Bond rout starting to sound market alarm bells
reuters.com
reuters.com
(Interestingly, because of the very long mortgage duration, US homeowners are very insulated from interest rate shocks. But it will show up in consumer credit, car payments etc.)
Low rates are also expansionary for the economy in general.
The key is in the idea of governance and who's governing. Any and all governance which has happened by those the people in power don't like (basically the other team) is what is labelled bad.
The only question is, ultimately, is their governance sane and sensible? From the perspective of the greatest good for the greatest number of people.
And no. No it isn't.
The argument never was nor will be that [this thing] is bad when [the wrong people] do it; the argument is that [this thing] is bad. There isn't an expectation that a right wing government will somehow transcend the realities of government. The ideal social contract with the politicians - from the liberal part of the right wing - is that they do whatever it is that motivates them to take on the job and that is tolerated to some extent - but in exchange they shrink the size and scope of the government bureaucracy.
Obviously the ideal is a distant dream at this point, but the principle lingers. It is the only realistic option.
In my experience it’s exactly this. The principle vanishes quickly, because none of those “small government” people were really so. The primary small government faction in the US is conservatives. They’ve been, for a few decades now, VERY large government. Bordering on fascist.
They just lie, because it’s easy and none of their constituents care. You have better odds of hell freezing over than conservative constituencies holding their representatives accountable. When you’re in that situation, you’d be stupid not to lie.
To expand on this, shrinking the bureaucracy isn’t shrinking the government. Because, if you had read the agenda in project 2025, you’d know that the intention is to then concentrate those powers in the president.
That’s not smaller gov, that’s bigger. You’re creating a monarch.
To this day, millions deny the impact of project 2025. Like it’s some made up liberal strawman.
Guys, half the writers are in his cabinet. He’s following it to a tee. I don’t think we could’ve asked for a more perfect establishment Republican if we tried.
They’re not some little guys dismantling the system. They ARE the system.
Or disappearances, in some cases
You can only run a trade deficit if the country you are trading with is a net investor. Part of that investment is going to be in the form of bonds. If you force a cut in the trade deficit, you cut the demand for bonds, which lowers their price and raises their interest rate.
Also see "I’d like to apologize to bricks for calling Peter Retarrdo dumber than a sack of bricks. That was so unfair to bricks." - E Musk
> Ten-year Treasury yields have risen 39 basis points to 4.38% this week alone as prices tumble.
Ok, but the recent high point for 10-year yields was 4.79% on January 13. Why is this 4.38% alarming? And why is a brief intraday spike above 4.5% (in a foreign market) newsworthy? This reads like someone was looking for bad news to report.
Most commentary, for and against, has been exclusively on the economics, and from that perspective it makes little to no sense. But I've seen suggestions in a couple of places that there are relevant "national security" motivations, or to put it bluntly, a greater freedom to wage war - or at least to put oneself in a position where the threat of it would be more realistic. Decoupling the US economy from the rest of the world, but especially from China, makes sense if the strategic cost-benefit analysis sees a significant potential for war with that country. It's a commonplace of international relations, and intuitively obvious, that the more integrated are the economies of two countries, the less likely they are to start wars with each other (no doubt there are exceptions, but as a rule...). That doesn't have to mean anything imminent or indicate concrete plans on the part of US, but it's plausibly a factor in the overall calculations.
In fact, the economic interdependence of the US and China had seemed to be a big reason to remain hopeful that there wouldn't be a war between them, among other reasons of course. Reducing this interdependence seems to destabilize this situation. The unfortunate fact is that I can't see the US military establishment just peacefully allowing China to become more militarily powerful than itself. I'd be happy to hear other perspectives on this, I'm far from an expert and haven't seen this angle discussed much.
And a similar concern applies if the US lacks the manufacturing capability to wage wars with its own resources. Something we already saw that when we ran out of ammo because of the war in Ukraine.
This is indeed a common way of thinking and intuitively obvious but I think it has also been proven wrong by the war in Ukraine. We sanctioned Russia as hard as we could and it 3 years later they're still there.
