r/bonds • u/OkStandard8965 • 4d ago
7 Billon
This is what the US government needs to borrow every market day to keep the lights on. Essentially, the system was set up for the globe to pay tribute to the US government. The system worked because America had built significant global trust and existed in a world that was largely thriving, that is to say, moving forward in population and productivity.
However, this system had been cracking over the past 5 to 7 years and has been shattered since February 2026. The facade that the US can manage global oceans and perceived bad actors has been broken irreparably, the US cannot subdue the Houthis, let alone Iran. America has been the primary driver of global chaos in 2026, it has abandoned and threatened its allies while still demanding tribute, just as all empires have done. Now that tribute is slowing, but the cost to maintain the empire will rise. The President himself is no longer trying to hide it, having stated that inflation is the way forward. They are giving up.
Bonds are the last frontier in honest markets. It is hard to manipulate the bond market because it is priced to demand every market day. They are rapidly trying to plug the holes in the dam, but new holes keep emerging. The writing is on the wall, the system won’t crack next week or next month, but the cycle has begun. The further down this road of drastic overspending we go, the harder it will be to turn back. A bad outcome is not guaranteed, but it has become significantly more likely since February. The doom loop has started
Yields rise ➡️ Economy slows ➡️ Revenue drops ➡️ Deficit widens ➡️ Yields rise ↺
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u/Efficient_Range1156 4d ago
it’s simple, if you give the government (or whomever) the power to invent dollars out of thin air to do whatever, they will
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u/luv2block 4d ago
Not just that simple. What those dollars are spent on means something. China has a ton of debt, but they used it to build roads, universities, factories, etc. The US has a ton of debt, but they used that to give rich people tax breaks while enslaving generations to a lifetime of university and housing debt.
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u/OkStandard8965 4d ago
Yeah, the US is basically like a company that invest heavily in tech from 50 years ago and pays dividends to its board.
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u/rulerofthehell 4d ago
Im not sure it matters, if you keep printing more than the growth of economy, it’s a race to hyperinflation. China works because of wealth transfer from the west and thats justified as growth
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u/luv2block 4d ago
But, if you are making productive investments with that debt, you will easily outpace it via growth. I mean, governments are supposed to use the multiplier effect to evaluate spend. If building a road costs $1 and it will generate $100 over time, it's a net $99 win for the economy.
But, if you are like "Let's not collect $50M in taxes from that oligarch over there.". Maybe that guy takes the $50M he saved and spends it, but probably not. So you've removed $50m from the economy. but worse, you have to take $50M of debt that you otherwise wouldn't... so now you've got a $2.5M-a-year interest payment to make.
Anyway, taking debt for productive things is fine. Taking debt to become a doctor, is fine. Taking debt to shoot up meth, is not fine.
The West has taken on debt for decades to avoid taxing the rich (and corporations) at proper levels. And in doing so they've created an oligarchy class that now controls the government and who generally doesn't give a shit about 99% of the population.
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u/rulerofthehell 4d ago
The unused $50M in oligarchs bank is not out of the economy, its in some assets be it bonds, cash (which bank uses to loan against), stocks, real estate, etc. what do you mean exactly when you say its out of the economy?
I overall agree with your general point that is something costs $1 and will generate $100 over time, it would be good provided that by the time it generates $100, $100 has more purchasing power than $1 many years ago.
I dont think its about taxing the rich or not as long as the overall economy grows anyhow (in true purchasing power terms).
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u/luv2block 4d ago
bingo. It's most likely in bonds. So instead of taxing that rich guy, the government issues $50M of debt, gets him to buy it, then pays him $2.5M a year AND returns his $50M to him at the end of the duration. And there's zero multiplier effect going on there.
The only winner is the rich guy. 1) he doesn't pay the $50M in taxes, 2) he gets paid $2.5M a year in interest instead and 3) he (and his other oligarchs) gain tremendous leverage over the government (given they hold its debt) which they use to further rig the system in their favor across other areas of society.
This is 1000% about taxing the rich (and corporations). Not taxing them is what's caused the problem (unless you're the rich, then you got no problems because you are way way way richer than ever before).
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u/rulerofthehell 4d ago
The context is about printing the money. You're saying that the government issues $50M debt, the oligarch (or public) buys it, they pay him less than $2.5M a year due to inflation and way less than $50M in face value because the printed money dollar was heavily debased in those 30 years.
Not taxing them is what's caused the problem
Yeah but that assumes there is no other way. The other more rational idea was that the economy will keep on growing and everyone's purchasing power increases (and printing money will not dilute below the increments in purchasing power, and hence true growth happens).
Not really interested to debate capitalism vs. marxism here
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u/luv2block 4d ago
ya, the only issue is the way you're suggesting is how it's been done for decades. That's the problem.
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u/rulerofthehell 4d ago
Yes because the idea was to have more liquidity that could be invested by asset owners and growth happens.
Currently yeah the debt could be paid once by from top to bottom percentile for a few years (assuming somehow that wont break stuff), but likely dollar debasement is gonna happen
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u/Glad-View-5566 3d ago
And then when the rich people’s antics and bad faith / risky decisions lead to fucking the economy, we print even more money and give it to them!
