this post was submitted on 19 May 2025
198 points (99.0% liked)
Political Memes
8074 readers
3335 users here now
Welcome to politcal memes!
These are our rules:
Be civil
Jokes are okay, but don’t intentionally harass or disturb any member of our community. Sexism, racism and bigotry are not allowed. Good faith argumentation only. No posts discouraging people to vote or shaming people for voting.
No misinformation
Don’t post any intentional misinformation. When asked by mods, provide sources for any claims you make.
Posts should be memes
Random pictures do not qualify as memes. Relevance to politics is required.
No bots, spam or self-promotion
Follow instance rules, ask for your bot to be allowed on this community.
No AI generated content.
Content posted must not be created by AI with the intent to mimic the style of existing images
founded 2 years ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
US Government Bonds are referred to as “risk free debt” because it is seen as the safest investment in existence. The US has never missed a payment in the whole history of the country.
Because of that all interest rates are related to the bond rate. People are getting nervous that US bonds are no longer trust worthy so they are demanding higher interest rates. This is terrible for the economy because those are the floor of interest rates. Meaning the cost to borrow is going up along with the cost of every thing else.
They're only the floor because they're seen as risk free. "Why lend someone money for less than what the US government is offering you? The government is always gonna pay you back, after all". If that mentality changes then treasury bonds will no longer be the floor, because you'd rather lend the money to someone else than the US government.
Not that this isn't disastrous for the US. Increased taxes, cuts to medicare/medicaid/military, a government default, or a mix of all three are an inevitability. The US government can probably keep paying interest payment costs with more debt for a while, but not forever. These movements in the bond market takes us closer to the end of the USA's debt spree.
Donald Trump is dismantling the US and I can’t even enjoy it because he’s an asshole.
Boring, dumb, ugly timeline…
The lack of triple A status seems to indicate the debt is most definitely not risk-free.
I always would argue with my finance professors that calling it risk free was stupid given that most governments default on their debt eventually, and the US is probably no different