Withholding some nebulous service industry from a country that's mostly reliant on primary and/or manufacturing is probably not a strong enough deterrent to a sufficiently motivated political force. It might be that it just puts service industry reliant countries at a disadvantage.
Drone warfare is another piece of the puzzle, both how they are employed in the Ukrainian war as well as in the red sea blockade. The west is also at a disadvantage here compared to, say, China. When was the last time you saw a drone-dragon lightshow outside of Shenzhen?
We thought we had world peace through commerce but it was probably an illusion. I think everyone is rethinking the last 150 years of history right now.
In the case of Russia, while there were subtantial sanctions, it was still trading natural gas to the EU, and I believe they still are. China and India also helped Russia (and themselves) tremendously by buying huge quantities of discounted hydrocarbons, and I think it's plausible that there were indications before the war that such deals would be available.
As an aside about drones, a striking number of new companies established over the last handful of years in several European countries are military drone specialists. By now it's quite obvious why. In the future I guess there'll be a new slew of companies specializing in counter-drone tech.
Is there anything pointing to this supposed thorough analysis really being done behind the doors? Genuinely asking, because for now in my opinion from POTUS communications I don’t make me think there is and this comment is another instance of trying to make something irrational rational.
If the tariffs remain in place then one result that is guaranteed is that they will reduce trade between the US and the rest of the world, and reduce the most with the most tariffed countries. Whether that's rational or irrational I guess is the question I'm asking, and I'm looking for reasoned opinions either way
This bond lever - the threat to abruptly shut off US debt supply - is just one of them. But China can also simply manage far more easily without US imports than the US can manage without Chinese imports. And for any given pain threshold, China can bear that far longer than the US will, because of the authoritarian control the government can exercise.
And then from a geopolitical point of view, even if China loses they win - because the rest of the world fully views this as an act of betrayal and lunacy by the US and the more negative the outcome the better China looks by comparison as a reliable, rule following partner on the world stage.
Basically what I see here is that we have a game of poker where China holds nearly all the cards and Trump is just pushing more and more chips onto the table.
China has had net positive tariffs against the USA for decades though. Obama tried to use the WTO to label them as a currency manipulator. Trump tried some tariffs the first time around but they just raised theirs higher to keep the imbalance.
Not saying the current strategy is a good one. But America has lost the entire supply chain, racked up huge debts, and a dollar that encourages more and more consumption. Doesn't something have to happen eventually, before the problem gets worse?
The path out of it is painful - starting with reducing US debt, and using a full complement of measures to diversify sources of goods and services (including bringing them domestically where it makes sense). It's something you do over a decade, in partnership with your allies, not a week on your own.
It's misinformation to say the US is in a weak position. It's not. It's just gone on to do other things. When we talk about these trade deficits do we include streaming services, television shows, films, games and whatever else?
> (including bringing them domestically where it makes sense)
It doesn't, that's the point. Would you rather have factories with workers below the minimum wage or industries like the NBA?
China made that choice in the late 1970s and early 1980s and has progressed ever since and is now powerful enough to be able to stand up to the United States.
You have a warped view of what manufacturing is and how it can be built upon that is closer to children's cartoons than reality.
So you're saying that China has grew out of manufacturing because a lot of it is moving out of China. In the same way the US has also moved out of manufacturing ages ago.
> is now powerful enough to be able to stand up to the United States
How do you conclude that the ONLY thing China did is manufacturing?
> You have a warped view of what manufacturing is
No, it goes to show you know very little about the world. It's not all just manufacturing. That's definitely not all that China does. If it was you wouldn't have to ban Huawei and Tiktok.
Do you know how many games come from China now? A lot of US and EU game studios are at least partly owned by Chinese companies e.g. Tencent.
China's Manufacturing Production [1] and Industrial Production has increased year-on-year for the past 10 years, excluding abnormal events such as Covid, so where are you getting your data? If you meant to say that they are transitioning to a higher level of manufacturing, instead of the sweatshops they were associated with in the 90s, this is true. But it was the low-level manufacturing that allowed them to build up both the capital and the skill necessary to advance further and further.
