Trump administration 2024-2028
- Thread starter dimsum
- Start date
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And there we go, ten year T bills trading at over 5%… Oil continuing to steadily climb with Brent and WTI both solidly over $100/bbl. Get ready for more angry presidential noises and blame deflection. He’ll be increasingly hellbent on finding distractions from the economic damage of his policies.
- Reaction score
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Long-term rates aren't just a US problem, and are a consequence of many factors.
See here.
"For insight, I plot some of the international pattern. (Sorry, Fred only goes to June for the other countries.) It’s a global phenomenon. And it lines up roughly with fiscal policies. The US actually looks a lot like the UK, everyone’s favorite advanced-country fiscal and economic stagnation basket case. So much for exorbitant privilege, the idea that the “reserve currency” status of the dollar means we can borrow at low rates. But Germany isn’t far behind, and Japan has shown the steepest increase as its fiscal problems seem finally to be catching up to it."
- Reaction score
- 8,705
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US Federal Government spending on just the interest payments on US debt is it equal to 20% of its total revenue…… Interest payments are now larger than defence spending.
US interest payments are between 3.2 - 4.2% it’s GDP.
For Germany it’s 0.7%. For Japan it’s 2%. For Canada it’s 1.6%.
Germany pays 30 Billion Euros on its debt in interest payments for 2026. Canada will pay 54 Billion CAD.
Stress testing this out 5yrs from now, if interest rate stay at current levels, across all of these countries - the US interest payments become 5-6% of its GDP. Meaning, interest debt payments of 1.75-2.1 Trillion a year. Putting it in another context- 27-33% of ALL US Federal revenue would go to just pay the interest on US debt……
For Canada interest payments will equal 2.1% of GDP by 2030. Germany will be on the best position, followed by us.
Yes, I’m aware, but as this is a thread on the U.S. administration, and as the U.S. currently suffers from a particular sort of executive immaturity, I decided to focus my reply on them.
- Reaction score
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- Points
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If deficit spending is the major underlying problem (it is, for pretty much everyone so affected), and in the US Congress retains full control of appropriations (it does), focusing attention away from other factors and using it as another haranguing point against Trump isn't particularly helpful. The actual structure and function of the US government should form the frame of the discussion. Someone could always start a new thread on foibles of the US Congress and leave this one for posting the daily Trump lamentations.
We could pretend the policy and foreign affairs decisions of Trump and his executive, certain de jure constitutional constraints notwithstanding, doesn’t have a major impact on bond and commodities markets… But that would be putting legal theory in a position of primacy over economic reality, and that doesn’t seem particularly honest. Foreign policy decisions that disrupt trade flows and creditor/consumer confidence have many real impacts that are distinct from those arising out of the congressional power of the purse.