deductions available.
morbie5 | 3 hours ago
The effective rate was generally higher, nowhere near 90% tho. For people at the very top the effective rate was around 5-10 percentage points higher than now
Dependent_Ocelot8052 | 7 hours ago
Do you think billionaires/100 millionaires currently pay anywhere close to the rate they should now? The swiss cheese holes are still wide open.
morbie5 | 3 hours ago
Read the whole comment before you comment and then read it again to make sure you didn't miss anything. If you had done that you would have noticed that I said: "The effective rate was higher back then tho, so there is certainly room to raise taxes"
ironteddybear | 9 hours ago
No one actually paid those 90% tax rates. People of means had ways to structure their finances in such a way to minimize tax payments.
3_Thumbs_Up | 10 hours ago
The US needs buyers of their bonds, not some clever scheme. In world war 2 they could resort to appealing to people's patriotism through extensive marketing.
Report_Last | 9 hours ago
The main buyers of U.S. bonds during WWII were commercial banks, corporations, and the Federal Reserve.
3_Thumbs_Up | 8 hours ago
Correct on banks and corporations, but retail investors were bigger buyers than the federal Reserve. Some 85 million Americans bought the government war bonds. Granted, the federal reserve made a formal promise to guarantee the interest rate, but they mostly only needed to act on their promise to a limited degree. They mainly ended up buying the short term 90 day T-bills due to the fact the competing war bonds were more profitable for institutional investors. They never had to bail out the entire yield curve. The demand was there, but due to the fact the government price fixed both the war bonds and 90 day t-bills, arbitrageurs completely lost interest in the less profitable choice. They sold of all the T-bills they had and bought more profitable war bonds instead. So there was no lack of demand in general for US treasuries. Without the artificial arbitrage opportunity, the Federal Reserve would likely not have had to do anything.
But the crisis and situation now is entirely different. Back then the US was the biggest creditor nation in the world. Now it's one of the biggest debtor nations. The trust in the ability for the US government to repay its debt without devaluing the dollar was massive. That trust is what's eroding now. Whereas war bonds was a very profitable low risk opportunity for institutional investors back then, the same does not apply in the current crisis that's founded in a general distrust of the US government. Good luck convincing profit seeking banks and corporations to do the same in the current environment.
And the FEDs hands are more tied now than in world war 2. With the reduced trust they would likely be forced to act significantly on any formal promise to back the entire yield curve, not just serve as a back stop for profit seeking arbitrageurs. But that would erode foreign trust in the dollar even more, during a crisis that seems to be starting due to lack of trust in the US. A formal promise to back US treasuries would be an excellent opportunity for foreign investors to cut their losses and reduce their exposure.
Until the US government very strongly signals that they have another plan than devaluing the dollar, I don't see a reasonable way out of this.
Frequently_lucky | 7 hours ago
It was only a few days ago when Scott "I am the house now" Bessent was attempting to bully the gorilla in the room, aka the bond markets. The gorilla just showed Bessent who is in charge.
As always, put clowns in charge get a circus.
Toty10 | 11 hours ago
We don’t have the same monetary system as we did after WW2. Government can always pay its debt as they control their own currency.
SouthHovercraft4150 | 11 hours ago
Effect is the same, inflation.
HeyUKidsGetOffMyLine | 10 hours ago
The current GOP has done nothing but inflationary policy. Of course they will opt for for as it appears to be the plan.
Toty10 | 11 hours ago
Inflation and therefore yields are up because of gasoline and diesel prices, not the debt. But yes, I agree that you can overinflate the economy at a certain level of spending and the inflation impact should be the real focus not the overall debt outstanding.
Gamer_Grease | 9 hours ago
Well, we sort of do, which was the problem with Bretton Woods. Somehow there was always more “gold” to pay Koreans to slaughter Vietnamese with Japanese equipment.
3_Thumbs_Up | 3 hours ago
There's no such thing as a free lunch. If they choose that route there will be a run on US treasuries and a financial crisis on the scale the world has never seen before.
Toty10 | 3 hours ago
Pretty sure the Fed would soak up any excess liquidity.
3_Thumbs_Up | 2 hours ago
That would signal to the entire world that the only plan the US has is inflation and devaluation. Would be a great opportunity for foreign holders to cut their losses.
Toty10 | 2 hours ago
You just said there would be a run on Treasuries. That would be a crisis and the Fed would step in like they did every other time there has been crisis. Please read up on how the monetary system works. There are certainly risks but not as you described.