Hell, you've got a naval empire (the United States) that is currently unable to come even close to the Chinese ship-building capabilities - their output dwarfs the US by 232x [2]. It's not something that happened overnight and it's certainly not something that was strategically planned out 30 years ago - it is a slow process that started with low-level outsourcing and allowed China to grow into the behemoth it is today.
Sooner or later the US was going to have to deal with this fact and it seems like that time has come. Whether or not there's a plan, whether or not it will even work - I have no clue, you have no clue and neither does anyone on this forum.
Also, to counter another point you made - "When we talk about these trade deficits do we include streaming services, television shows, films, games and whatever else?" - you can't fight a war with an economy based on streaming services, TV shows and games.
[1] https://tradingeconomics.com/china/manufacturing-production
[2] https://www.americanmanufacturing.org/blog/chinas-shipbuildi...
Is this how we came up with the "magical" tariffs formula? Look at some data, interpret it in a random way and off we go?
You don't say that [1] shows the average growth was 6.56% in China vs 9.28% in Vietnam [3] vs 10.33% in Bangladesh. So then relatively, it's not exactly "growing" is it?
If China was still explicitly growing manufacturing the numbers would be much higher. Is it actually focused on manufacturing or are there other triggers? E.g. US banned Huawei, so they had to go back home and manufacture. E.g. US is banning AI and other exports so China has to make their own. I'd say US is increasing China's manufacturing rather than China!
[3] https://tradingeconomics.com/vietnam/manufacturing-productio...
[4] https://tradingeconomics.com/bangladesh/manufacturing-produc...
[5] https://worldpopulationreview.com/country-rankings/manufactu...
> Hell, you've got a naval empire (the United States) that is currently unable to come even close to the Chinese ship-building capabilities > Sooner or later the US was going to have to deal with this fact
Why? Does the UK need to deal with this "fact" too then? The US has a naval empire that the UK is no where close to in capabilities. Based on your logic, the EU would have to band together to revive the British empire and deal with the US?
I wouldn't want this. The US wouldn't want this either. So what fact is the issue?
Why are you suddenly, when faced with data that doesn't fit your narrative, using that word when it was nowhere to be found in the original discussion?
>Why? Does the UK need to deal with this "fact" too then?
If the interests of UK and China ever seriously clashed and led to a conflict, yes, they would. I can't believe that military capabilities and force projection in the modern world need to be explained on a website meant for professionals.
The world is always relative. Otherwise if you want it in absolute terms, the US is the world's 2nd largest global manufacturer. What manufacturing do you need to bring back then?
> If the interests of UK and China ever seriously clashed and led to a conflict, yes, they would
Who clashed with who? The US has no real conflict with China. Most US companies and citizens are happily using China made products before the tariffs. Lots of US companies sell to China. Where's the issue?
Oh you mean what's been said by certain political parties and the media for their own gains?
> I can't believe that military capabilities and force projection in the modern world need to be explained on a website meant for professionals.
Exactly right. As if the military is ONLY about the navy. Then don't slice and dice it as you please. Who says the US is weak? I didn't.
Under consumerist capitalism, more consumption is generally considered to be a good thing. See all the people complaining about the price of eggs under Biden. I wonder how they're doing.
The tariffs mean that Americans will be able to afford less stuff. That's the stated objective: buy more expensive American goods rather than cheaper imports. It remains to be seen how a country which got started around a riot against import taxes is going to handle this.
The linked article is LITERALLY pointing out that the "something" you want to "happen" is in fact making exactly the problem you're talking about WORSE.
I don't get it, I just don't get it. We're all getting poorer, very rapidly, on every imaginable axis: higher domestic prices, lower international demand, higher interest rates (the linked article), lower asset valuation in US dollars, loser US dollar value globally. Literally everything is worse. And you're still digging for some kind of coin that might have some shine on the other side that you missed.
