The U.S. government’s creditors are getting nowhere near adequate compensation for the risks they’re taking, which means interest rates are going a lot higher. From Alasdair Macleod at alasdairmacleod.substack.com:
US equities are being driven by purely domestic investment flows — rejoicing over Trump’s MAGA policies is understandable. But it ignores an enormous, dangerous elephant in the room: debt!
History is littered with well-meaning attempts to correct an accumulation of past economic errors. The script goes like this. Common sense tells us we are heading for a crisis, unless there’s a change in economic and political philosophy. For years, we have been talking about the need for a great policy reset. There are two paths to follow: either try force the pace on change to prevent an obvious crisis which damages everyone, or to take the view that fundamental political reform can only occur after current policies have completely failed.
Essentially, Trump is a patriot trying to steer the US economy back from the brink. But he is an isolationist in a commercially integrated world, and he relies on foreigners to fund his policies. We have to look at Trumpenomics from their point of view. How do they read consumer price inflation, in the wake of extra trade tariffs? How do they read the stimulus of income and corporate tax cuts? How is it all going to be paid for?
The answer to these questions is being revealed in the chart below:
There are early signs that this bond yield is moving higher to challenge the 5% level. And it seems unlikely to stop there.
Alasdair Macloed wrote for the Cobden Centre 5/11/2024 – Conclusion
‘Forget who wins the presidential election, it will not stop an equity bear market commencing in the coming weeks, likely to be of crash proportions.
Globalisation is stated to be the integration of the world’s economics, politics and culture and treason and conspiracy at the highest level in the Stock Markets will ensure that China will rule the world with the renminbi being the global currency.
Max Rangeley has been given an alternative scenario by the writer of how the debt can be left with the banks and replaced with a Co-operative Economy; are you up for the challenge, there is not much time left to make the choice.
The global economy is broken with $300 trillion of fiat currency debt that has reached the end of its exponential growth. Donald Trump has done the maths and is trying to isolate America from the worst effects of an impending crash; can you do the maths or do you believe there is no end to exponential growth.