3_Thumbs_Up | 2 hours ago
The fed can back stop interest rates in a normal financial crisis. But if the crisis stems from a lack of trust in US treasuries themselves, and the FED steps in without any significant fiscal policy change that clearly signals the US government is taking the problem seriously, then they will inevitably just erode trust in treasuiries further.
I.e. the more the FED steps in to soak up liquidity, the more liquidity they will need to soak up, because everyone will take it as an opportunity to cut their losses and get off the train. The liquidity crisis would become a currency crisis. The US government can bail out banks, but they can't bail out themselves.
The problem is made even worse by the likely coming inflationary shocks from Trump's tarriffs and the oil supply shock. "Providing liquidity" in an already inflationary environment where trust in US treasuiries are at an all time low is nothing but a recipe for an even bigger disaster.
Toty10 | 2 hours ago
Have you forgotten quantitative easing when they buy up Treasuries to keep yields low? They can buy up to infinity. And why would anyone lose trust when the US government literally can’t default (except for some idiotic debt ceiling debacle). And where are people moving their money to in this situation?
And do you realize that inflation and dollar strength are separate things? Dollar vs other currencies are actually up not devalued.
3_Thumbs_Up | an hour ago
>Have you forgotten quantitative easing when they buy up Treasuries to keep yields low?
Was 2008 a sovereign solvency crisis or a private sector liquidity crisis? Using QE to unfreeze private credit markets is fundamentally different from using it to monetize a structural government deficit.
>And why would anyone lose trust when the US government literally can’t default (except for some idiotic debt ceiling debacle).
Because foreigners want their purchasing power back, not just the nominal dollar value.
And the world is already losing trust in the US government and treasuries. Major pension funds in both Sweden and Denmark have fully or almost fully divested from US treasuries. Norwegian central bank is talking about diversifying away from US treasuries and sent a formal recommendation to their Parliament. Other financial institutions around Europe are making similar moves to various degrees. Not all of them, but quite a few.
If the US government signals they will just print money to pay their debts, this trend is guaranteed to accelerate. While the US government may not technically be able to default, printing money to pay foreign Treasury holders is essentially a soft default.
>And do you realize that
In general I tend to stop talking to people when they start their arguments with "you do realize that..." Speak like an adult and state your argument without condescending bullshit. I've shown respect to you despite disagreement. Show it back.
>inflation and dollar strength are separate things?
Separate but related.
>Dollar vs other currencies are actually up not devalued.
And one way to very quickly change that would be to try pay off sovereign debts by printing money. Many countries have gone down that road before, and it hasn't ended well once.
But I don't think I need to convince you. The US government seems hellbent on going down that path regardless, so my bet is you might even get to experience it first hand.
Toty10 | an hour ago
About 75% of treasuries are US owned. There has never been a crisis where the US risked default. It is not possible. If some countries diversify from treasuries that’s a not a crisis. Yields are up from supply side inflation, from the Iran war. Has nothing to do with the debt. Anticipation of the raising rates is what’s leading to higher yields at the end of the curve. You aren’t regaining purchasing power by selling treasuries. Countries can make their rates higher to stimulate demand for their currency but would slow the economy. We have demand for dollars because we are the biggest consumer in the world and because all oil trades in dollars. If you are in Europe for example, you need to buy dollars to buy oil. Nothing to do with the debt.
Richandler | 5 hours ago
> artificially low interest rates
You know money is artificial right?
jarena009 | 12 hours ago
4.7 to 5.2% are likely the "new normal" on the 10 year treasury yields, regardless of the fed; maybe even slightly higher. Structural $2T deficits on $40T in debt with no serious deficit reduction plan (inclusive of tax increases especially on the wealthy, reining in healthcare costs plus these wars and our military budget in general), compounded by $80-100 oil is the problem.
If the deficit were instead down to $1T immediately with some expectation it'll hover around that for the next 10 years, we'd be looking at treasury yields going down considerably.
Problem is $2T deficits now turn into $3T in 7-10 years.
saln1 | 12 hours ago
Not to mention the current $1.2trn interest payments will become $2trn by 2035 which will be impossible to grow out of. Inflating away the debt is the only solution
a_library_socialist | 12 hours ago
Yup, it's either print money, or accept that much of the fictitious capital of the US doesn't exist.
I don't expect the geretocracy of the US to accept the latter, especially as that would hit the old in benefit of the young. So Weimar times it is!
Biggest-Benjamin | 5 hours ago
If the country did admit that its trillions of dollars of capital didn’t exist in reality or value, what would that look like?
a_library_socialist | 4 hours ago
Good question.
