đ¨ The yield on US 30-year Treasury bonds has risen to a terrifying 5.25%, essentially reaching the rate levels seen on the eve of the 2007 financial crisis!
And U.S. Treasuries have officially broken through $4 trillionâan all-time first! It took just 150 days to go from $3.9 trillion to $4 trillion.
Based on the current 3.75% interest rate, the United Statesâ annual debt interest expense is as high as $1.5 trillion. This means that for every $5 in tax revenue collected, $1 is directly used to pay interest.
Now the situation is absurd:
Hiking rates doesnât work, cutting rates doesnât work, shrinking the balance sheet doesnât work, and expanding it doesnât workâevery path has fatal side effects.
If the U.S. cannot quickly resolve the U.S.âIran conflict, calm oil prices, and bring down inflation, then in the end it will have to fall back on the classic playbook of flooding the system with liquidity, because the surge in long-term bond yields will ultimately seriously threaten valuations in the U.S. stock market.
The only way to crack itâshould be to go all out and levy taxes aggressively on the rest of the world, right?!
And U.S. Treasuries have officially broken through $4 trillionâan all-time first! It took just 150 days to go from $3.9 trillion to $4 trillion.
Based on the current 3.75% interest rate, the United Statesâ annual debt interest expense is as high as $1.5 trillion. This means that for every $5 in tax revenue collected, $1 is directly used to pay interest.
Now the situation is absurd:
Hiking rates doesnât work, cutting rates doesnât work, shrinking the balance sheet doesnât work, and expanding it doesnât workâevery path has fatal side effects.
If the U.S. cannot quickly resolve the U.S.âIran conflict, calm oil prices, and bring down inflation, then in the end it will have to fall back on the classic playbook of flooding the system with liquidity, because the surge in long-term bond yields will ultimately seriously threaten valuations in the U.S. stock market.
The only way to crack itâshould be to go all out and levy taxes aggressively on the rest of the world, right?!