This isn't 1v1 though. Maybe there was a time when US vs the rest would work, but now?
The problem is this isn't about import / exports of physical goods.
Once tariffs and bans happen on digital goods, services, etc the US is toast. Has Trump forgotten about them? China is already onto things like US films.
Game studios, Disney, Netflix, Hollywood, etc are all on the firing line.
Even sports like NBA, major league, etc would all crash. A large part of their income is from advertisements and broadcasting deals overseas.
Even if local alternatives may be lacking now, we can subsidize them for some time so they grow on scale, and thats more than enough for us, we don't need to be cheapest on the market. If we are reliable rest of the world will come to us too. Don't forget US vs EU are 2 mammoth +-comparable economies, and EU has more 100 million additional citizens.
4D chess move would be banning for example ASML machines for any US-related business, let's see how orange man handles his emotional swings.
This is all just a tremendously stupid set of moves. The problem is, people in current US power circles are visibly not smart, you can see it daily. So they inevitably fuck up things, and with massive moves massive fuckery flies to all of us. There is almost 0 chance things will end up as they are publicly spoken of - there are 2 options, dumb as fuck as I wrote or actually some sort of nefarious plan for trump's clan and cronies to get massively richer and suck a lot of money from markets and everybody and their pensions.
Actually I hope its the latter, smart evil can be somewhat reasoned with, pure dumb arrogance not so much you just have to keep licking that ar*ehole and pray for the best.
So, while China has better cards than the US, the EU has no cards at all.
Only because the US requested it i.e. banned China.
And who's US-related again? Oh you mean those that have to pay >30% tariffs? Are you sure they're related?
> So, while China has better cards than the US, the EU has no cards at all.
No? EU can just sell ASML to China instead.
I'm surprised that with the current shenanigans around DOGE and security that Europe hasn't banned them as I don't see how they can be considered GDPR compliant if the data can be plundered whenever Trump and his menagerie decide that they want to look for dissenting opinions.
As long as he gets to play as much golf and watch as much TV as he likes, he doesn't seem to care much. I don't think anyone bought Trump, I think he's just signing whatever is put in front of him and taking credit for it so he can go back to playing golf.
I'm not sure who has cards is the problem so much as launching an unnecessary trade battle in the first place.
If you really wanted to onshore industrial production you could have announced sane policy in advance to give people time to build factories in the US etc. without a trade war needed.
Usually one could estimate the absolute minimum of future earnings.
But the current administration seems to be set on redirecting those earnings away from investors towards the government. And I don't see what could limit the extent to which they do so.
Come on, it's definitely not zero for most of the companies, even if tons of small businesses go bankrupt.
> But the current administration seems to be set on redirecting those earnings away from investors towards the government. And I don't see what could limit the extent to which they do so.
The objective of the current administration is to implement fascism. Companies can operate and make profit, as long as it’s allowed by the government. See the blackmailing of law firms and tech companies for examples.
Ironically, Thomas Sowell made that argument back when Obama dared to give Americans healthcare - https://www.creators.com/read/thomas-sowell/06/12/socialist-.... And he also rang similar alarm bells during the Biden administration - https://www.foxnews.com/media/thomas-sowell-systemic-racism-.... But he has offered nothing more than milquetoast commentary about tariffs being bad when it comes to the current administration.
Companies can operate and make profit
Who pays for all this, as always, is common people, getting poorer. More specifically middle class, poor don't buy money-making devices from ie Apple, and rich will either stay rich or get richer if positioned well.
Yeah and much of the revenue comes from abroad too. You could at least try to show a balanced view
the U.S. still counts for around 40 percent of Apple’s net salesWhich is still a huuuuuuuuuuuuge market
But the point is that domestic consumption is not constant. It can decrease, it can substitute more basic goods. Such as potatoes.
1) https://en.wikipedia.org/wiki/Juche
2) https://en.wikipedia.org/wiki/Potato_production_in_North_Kor...