You'd suddenly see most of the 1% have little to nothing. You'd also see the assets of retirement accounts and the like resetting to what they actually can produce - which, in the US, is not too much.
Debt would be interesting. You'd be seeing massive deflationary pressurs . . . but also the vast majority of debt would be noncollectable to say the least, and suddenly there's no money to pay the cops to seize things (cops themselves are suddenly broke).
Shay's Rebellion, or St Petersberg 1917? You don't have large amounts of veteran, but there are a whole bunch of guns.
Biggest-Benjamin | 3 hours ago
I will look up Shay’s rebellion and the St. Petersburg event, I hadn’t heard of those before.
a_library_socialist | 2 hours ago
St Petersberg means the October Revolution.
Biggest-Benjamin | 16 minutes ago
Oh! Then yes definitely remember that from my Russian history class
jarena009 | 11 hours ago
You could easily raise taxes tomorrow and slash the deficit by at least a third, and there's plenty of at the top 1-2% to do this.
There's no shortage of funds to tax; just in US corporate profits, they're at like $4.3T after tax.
Prize_Compote_207 | 10 hours ago
No, you don't get it.
Taxpayers are supposed to give their money to profitable corporations via "bailouts."
thatgibbyguy | 12 hours ago
The only solution? The person you replied to gave several other solutions, saying all we can do is increase inflation is not only wrong it's just disastrous.
Consistent_Laziness | 11 hours ago
Whatever the path we take for solving this problem the administration to do it will be ousted and then we’ll be right back to doing this until we crash and burn. Voters are stupid and politicians want to keep their job.
saln1 | 11 hours ago
The only realistic solution
Prize-Afternoon-9203 | 12 hours ago
Does this make gold more attractive?
082426grateful | 12 hours ago
I don’t see how anything is attractive that isn’t considered a “risk asset”. It’s the speculative economy now.
Facebook_Lawyer_Gym | 10 hours ago
Cheap debt is, but that's not something can't get anymore. Well, for the regular folks at least.
bradeena | 11 hours ago
Anything that is associated with essential, hard assets is usually a good inflation hedge. Real estate, energy, minerals, etc
a_library_socialist | 10 hours ago
The only problem is energy and even parts of real estate are also facing their own bubbles. Energy has been up due to expected AI demand - but if that bubble pops, then . . .
Dfiggsmeister | 11 hours ago
For the short term, yes, long term no. Gold will drop as soon as the recession hits, losing a good portion of its value. At least traditionally it has. Gold will get a tick up in value until the stock market has a crash, at least that’s what happened in 2008. By 2010, gold dropped significantly in value.
windchaser__ | 11 hours ago
Tbf, we didn’t see high inflation in 2008-2010, so ofc gold didn’t perform well as an inflation hedge.
However, a lot of people expected high inflation after QE, which is why gold and silver soared. When the inflation failed to materialize, they fell.
Prize-Afternoon-9203 | 11 hours ago
What is a safe investment in the short term do you think?
Pace_Salsa_Comment | 11 hours ago
Whiskey and ammunition
Riff_Ralph | 10 hours ago
Well, at least King Charles managed to convince Trump to lift the tariffs on Scotch whisky imports. A small ray of sunshine.
Facebook_Lawyer_Gym | 10 hours ago
SGOV/VBIL is essentially risk free. ETF's that don't have mag 7 (SCHD, etc) might fair slightly better in a downturn.
Prize-Afternoon-9203 | 9 hours ago
I have SGOV already. Will probably increasing my port % to 30-40%
Dfiggsmeister | 9 hours ago
Nothing for now. There’s a lot of risk out there to be focusing too much on the short term. What you should be focusing on is long term investment, such as healthcare and renewable energy. Playing the short run game right now will leave you vulnerable to the changes of the stock market. The stock market can remain irrational longer than you can be insolvent.
a_library_socialist | 10 hours ago
Non-AI stocks - they'll go up, then down.
SGC-UNIT-555 | 6 hours ago
Tinned beans
L4gsp1k3 | 10 hours ago
Gold as an inflation does work in an segmented non global world economy.
Current global economy has a drawback which is, when one is down, almost everyone follows.
a_library_socialist | 10 hours ago
Gold dropped from record highs, though, as lots of people didn't realize that the US was going to be able to outsource inflation for the 10s
Gamer_Grease | 9 hours ago
Gold moves wildly with a lot of different variables. So yes and also not necessarily.
johnniewelker | 11 hours ago
Might finally force the government to cut costs. At some point you have to admit you don’t have the money for the expenses you want
CrackingToastGromet | 11 hours ago
I volunteer the defense department and bloated ICE budget to take the first round of deep cuts.