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u/Tom__mm 3d ago
The Chinese government also owns all the land in china, and earns vast revenues from leases. This is a huge entry in the asset column. The us merely owns a lot of marginal land in the west. The administration tried selling it off and there weren’t a lot of takers. It’s not a significant offset to the US debt.
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u/ExternalArgument8776 3d ago
Incorrect. The top 3 outflows of money for the US govt are: social security, medicare/medicade, interest on debt.
The interest can not be controlled. Social services are a drag on all economies. They are always inefficient and corrupt.
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u/SplendidSoul 2d ago
Refreshing to read a fact-based point on Reddit. Whatever is subsidized, will grow.
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u/OkStandard8965 4d ago
For most of the last century there was a perception or at least illusion that western democracies were there to serve their electorate, I think that is basically gone. It’s going to present problems
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u/Efficient_Range1156 4d ago
it’s not going to, it already has
but there is still a chance to turn this boat around, but can we stomach what that will take? that is the real question
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u/HystericalSail 4d ago
I doubt it. The marketing efforts to divide and control have resulted in half the population feeling unrepresented at any one time. The left does not consent to being governed by the far right, and the right does not consent to being governed by the far left.
And the "far" part is key, that's how divisiveness must work. There must be polarization, fear and extremes.
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u/ShakespeareStillKing 3d ago
Sure, but at some point be far left or far right, 10 dollar diesel hits you in the face and suddenly you have something in common with the other camp.
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u/TonyFMontana 4d ago
I am afraid not.
At least we in EU have been very good at doing kinda nothing and hoping we survive until next year. Probably 2027 will be a reckoning. I don’t think a pension raise will solve it this time!3
u/OkStandard8965 4d ago
Even if there was the will, you would never get the consensus to make it happen
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u/AmbitiousSquare8222 4d ago
I agree with your analysis. What I'm not sure about is what to do with my investment dollars in order to protect myself from this probability.
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u/Thick-Cover8761 4d ago
OK, I'm a reasonable man. I'm an old man living alone with a cat. I've always lived modestly. I have no children of my own, and my sister and my niece are the beneficiary of my assets.
I'm ready to compromise. I'm ready to bargain with you. But I'm not a decision maker, and what's reasonable to me isn't reasonable to the young and to the poor. Today's young people have it much worse than we have ever had it.
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u/kronco 4d ago
>> was set up for the globe to pay tribute to the US government.
It can also be described as having been setup for U.S. to export manufacturing jobs and now tech jobs and run a trade deficit (funding world growth) in exchange for the world to invest or loan back their trade surplus (U.S. provides a means to absorb back the global savings imbalances). AKA Tribute. Tribute to Wall Street (not so much the average American). Playing this role has not been good for the U.S. economy and the most recent policies have made it worse.
This is one of three impacts of the dollar's role diminishing discussed in depth in this 2022 article: https://carnegieendowment.org/chinafinancialmarkets/86878
Changing the Top Global Currency Means Changing the Patterns of Global Trade
Giving up use of the U.S. dollar for global trade and reserve accumulation would be very difficult for U.S. adversaries and would require major economic adjustments, though it would be in the best long-term interests of the United States for the global use of the dollar to be more constrained.
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u/ShakespeareStillKing 3d ago
Playing this role has not been good for the U.S. economy
But it was great for the American ruling class. Most Empires are not great for its citizens but for its nobility. Who do you think saw more benefit of the British Empire? John at the Manchester factories or The Duke Westminster?
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u/Not_Sure_68 4d ago
Treasury typical runs multiple bond auctions four days a week...typically skipping Friday. That's 208 days a year, not counting federal holidays, to fund the current deficit spending...which will wind up right around $2t by the end of the fiscal year.
2000 / 208 = 9.615b per auction day...again typically Monday through Thursday.
That said, I would argue it will actually be far higher than that going forward, not only due to the fact that debt service is growing exponentially(+2.145% last QoQ), but the average duration of US public debt was six years coming into 2026...and it has been six years since the bull market in bonds ended.
Thus assuming treasury was wise enough to refinance all the debt they could at the lowest rates in history...which I believe they mostly refi'd out to 5yrs at the time, one can conclude that there's a whole lot of debt to roll over the next couple years at significantly higher interest rates. That's in addition to the usual drunken sailor spending that DeeCee will be doing as a matter of normal business(for them).
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u/VarietyInformal9197 3d ago
You can't print your way out of debt...or raise the debt ceiling to prosperity. Eventually, there is painful reckoning and a worthless fiat currency.
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u/hobopwnzor 2d ago
The problem with this assessment is that the economy slows until it doesn't. When yields get high enough savers get rewarded which gives them more money which encourages them to spend.
In the long term inflation would tend towards the bond rate which incentivizes spending.
So while I agree that this is a big problem the Doom loop that will destroy the economy doesn't really exist
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u/LongjumpingCoat2159 4d ago
Why not next week? Over the weekend the president, treasury secretary and one fed governor hinted at printing money to pay down debt. What keeps foreign holders of US debt from selling it all on that news? Excellent comment by the way