The 2s-10s spread tends to act a bit like brakes for the economy. The 10 year yield is largely down to inflation and the 2 year largely controlled by the federal reserve. They raise the 2 year above the 10 year to slow the economy if you are getting inflation and lower it if the economy looks like slowing too much and going into recession. This looks like people expecting recession.
Who is the the "they" here? The government does not set 2 year or 10 year rates, they are priced by auction for new issues and priced by the market for secondary transactions.
It certainly affects longer-term rates, but only indirectly. In effect, the lending rate for 10 year bonds, say (a common benchmark duration) is set entirely by the market. These are closely related - they operate in the same space - but are in principle independent decision-makers.
As to bond yields vs bond prices, t is easiest to see for new bonds - sold directly by the US govt. Unlike consumer loans, with bonds you know exactly how much you get repaid - periodic coupon and maturity. The variable is the price today paid for the bond. The government hopes to achieve a high price, raising as much cash as it can today (for the same future repayment cash flow), i.e. a low interest rate.
If the buyers of bonds - lenders - show up in small numbers, there is weak demand to buy, and the bond price is low. This translates to a high rate of interest - for a smaller upfront loan, you get more repayment down the line.
The same mechanism works in secondary markets - bond owners trading with each other.
In terms of how this affects the decision-making by the Fed - in principle, not at all. Fed is free to do whatever the like. But in practice, Fed is bound by the same forces as the bond traders, and bond yields are going up suggests the Fed will likewise have to raise rates. Or bond yields go up in anticipation to the Fed having to raise rates, etc.
There may also be some panic selling by speculators or people worried about their bonds - higher market rates makes the prices of bonds fall.
When bond prices fall, interest earned on them rises.
1) Trump is playing a storyline. The Market place of ideas in America has one side which is under a monopoly. It sets its own prices, decides what information enters and exits, decides what the market SHOULD look like. It manages half the voting population.
This is why “Trump does what he says” resonated. Previous lawmakers played the role on TV, but in back room deals, acted as if reality mattered.
Trump does not. He will continue to not do so, and the ideas sold in the market place that supports him, will continue to sell ideas to support it. Even if they don’t make logical sense.
It’s like science fiction, reality doesn’t matter.
Without addressing the information asymmetry, no democracy can function. No decisions can be made.
This is the nicest way I can put it to people, without being blunt. This has been the work of decades, reaching all the way back to watergate.
2) Jobs are being lost to automation faster than they are lost to outsourcing. China is the last country that will raise its standard of living through manufacturing. India has to pivot to services, to have a hope of doing anything. All of this is human capital intensive.
3) Wealth inequality is the problem - and frankly, if you have money to spare you are simply going to buy assets. This will be bought from people who are increasingly affected by cost of living issues, and have to sell their assets. This means taxes
4) If Americans want a snowballs chance in hell, there need to be special elections around the country in 2025, to take control of congress. Republican senators and congressfolk are threatened by the voting base if they break with Trump, which they wont anyway. The checks and balances are broken, see point 1.
You cannot win in a broken market place. You cannot fix a marketplace of ideas with government power, because that breaks the principle of Free speech. If you are a government who IS in power because of market place monopolies, these rules do not apply to you.
Trump is serious about devaluing the dollar. The only reason he may not, is because the viewers/storyline suggest he shouldn’t.
I will regret making this post, because of the comments it will generate. It is general enough for a million holes to be poked in it. Sure. This is an outline, that covers most of the pieces that are on the board.
'The labor market will reallocate to productive jobs' doesn't take into account the experience of having ones income security disappear as an industry is shipped overseas, then having to retrain into a new field.
And the US largely didn't fund that, at least in a meaningful, at scale, don't-piss-people-off way.
Those at the top reaped the benefits of free trade; those at the bottom suffered the pain.
Trump (the character) was voted in on the basis of that anger, something the Democrats never seemed to understand.
It'll be curious what the reaction is to serious economic pain in the midterms.
Trump the character plays the storyline, which is hopefully useful to help people predict what’s happening.