Gamer_Grease | 9 hours ago
US discretionary spending is a trivial amount of money. We spend the great bulk of our money on entitlements like SS and Medicare and interest payments.
What we need to do is hike taxes substantially. But then we need to do that in a way that is very targeted, so as not to harm the real economy of goods and services.
Tammer_Stern | 11 hours ago
“War” department is mentally easier to cut.
Ketaskooter | 10 hours ago
The defense spending needs to be cut but most of the cost cuts will come once the people are willing to destroy the medical cartel that is milking the federal government.
johnniewelker | 11 hours ago
That’s what $1Trillion to zero down any defense for the country? Our deficit is $2T and will be 3T with rising raises. You need another $1T at minimum- what else would you cut?
Gamer_Grease | 9 hours ago
Good point. Taxes need to be raised substantially.
fiveswords | 10 hours ago
Defense for...2 years?
ChickerWings | 11 hours ago
There was thjs guy who wrote a whitepaper about all of this in 2009, satoshi something or other?
ktaktb | 12 hours ago
Lol
Problem is our government is not trustworthy to maintain a rules based global order, rule of law within its own borders, and the distrust of the american people globally wont go away after trump, his reelection was an indictment on the competence, intelligence, and reliability of the american worker.
That is why we are fucked.
If we were still in the era of american seriousness, we would be fine. We could navigate this.
jarena009 | 11 hours ago
💯 that is the behavior and "policies" underpinning it all. We're basically unreliable as a global partner now and more so resemble the neighborhood or school bully.
The big problem Trump is just a symptom, combined with feckless and mediocre opposition (Democrats).... Democrats may retake office the next 4-6 years, but inevitably they'll not only fail to roll back much of whats happening but inevitably they'll be their mediocre selves, get voted out by 2030-2032, and we'll be right back to the same Republicans we have now if not worse.
Bio_Menace | 21 minutes ago
It’s hard to imagine worse, otherwise spot on lol
jarena009 | 19 minutes ago
I felt this way in 2003-2008, but here we are.
coalescence2071 | 11 hours ago
We are at $3T deficits. Used to be 2 when we paid $400 billion on interest expenditures. Now we pay $1.2T for interest expenditures. So the Government has to borrow the extra plus the new war cost. Also to note. We are at $3T and not even in a recession. Any major issue we run into will cause deficit spending to soar.
morbie5 | 10 hours ago
> We are at $3T deficits
It is $2T
coalescence2071 | an hour ago
the actual increase in the gross national debt is out pacing the number you have, it is actually rising by an estimated $2.7 trillion for 2026. Will reach $3 trillion next year or higher. Look at how much Debt goes up in a year, not the official government deficit number year-over-year
Packtex60 | 10 hours ago
The average yield on the 10 yr since 1970 is about 6.4%. We are still below that. People have a distorted view of inflation and interest rates because of the 25 years of artificially low interest rates since the dot com bubble.
morbie5 | 10 hours ago
> The average yield on the 10 yr since 1970 is about 6.4%.
The debt to GDP ratio was a lot lower back then
Packtex60 | 8 hours ago
So you think they should be higher but you stated that 4.7-5.2% was the new normal like it was a big change from historical levels. I’ve been waiting for rates to normalize for 25 years. The post COVID bump was the beginning of the return to normal.
The housing market has to correct from the run up created by 2-3% mortgages. My neighborhood is down 6-7% over the past year. Pricing is still absurd.
morbie5 | 4 hours ago
> but you stated that 4.7-5.2% was the new normal like it was a big change from historical levels
Where did I state that?
Gamer_Grease | 9 hours ago
6.5% is a very conceivable number considering current global conditions.
Packtex60 | 8 hours ago
I certainly wouldn’t rule it out. The government didn’t care about the expansion of spending to 24% of GDP when they were financing the debt at 0.5%. That is coming home to roost and both parties have gone full on populist. Not a good combination.
mista_r0boto | 8 hours ago
That may be true but the demand for capital from the AI craze is causing rates to rocket. Once the AI investments moderate there will be plenty of capital again. The capex rate is unsustainable. Everyone knows this but it’s a big game of chicken. It’s worse because these aren’t assets like infrastructure with a 50-100 year life. Instead they have a 5-6 year life at best (other than the physical construction of the data center). That is why it will eventually crumble. I don’t know if that’s 1 year, 2 years or 4 years away. When it does capex dries up, economy contracts (since AI capex was propping everything up), and long rates fall because demand is much less.
