The yields on Treasury bills hit a 16 year high, and they aren’t done. Inflation in the US is killing confidence in the dollar. China has been engaged in moving away from holding US treasuries. They have sold off many debt holdings, going from holding $1.3 trillion in US debt to just over $800 billion- a downsizing of about 40%.
All of this is making it more and more expensive for the US to pay the interest on the $33 trillion that it already owes, and will soon begin affecting the strength of the dollar. The US will have to create money out of thin air in order to cover this as well as still keep sending money overseas. Expect more inflation to come as a result.
2 Comments
EN2 SS · October 19, 2023 at 4:59 pm
The fascist uni-party has been printing worthless money for decades. Until they quit printing it and just started adding zeros to their bank accounts. The money system, the JustUs system, the government is all make believe and the insanity will not end without bloodshed. Hopefully all of theirs.
Max Wiley · October 21, 2023 at 10:12 am
Everyone seems totally oblivious to the debt trap the Fed and the Treasury are in.
Rates and/or yields keep rising, cost to service the debt rises exponentially, debt service cost applies directly to deficit, new and more Treasuries are issued to cover the deficit and add to debt, Fed creates new dollars to prop up Treasury auctions, massive inflation ensues.
OR
Fed capitulates, cuts rates to keep economy running, US attempts to inflate its way out of the debt trap, massive inflation ensues.
Those are the two options on the table. Both end with massive inflation and major loss of dollar purchasing power. The unsustainable (and growing quickly) $34 Trillion debt guarantees it, it is only a matter of time.
The only question is “How bad will it be?”
The end of the dollar as world reserve currency? Probably
The end of the US as global hegemonic superpower? Some would argue this has already happened.
The end of the US in its current form, either politically or geographically or both? Near certain to be one or the other, and both is certainly on the table. Historical examples abound, from Europe to China.
The base case scenario is the people of the United States lose 30% of their purchasing power. That’s what has been the historical average over the past 600 years when the reigning Empire has lost the reserve currency status.
I’m not hopeful the base case is achievable. None of those previous Empires were sitting on a pile of debt equal to a year and a half of total economic output.
Our debt to GDP isn’t 150% you say? It will be, very quickly, when the debt merry-go-round stops. It will likely be higher than that, once all of the financial fallout is calculated.
There is no voting our way out of this. The people will either find a way to rid themselves of the parasitic elites, or the people will enter a new age of serfdom.
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