What bugs me is that, the deeper shifts aren’t part of the counter narrative. Automation is eating jobs faster than trade ever did. Lights-out factories exist.
Also - it sucks to get taxed, sure. However it sucks more to not have a working global market. Your wealth is better if you have more people able to buy and make things.
Perhaps, though I don't see how you're going to get them without changing or violating the Constitution. And changing the Constitution would mean acceptance by those you're trying to get rid of.
Bluntly, the only way this could happen is a civil war - a real, shooting civil war, with bullets and dead bodies. I'm not yet at the point of cheering for that, much as I dislike the current status quo.
> Republican senators and congressfolk are threatened by the voting base if they break with Trump, which they wont anyway.
Then I don't see how a special election in 2025 would help. You say we need a special election to get rid of these folks, but you also say that these folks would be threatened by the voting base if they break with Trump - which to me means that they won't be threatened by the voting base if they stick with Trump.
So I don't think your point 4 offers any hope at all.
A special election is a dumb idea.
We should form a "Super West". Instead of a divorce between the US and EU and others, the exact opposite should happen: an unbreakable union with shared values, investments, legislation and protections.
Such a unified block could then intelligently "tax" China for industries we consider to be strategic. You can't do this without a unified West. Right now the US is pushing its (former) western allies towards China.
I think a unified block with intelligent protections can sustain an advanced West and create conditions where the working class and middle class is not facing an endless race to the bottom.
This block could also address a pressing issue of global capitalism, the formation of untouchable monopolies and billionaires. End tax loopholes and yes, I'll say it: cap billionaires. Increase minimum wages and offer more job protection. A unified regulation rather than individual countries undermining common interests.
I'm sure that these classic progressive values are unpopular on this forum but I genuinely believe that these values created the middle class in the first place. And the middle class is being eroded and the working class is close to dead.
We should not mimic the race to the bottom (which leads to a birth rate 25% of replacement), we should recreate the post war West. A ordinary person should be able to start a family, own a home, etc. If we can't do that, nothing matters.
The way to achieve that is cooperation, strict shared values and regulations and a whole lot of technology.
The West's trajectory where life kept getting better stopped in the 90s. We need to bring it back.
The US government is ~37 trillion dollars in debt and rising. They're not going to do anything to cut spending until they hit a crisis so massive that they just can't spend any more. Which is going to have to be a shocker of a crisis given how they've handled the last couple. Raising taxes seems to be off the table too.
While it is true that US treasuries are low risk, they are low risk in the way that lending the broke town drunk money are low risk - you can come up with accurate estimates of how likely you are to get the money back. The real mystery has for some time been why people persist in feeding the US government money voluntarily. The math doesn't seem to be ambiguous, the value lent can't be paid back in real terms. Foreign holders of these things are engaging in charity.
The US can't afford to extract tribute from people. It isn't powerful enough, relatively speaking.
Yes, that's what's happening. They were paying tribute, based on a mutually beneficial status quo. Now they're asking if they should continue to.
But I agree, now they're asking if they should continue, because those assumptions are starting to look invalid.
I think you have this backwards: the US was helping considerably, and then got taken over by pro-Russian conspiracy theorists.
But the bond stuff isn't "tribute" or nationalism; remember, it's being made by private sector investors, not national governments. Fairly straightforward calculation: which way is the exchange rate expected to move? Interest rate? Risk of default?
Up till now the US offered moderate interest rates, favourable direction of exchange rate movement, and imperceptible risk of default. There's still no reason to default other than madness and a desire to strap on the suicide vest and become Argentina.
Are you sure about that? Back in 2022 the US Treaury reckoned that most holdings were foreign governments [0] - they had Foreign Official at ~3.9 trillion and foreign total at ~7.5 trillion. That has been shifting towards the private sector since then but the market has heavy sovereign involvement.
> and imperceptible risk of default.
The US clearly has quite a high risk of default - there isn't a reasonable path to them paying the money back. It takes imagination to even come up with scenarios where they try. In real terms they are going to default, in nominal terms there is still a high chance that they call it a default. There is no guarantee that they'll print money for foreigners; it is already going to be farcical claiming that they're not defaulting as they devalue like mad; it is quite possible they won't bother with the act and just do the honest thing.