Packtex60 | 4 hours ago
So what percentage of the CAPEX is chips and computer parts vs power? I really don’t have a feel for that.
mista_r0boto | 4 hours ago
According to AI 60-70% goes to compute.
flerchin | 12 hours ago
2T is exactly 5% of 40T. I wonder if there's a rule of thumb there.
Adventurous_Bath3999 | 9 hours ago
The rule of thumb is that if your tax collection is lower than the interest you pay on your debt (forget about returning any portion of the capital amount), you are in serious trouble. You are digging a deeper and deeper hole, endlessly. There is no way out, only way into deeper mess.
Gamer_Grease | 9 hours ago
The problem with scenario is that the economy is $1T smaller if you don’t manage it correctly. That’s why this is such an intractable issue. Cut spending by $1T and induce a recession, which will last until shortly after everyone in government is kicked to the curb.
Now, find $1T in taxes from exclusively wealthy people, and you might be able to pull it off. Most of their money is invested because they are mechanically incapable of spending it all. But they’re politically influential as well.
jphoc | 12 hours ago
This just means the government prints more money and that it just goes into peoples 401ks?
Adventurous_Bath3999 | 9 hours ago
What does printing money really mean? In simple terms, it means borrowing money from some source, whether people, some institutions, or sovereign governments. If they refuse to part with their ‘real money’, the printed money is just a supposed promissory note… nothing else! Whether it gets honored or not becomes the real issue!
jphoc | 9 hours ago
So the way we print money is to create a debt off set. While the U.S. government owes something for every dollar printed, its true effect is to prevent money printing from becoming inflationary.
If a debt obligation is made for every dollar this means someone is removing the ability to spend by purchasing securities.
So in essence for every dollar printed, past the deficit is a dollar that ends up being in a savings account.
Adventurous_Bath3999 | 8 hours ago
But the borrowed money, by the government, is spent by the government… in a wise, or not so wise manner, so how does it exactly help? Unless the spending is curtailed or the taxes hiked, where it really needs to be hiked, this approach does not help.
jphoc | 8 hours ago
It’s not an approach. It’s just a description of what actually happens. How it’s spent is a side discussion.
AnUnmetPlayer | 5 hours ago
> 4.7 to 5.2% are likely the "new normal" on the 10 year treasury yields, regardless of the fed
That's absolutely not true. Everything is a function of Fed policy. When there is inevitably another recession and rates are cut and treasury yields plummet alongside that, then all these people panicking about debt, deficits, and yields getting out of control will get very quiet.
The market is pricing the expected trajectory of the policy rate, it's not responding to the size of the debt or deficit. Yields do not correlate with debt levels.
jarena009 | 5 hours ago
Sure is. In forming its long-run projections of the interest rate on 10-year Treasury notes, the Congressional Budget Office estimates that a 1 percentage-point increase in the projected ratio of debt to gross domestic product raises average long-run interest rates by 2 basis points (bps).
So it's a lagged effect and positive relationship over time.
https://www.cbo.gov/publication/60314
Plus there's supply and demand of treasuries. Having to issue an increased supply of treasuries without commensurate demand pushes yields to further.
https://www.federalreserve.gov/econres/ifdp/estimating-yield-impacts-of-treasury-demand-and-supply-changes.htm
AnUnmetPlayer | 4 hours ago
That's a bunch of horseshit. From the CBO paper:
"The agency’s expectation that average long-run interest rates are, in part, determined by the debt to-GDP ratio is based on the implications of a theoretical model. In the standard neoclassical growth model based on an aggregate production function for the economy, government debt “crowds out” productive physical capital, which results in higher interest rates in the long run. In that model, an increase in government debt (roughly speaking, a budget deficit) is associated with an increase in interest rates."
Financial crowding out isn't real. Government spending increases the money supply and bond issuance to cover the deficit simply neutralizes that change to the money supply. However it's an asset swap, which leaves the additional wealth in the non-government sector higher. Public deficits make the private sector richer, after all, where do you think that money is going? Their model doesn't understand actual institutional operations and sectoral balances.
Additionally, investment isn't a function of other people's savings. Loans create deposits. Banks don't lend out other people's money, they simply create the money out of thin air. Reducing savings doesn't reduce the capacity of the financial sector to lend, and therefore doesn't push up interest rates. This make believe market where government deficits force the private sector to compete for fewer and fewer funds available for investment doesn't exist in the real world. It's a fiction in shitty economics textbooks.
