Government Bubble Burst

Contact Your Elected Officials
Wall Street Journal Header

Treasury bond investors have been taking a historic beating.

Stung by historic losses in recent years, long-term bond investors are showing a diminishing desire to lend to the U.S. government. Or maybe itโ€™s just that the government is trying to borrow too damn much. Even in the congressional chamber controlled by Republicans, the leadership debate revolves around how many spending expansions the next speaker will jam into another debt-fueled bill. Interest-rate math hasnโ€™t yet intruded into politics even though it has already meted out severe punishment in the markets. Investors are now demanding more compensation in return for financing Washingtonโ€™s historic fiscal recklessness. The Journal reports:

The benchmark 10-year U.S. Treasury yield topped 4.9% intraday Wednesday for the first time since July 2007.

The Journalโ€™s Sam Goldfarb notes:

In recent months, the Treasury Department has both increased its borrowing forecasts and boosted the size of its longer-term debt auctions by more than investors had been expecting.

During the unprecedented monetary adventures following the mortgage crisis of 2008, the U.S. and other governments around the world drove interest rates down to near zero. They managed this feat in part by having their own central banks buy up government debt issued at such rock-bottom ratesโ€”and also by using regulation to encourage large institutions to buy this paper.

Some overseas locales even embraced the insanity of negative interest rates, in which bond investors had to pay government borrowers for the privilege of loaning them money. In 2016 James Grant of the indispensable Grantโ€™s Interest Rate Observer noted that such a situation had not previously occurred in all of recorded history.

At the time, your humble correspondent called it the โ€œ5,000-Year Government Debt Bubbleโ€ but now vindication is not much fun when pondering the dangers of the current moment. The massive debt piles accumulated while governments were artificially holding interest rates at or below rock bottom are quickly becoming much harder to bear.

By James Freeman

Read Full Article

Wall Street Journal
Wall Street Journalhttps://www.wsj.com/
The Wall Street Journal was founded in July 1889. Ever since, the Journal has led the way in chronicling the rise of industries in America and around the world.

The Sacred Honor of the 56

Today we're celebrating the sacred honor of the 56 men who signed the Declaration of Independence.

Alligator Alcatraz: A Bold Step Toward Secure Borders

Alligator Alcatraz funded through FEMA, represents a decisive move by the Trump admin to address illegal immigration with efficiency and resolve.

Is America Broke?

Silicon Valley investor and economic commentator Balaji Srinivasan made...

Hungary: Prideโ„ข Cometh Before the Color Revolution

The EU engaged in a diplomatic siege of the Eastern European nation-state of Hungary pressuring it into embrace global trannyism or face wrath of Brussels.

Understanding the Trump/Musk Feud

The passion Trump and Musk exhibit over the OBBB is not contrived or for show. Each is addressing the problem from completely different approaches.

Noem Waives Environmental Restrictions to Fast-Track Water Barriers in Rio Grande

DHS Sec Kristi Noem waived federal environmental laws to fast-track construction of 17 miles of waterborne barriers in the Rio Grande in South Texas.

Federal Officials Warn of โ€˜Lone Wolfโ€™ Terror Threats on July 4, NY Governor Says

NY Gov. Kathy Hochul confirmed that federal officials informed her about a possible terrorist threat ahead of the July 4 Independence Day holiday.

Record 1 in 5 Buyers of New Cars Committing to $1,000-Plus Monthly Payments: Edmunds

The share of new car buyers committing to make monthly payments of $1,000 or more hit an โ€œall-time highโ€ in the second quarter of 2025.

US Economy Adds 147,000 New Jobs, Unemployment Rate Dips to 4.1 Percent in June

The U.S. job market remained strong in June, as labor conditions continued to hold up amid economic uncertainty.

US Keeps Pressure on Chinese Goods Amid Vietnam Trade Deal

Transshippingโ€”rerouting goods through a third country to disguise the origin of the productsโ€”is a focal point of trade negotiations with Asian markets.

White House Report Reveals Top Earners, Staffers Working for No Salary

The Trump admin released its yearly report that shows the salaries for White House staffers, also revealing officials who arenโ€™t accepting salaries at all.

Transportation Secretary Urges Governors to Remove Political Messages From Crosswalks, Intersections

Duffy sent letters to governors, mayor of D.C., and gov of Puerto Rico urging them to remove political messaging from intersections and crosswalks.

Bessent: US, India Near Agreement to Lower Tariffs

The United States and India are โ€œvery closeโ€ to a trade agreement, Treasury Secretary Scott Bessent said on Tuesday.
spot_img

Related Articles