[0] https://ticdata.treasury.gov/resource-center/data-chart-cent...
Indefinite rollover is completely fine! Yes there are problems if the total interest payment gets too large, and there's scope for discussion about that, but there's no hard cutoff, it just becomes more and more uncomfortable.
People saying there will be a default: deadline please. Or is this just a general assumption that mortality is inevitable for states? The UK has never defaulted, for example.
Sure the US can afford its debts if it avoids paying fair interest and never returns the principle. The idea that is reasonable from a lender's perspective is fantasy and we live in reality.
> The UK has never defaulted, for example.
The UK has traditionally not been in a state of running up debts; they borrowed money for things like world wars then spent most of their time paying loans down. The US isn't behaving like a creditworthy country because they borrow to consume and they aren't attempting to shrink the debt.
If the US tended to be repaying the money it borrowed then it'd be plausible that they intend to avoid a default.
But it does! All the bonds pay out after X years, and everyone is completely fine with this.
> The UK has traditionally not been in a state of running up debts; they borrowed money for things like world wars then spent most of their time paying loans down. The US isn't behaving like a creditworthy country because they borrow to consume and they aren't attempting to shrink the debt.
You've not looked at the numbers, have you.
I'm happy to argue with you but you're going to have to read the entire sentence. Possibly even the entire paragraph. Otherwise it is a bit pointless even for the fun of it.
> You've not looked at the numbers, have you.
I have, I put a good 5-10 minutes in to it. I suspect you haven't looked at the numbers.
You can find references on places like the BBC [0] but there are also charts that go back to the 1800s and the story is reasonably consistent. Historically most years the UK pays down debt. In fact, the last time it didn't was the 1930s and after that klutzy fumble it didn't get to be an empire any more, so that was a mistake.
[0] https://ichef.bbci.co.uk/ace/standard/800/cpsprodpb/16CB7/pr...
This is such a nonsense conspiracy theory. Anything "non-American" isn't by default pro-Russian, ffs.
Come on people, this nonsense has to die. You can't be that dumb. Nobody believes this excuse any more.
Maybe America is in trouble because Americans are just shit at keeping themselves safe from real harm, and Russia has nothing to do with it.
https://fred.stlouisfed.org/series/GFDEGDQ188S
Of course, the long term trend there isn't great either. It was OK until the financial crisis of 2008, after which it grew to around 100% debt to GDP, which is usually seen as a warning level. Then it grew again very sharply during the pandemic and today is around 121%.
The apparent pattern is that it grows during recessions, but stays pretty flat during good times, and as the current administration seems to want to have recessions for fun, confidence among lenders may have been shaken
There is a clear risk that the US will instead lump trillions of losses on foreign investors and attempt to protect the purchasing power of their voters. It isn't like they're fooling anyone either way - they borrowed a bunch and can't pay it back. They can pretend they paid it back but the markets are going to respond to the magnitude of the losses and not the excuses. The leadership may as well let the bulk of the damage fall on people who don't vote in US elections - there isn't any particular reason to do otherwise.
The US could choose to tank their own currency but it'd be more orderly and the incentives certainly could be aligned to formally default regardless.
There is a common misconception that most US debt is held by foreign investors, but that is wrong - 80% of treasuries are held domestically.
The question is really do the bondholders directly eat the losses (20% foreigners) or US consumers and their tax base eats them (potentially ~0% foreigners although inflation is so complicated in practice it is hard to tell). It'd be pretty easy to handle the situation by a standard default and probably better for the voting base. The risk of the politicians breaking that way is obviously present.
It is risk, it doesn't even have to be likely. It is just the question of "will the bondholder get all the money they're promised?" and the answer can obviously be no. The US can't afford to repay their bonds, purposefully triggering vast inflation would be quite damaging to the US political class and there is a chance they decide not to. It isn't a negligible chance.