You can torture the numbers and use shit models to argue that the 60+ year negative correlation I showed you is actually positive causation if you want to, but that's just ideological bias and refusing to give up on a model that doesn't reflect reality.
On the point of supply and demand for treasuries, well again government spending increases the money supply. The demand comes from the deficits. It's self funding, especially when the Fed is targeting a rate because they will always add liquidity when needed to prevent the policy rate from rising above target. Ultimately, wherever those USD savings end up is where the demand for treasuries will come from because there is no aggregate alternative.
There will be no debt spiral. When the Fed inevitably cuts in the future due to the next recession then yields will plummet despite the fact that the recession will cause a surge in the deficit and debt levels.
jarena009 | 4 hours ago
Lol correlation isn't causation, and lagged effects are an actual thing 🤷♂️.
Incidentally, unrelated, if I take a medicine now....but it doesn't impact my headache until 40 minutes later, by your logic the medicine doesn't reduce my headache 🤷♂️
AnUnmetPlayer | 4 hours ago
I can use lags to 'prove' that sunsets cause the sky to get brighter, so who cares? You need a mechanism. How does increasing the non-government savings stock actually cause interest rates to rise? Crowding out isn't it. That's not how banks work.
Also it's more than a half century long correlation. How long is your damn lag? It's nonsense. How long do increasing debt levels have to not result in some kind of crisis for you to start questioning the model?
>by your logic the medicine doesn't reduce my headache
That's not my logic at all. You can demonstrate a mechanism for how medicine causes an effect.
jarena009 | 3 hours ago
I refer you back the empirical research on the topic, which you're ignoring. If you're still confused, maybe contact the CBO who put it together rather than looking at two lines on a chart, and concluding no relationship 🤷♂️
AnUnmetPlayer | 3 hours ago
I'm not ignoring it. I literally quoted some of it for you to explain why their theory and model is bullshit.
Here's more:
"In our preferred specification, we control for changes in Federal Reserve and foreign holdings of U.S. Treasury securities, as well as changes in several other macroeconomic variables."
They're trying to get rid of any effect Fed holdings have on yields. If they don't do that then they actually measure that rising debt levels correlate with falling yields. Then you can look at their results table an see that once controlling for Fed holdings that effects dwarfs the size of the debt effect.
The biggest reason I responded was your "regardless of the Fed" statement. Your own source disagrees with that. Fed policy dominates. Always has, always will. Even if you want to reject any heterodox criticisms on the theory, it's still found by the CBO that Fed actions dominate any debt level impacts. You can't apply their ceteris paribus finding to our non-ceteris paribus world where the Fed does things.
morbie5 | 10 hours ago
> (inclusive of tax increases especially on the wealthy, reining in healthcare costs plus these wars and our military budget in general)
It'll take more than that. Social Security retirement age will need to go up by about 2 years and we would also need federal civil service reform.
It can be done tho
jarena009 | 10 hours ago
Social Security adds nothing (more accurately a negligible amount) to the deficit, plus cutting people's retirement at this juncture, with record wealth and record profits concentrated at the top would be a huge slap in the face...let them eat cake moment.
morbie5 | 9 hours ago
> Social Security adds nothing (more accurately a negligible amount) to the deficit
100% wrong, Social Security and Medicare are the biggest drivers of projected deficits in the medium and long term. That is an indisputable and easily verifiable fact.
jarena009 | 9 hours ago
Social Security is entirely self funded and by law cannot pay out more than it takes in/has in the trust fund. The only amount it adds to the national debt is the miniscule amount it costs to sell, roll over, or convert treasury bonds when it has to in the trust fund, and the administration of it.
Medicare though is not fully funded (pays out more than it takes in) and is a big deficit driver.
morbie5 | 4 hours ago
My dude, the trust fund runs out in about 2032. The projections I mentioned make the assumption that they will change the law and keep benefits as they are without actually changing the revenue source or benefit.
So no you are 100% wrong
jarena009 | 4 hours ago
Lol you're 100% wrong, and I refer you back to the existing actual law over the last 90 or so years, not your hypothetical, imaginary law lol
morbie5 | 3 hours ago
So you are cool with a potential across the board 26% social security cut when the trust fund runs out?
> existing actual law over the last 90 or so years
You do know they have changed that law during that time frame right? You really aren't so uneducated on this topic that you think the benefit formula hasn't been changed since FDR, correct?
> not your hypothetical, imaginary law lol
I don't make the projections my dude unit
jarena009 | 3 hours ago
Lol what? I said no such thing. Nice straw man.
