Ah, yes, but what about the Super Rainbow Black Moth?
sp3ctr4l
joined 2 weeks ago
You're mostly right.
Most T Bills and Bonds... they don't work like a credit card or a home loan.
Those are things you pay a bit on every month, and the interest rate is an APR, which means Annualized Percentage Rate, which means the monthly interest rate you are paying is the APR divided by 12.
So with those, the bank gets money every month untill you pay it all off.
With Bonds... say a 5 year Bond... you pay for the Bond, newly issued by the US govt, and 5 years later, you hand it back to them, and they pay you the face value + interest rate.
But, people who have already bought a bond, well they can sell it again, before it matures, to... some other guy, some other country, some other firm.
Thats called the 'secondary market', and most of the time you hear a news story about bond prices and yields, its a second party selling a bond to a third party.
Generally, when the US does an issuance auction of new debt directly... well, it has to generally track the prices and yields set by the various secondary markets, sorta like how you'd wanna check a car salesman's price against kelly blue book to make sure you're getting a reasonable deal.
There were moments in thr GFC, 07 08 09, where US debt auctions ... didn't actually result in the amount of bonds expected to sell, actually selling, because there were enough potential bond buyers who assessed that the US was offering unreasonable prices and yields, given the economic turmoil.
... I am not an 'expert' either, but I do actually have a BSc in Econ, and I apparently remember a good deal of my courses, and enjoy infodumping lol.
The prices and yields of bonds have an inverse relationship:
If price goes down, yield goes up.
The yield is also known as the interest rate.
This interest rate * the purchase price is paid by the US government to the bondholder at the end of the duration of its term.
When you look at the US Federal budget, and see the amount that goes toward making debt payments...
This, bonds, are a very big part of what you are looking at.
If the interest rate on US debt instruments are going up... that means more and more of the budget has to be allocated toward debt repayment.
While yes, extremely directly, bond yields rising doesn't... mechanically make the passing of a budget impossible in some kind of procedural way...
It very much makes the stakes higher as now our growing debt problem is growing even faster.
I can only hope I live long enough to see a 'The Death of Stalin' type movie about the Trump admin.
If US Bonds are no longer the de facto safe haven asset...
The USD is no longer the world's de facto reserve currency.
That means that even if all the tariffs were rescinded, Trump croaked and somehow JD Vance took a 'be at least somewhat more competent and less stupid' pill, and never reinstated them...
Well it would mean the dollar would crash against other currencies, we wouldn't be able to import anywhere near as much, and US international debt payments as a percentage of the yearly budget would climb fast.
... And then that could spiral into both massive austerity at home, and/or 'lol we are defaulting on our international debt' either by formal declaration, or... basically hyperinflation.
If ya'll want another layer of irony to all this:
George Soros initially rose to general public fame/infamy with large bets against British Pound in 1992, that effectively defeated the Bank of England's attempts to stabilize the currency, resulting in its devaluation, and something like a billion $ profit for Soros.
Fast forward to now, and Trump supporters have spent the last 5 or 10 years acting like Soros is secretly the most underhanded and influential 'world controller' bogey man that exists, and they blame everything they don't like on being funded by him... despite pretty much all of his charities and funds and causes he donates to being publically available knowledge... and despite Soros being a fairly small fish in the modern ocean of much, much more wealthy and infuential corporations and individuals.
... So, now, Trump very well may have done basically the same thing as what Soros did 3 decades ago: force the devaluation of the USD and cause economic mayhem, but... at a much, much larger scale than Soros did.
The Trump supporters have utterly and entirely lost their own plot, that they themselves mostly fabricated.
I am very annoyed that this use of 'freak' and further corruption of the term 'black swan event' have just gotten completely common place.
A black swan event is supoosed to be something completely impossible to have been predicted before hand because you didn't have enough knowledge to even understand there was a kind of risk you were not accounting for.
An 'unknown unknown', to use the only useful idea Donald Rumsfeld ever came up with.
... This bond sell off is utterly predictable, unless you are completely brainwashed into a delusional level of normalcy bias and complacency.
All you have to do is realize the US is acting like an unstable dictatorship... which it very obviously is... and this is an easily predictable outcome for anyone with a decent knowledge of macroecon theory/history.
Reminds me of:
(real gamers can hear this image rofl)
Ah yes, 1950, when America was the only massively industrialized nation in the world that hadn't been bombed into fucking oblivion during WW2, and therefore dominated the global economy by default.
They made the economy bad by spending too much money toward Ukraine.
... or something.
Anyway, time to occupy Gaza, invade Panama, buyout Greenland, maybe invade Canada, ramp up strikes on the Houthis, and leak the group chat planning said strikes...
oh, and goad China into an an unprecedented trade war, as they are doing full scale drills/mock invasions of Taiwan.
But its fine because Trump will end the Ukraine war on day one and is therefore the peace candidate.
... I swear to god I'd have to be beaten in the head with hammers and develop CTE to be operating on the same mental wavelength as Trump scrotum suckers.
I think the common denominator is that everyone thought of something with... basically big, scary, straight teeth, as a promiment design element, attached to some kind of monster.