You do know for the entire 90 years of it's existence through today, social security statutorily cannot pay out more than it takes in or has in the trust fund?
You don't make the projections? The only projection we have is the actual law, which will drive automatic cuts by 2032 (because statutorily it cannot pay out more than it takes in). I'm not interested in your hypothetical imaginary laws. This is the actual law 🤷♂️🤦♂️
morbie5 | 3 hours ago
> Nice straw man.
I don't think you understand what strawmaning means
> The only projection we have is the actual law
Wrong, plenty of good government type organizations do plenty of protections on this topic
> I'm not interested in your hypothetical imaginary laws. This is the actual law
So then 26% cut it is cuz that is the actual law🤷♂️🤦♂️
Gamer_Grease | 9 hours ago
If you’re going to trot out your hobby horse into this discussion you could at least give us enough details to talk about it. You mean to maintain current benefits once the trust funds run out, we’ll have to back the program up with discretionary spending, don’t you?
morbie5 | 4 hours ago
Imagine calling the biggest or second biggest driver of our medium and long term debt a 'hobby horse' lmao
> You mean to maintain current benefits once the trust funds run out, we’ll have to back the program up with discretionary spending, don’t you?
Every projection on this topic assumes that they are not going to change the law and not cut benefits when the trust fund runs out. You should know this
[OP] One-Emu-1103 | 12 hours ago
From the article: Soaring Treasury yields aren’t just bad for the government and its $40 trillion debt. They also threaten to raise borrowing costs, hitting everyone from homeowners to credit card users, while providing limited help to savers and potential benefits to banks.
Government debt costs leaped higher Wednesday, the product of multiple factors including a fresh report showing higher inflation pressures, surging expectations for a Federal Reserve rate hike in October, and an auction for 5-year notes showing that Treasury demand was weak. Competition from hyperscaler debt issuance also is seen as an aggravating factor.
Southport84 | 11 hours ago
Normally investments in equities would transition over to bonds but no one trusts the government to rein in spending so probably just more inflation until a crash.
bonerland11 | 6 hours ago
Corporate bonds took a giant shit as well. Serious question, why not buy VWESX?
Southport84 | 3 hours ago
Yeah sorry meant government bonds and treasuries.
1098duc_w_the_termi | 12 hours ago
The House just needs to buy some more treasuries. No big deal. The house always wins, not worried.
On a more serious note, yields are about to fuck everyone in the coming months. Risk free 5% is going to bring equity valuations back to historical levels.
I_Fuck_Whales | 11 hours ago
What do you mean by bring equity valuations back to historical levels?
windchaser__ | 11 hours ago
They mean that stocks will fall
I_Fuck_Whales | 10 hours ago
Stocks will fall to historical levels?
MrD3a7h | 9 hours ago
All levels are historical
windchaser__ | 9 hours ago
Is there an echo in here?
I_Fuck_Whales | 8 hours ago
Tell me what the hell that means. Stocks will fall to historical levels? Lmao.
What level? Yesterday? 1 year ago? 80 years ago?
J_NonServiam | 8 hours ago
They are probably referring to historically average PE ratios, just my guess.
I_Fuck_Whales | 7 hours ago
And we all know that using the past to predict future performance is dead nuts accurate every time! The world is a bit different today than it was during the times of “historically average PE ratios”. The technological breakthroughs in the past 5 years are incredible, let alone the past 3 decades.
1098duc_w_the_termi | 5 hours ago
Reversion to the mean. But overall borrowing costs become more expensive, money moves slower, growth slows. Equities don’t necessarily need to go down, but returns are muted for some time. Instead of 7-10% average returns we may see 2-5% for example. Stop drinking the kool aid thinking that we’re in a new paradigm. That’s what everybody thought every time before they were humbled by reality
I_Fuck_Whales | 4 hours ago
Any day now the crash will come… doomers and bears have been calling for it for a decade now.
J_NonServiam | 7 hours ago
I'm not here to argue with you, was just giving context about what they were probably talking about.
dust4ngel | 4 hours ago
> we all know that using the past to predict future performance is dead nuts accurate every time
it's fun to reflexively recite bumperstickers, but people invest in stocks because of the equity risk premium, that is the excess return that investing in the stock market provides over a risk-free rate. as treasury rates (the risk-free rate) increase, folks are less willing to buy equities because the expected equity risk premium is lower, and due to supply and demand, a lower demand means prices go down.
so it's less people trying in vain to tell the future, and more understanding cause and effect.
__Geg__ | 7 hours ago
What breakthroughs? Everyone is talking about big game with AI, but the productivity gains have been marginal if not questionable.
Gamer_Grease | 9 hours ago
I think they mean back to historical levels relative to the real economy of goods and services. Never before has the price of an asset had so little relationship to what the asset can produce.
MalikTheHalfBee | 8 hours ago
P/E levels are not at a historic high
Gamer_Grease | 8 hours ago
No, but a) they’re on a perpetual upward march, and b) they’re comparable to times that precipitated economic crises, after which we all acknowledged that they were way too high. What’s concerning is that each year brings a higher level and we’re all just kind of ok with that.
MalikTheHalfBee | 7 hours ago
It’s a higher level because the associated profits continue to climb. It’s not irrational. Compare current ratios to something like the .com bubble show it’s not at all similiar.
Mostly_Enthusiastic | 4 hours ago
CAPE ratio is though
Triarii789 | 55 minutes ago
Cape is better tool for long term projection since it uses 10 years earnings.
Its also less compelling right now since it includes pandemic earnings which isn't a 10 year recurring event worth factoring in
I_Fuck_Whales | 8 hours ago
The world is a technological marvel compared to what it was in 1970. Spending, innovation, population, technology have all massively increased compared to what we saw even two decades ago.
It’s a pointless sentence that means nothing. Historical levels could imply yesterday.
No one has any idea what is going to happen, but I think we know for damn sure that the innovation is not going to stop.
Gamer_Grease | 7 hours ago
The problem is that the innovation is apparently not productive. It’s not yielding more goods and services for less capital. It’s doing the opposite. It takes more investment to do most things now.
082426grateful | 12 hours ago
We might think you’re right. After all, that’s what we have learned, and observed, over the years.
Nah. I don’t think anything that we might see as a “fundamental” or even a simple truth, operates the same way anymore. We flooded the world with US dollars. Obligations. Now, we have to inflate everything to keep the dance doing.
SuspiciousStory122 | 9 hours ago
Unfortunately, we may need true demand destruction to get things back to equilibrium. It has been almost 20 years since the last recession that pressed the reset button. Yeah I know the technical definition of a recession.
Although, even with a recession and the job losses that come with it, AI may make the traditional path to recovery unavailable. Time will tell
Resident_Farmer1779 | 3 hours ago
I mean, could also raise taxes and cut military spending, but since our government is beyond incompetent looks like recession it is.
coloradoRay | 11 hours ago
this is all the whole point!
inflation is rising! what should we do? let's slow the economy down somehow... can we increase borrowing costs? ...but that will slow down the economy!?
btw - one way out of debt is to inflate it away. if/when the economy slows and if Warsh can soft land like the JPow, the debt will actually be in a better place adjusted for inflation.
SaltyyDoggg | 11 hours ago
If inflation is high and will stay high as a strategy to inflate away debt, then bond buyers want a better rate otherwise the bonds themselves are negative value — that’s what we’re seeing here
coloradoRay | 10 hours ago
100% for the near term. if we're selling short term debt at high rates, though, once those play out... inflation has done its work.
3_Thumbs_Up | 7 hours ago
Also opportunity cost. If the perceived risk of US bonds go up, alternatives are deemed more attractive.
SaltyyDoggg | 43 minutes ago
All alternatives have USA RFR built in tho
BunnySprinkles69 | 10 hours ago
But... but.... inflation is rising not because of a heated economy but bc of gas and tariffs,.etc
crocus7 | an hour ago
Are you saying gas and tariffs aren’t causing inflation?
I’ll give you an anecdotal data point. I am the treasurer for a manufacturer. Our prices are up 11% from a year ago and 15% from two years ago. But with that, our margins are slightly more than half of what they were two years ago.
Tariffs and fuel surcharges on our freight are killing us and we can’t raise prices fast enough to keep up.
BunnySprinkles69 | an hour ago
Sorry I mean yes tariffs and gas are causing inflation...not a heated economy. Raising rates cools a heated economy, it doesnt decrease tariffs or gas
crocus7 | an hour ago
Ah, my mistake. I thought you were being sarcastic.
Bio_Menace | 16 minutes ago
Why the hesitation to raise prices? Decreased margins doesn’t sound great. Are customers in your industry that sensitive to price hikes?
eurekaanchor | 32 minutes ago
Don't worry, the other team will get here soon to clean everything up ... again
It's a song as old as time
Don't worry, the other team will get here soon to clean everything up ... again
It's a song as old as time