this post was submitted on 19 May 2025
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165
Say Captain Say Wot (lemmy.dbzer0.com)
submitted 7 hours ago by cyrano@lemmy.dbzer0.com to c/politicalmemes@lemmy.world
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[–] Bustedknuckles@lemmy.world 37 points 5 hours ago (6 children)

My money (while I have it) is that this is going to be the most lasting damage of Trump's presidency. Piss off the world and demonstrate we're unreliable economic partners. They don't want our debt anymore and dump their holdings/new purchases at auction. Servicing debt is already around 15% of All federal spending. DOGE targets are nothing in comparison.

Debt can get very expensive, and we've gotten used to paying very little for it. Most people aren't considering how bad this can get - I hope someone with power has been

[–] brucethemoose@lemmy.world 7 points 1 hour ago* (last edited 1 hour ago)

Many advisors have.

Many debt hawks in Congress have too.

But it’s not populist policy because the concept is too complex, so it’s never politically tenable. :/

[–] scarabic@lemmy.world 13 points 2 hours ago

Trump struts around driveling about how everyone is ripping off the US left and right when in fact we have a stranglehold on most of the world, favored status almost everywhere we go, and structural advantages we forced on the world and have been milking for decades.

[–] spooky2092@lemmy.blahaj.zone 8 points 1 hour ago (1 children)

Absolutely. Republicans don't realize just how tenuous our status on the world stage, and thought it was still the 1950s. With everything they're doing, we're absolutely cooked for decades to come.

[–] grue@lemmy.world 5 points 46 minutes ago* (last edited 45 minutes ago) (1 children)

With everything they're doing, we're absolutely cooked for decades to come.

That implies we'd ever recover and this isn't just the permanent end of American dominance.

Sentiments like yours are probably the same sorts of things some British folks were telling themselves after WWII as their empire slipped away.

[–] spooky2092@lemmy.blahaj.zone 2 points 35 minutes ago* (last edited 34 minutes ago)

That implies we'd ever recover and this isn't just the permanent end of American dominance.

Oh no, you completely took the wrong implication out of this.

"We're cooked for decades" meaning that we're absolutely fucked, but it might not be awful after a few decades. I have no allusions that the American hegemony will ever return.

[–] Tar_alcaran@sh.itjust.works 17 points 5 hours ago

Doge's cuts can't event cover Doge's costs, let alone anything else, let alone all the following damages resulting from those cuts.

[–] cyrano@lemmy.dbzer0.com 12 points 4 hours ago

The dumping isn't actually occurring in the traditional sense; central banks typically hold short-term maturities (around 2 years) between them for stability. Japan is the primary foreign holder of us debt. In reality, there's no need for them to sell off these assets. They can simply wait until they mature, as selling would negatively impact their own investments. On top, they could decide to not participate in new auctions or request higher yields at those auctions.

https://www.statista.com/statistics/246420/major-foreign-holders-of-us-treasury-debt/

[–] Quill7513@slrpnk.net 5 points 5 hours ago

china for sure has been

[–] simplejack@lemmy.world 16 points 6 hours ago (1 children)

Oh god. What happened today?

[–] cyrano@lemmy.dbzer0.com 13 points 6 hours ago (3 children)
[–] peoplebeproblems@midwest.social 6 points 2 hours ago

5.023%. goddamn. I know they were purposely trying to trigger a recession, but it actually went over 5%.

I wonder what the massive over-leveraged asset will be this time.

[–] Semi_Hemi_Demigod@lemmy.world 21 points 5 hours ago (2 children)

Please explain the significance of this to someone who’s never bought a bond but has dug through a couch to find spare change for groceries.

[–] YtA4QCam2A9j7EfTgHrH@infosec.pub 27 points 5 hours ago (2 children)

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.

[–] tormeh@discuss.tchncs.de 7 points 1 hour ago

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.

[–] Tommelot@lemmy.world 13 points 3 hours ago (1 children)

The lack of triple A status seems to indicate the debt is most definitely not risk-free.

[–] YtA4QCam2A9j7EfTgHrH@infosec.pub 6 points 2 hours ago

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

[–] cyrano@lemmy.dbzer0.com 12 points 5 hours ago* (last edited 5 hours ago) (2 children)

In short, if the government plans to spend a lot, and people worry about prices going up, bond yields rise. This can make borrowing more expensive for everyone

Tap for longer

  1. Government Budget: When the government makes a plan for how to spend money (the budget), it can include a lot of spending on things like roads, schools, or healthcare Or Tax cuts or Big Beautiful Bill

  2. Rising Bond Yields: If people think this spending will cause prices to go up (inflation), they want more money back for lending to the government. So, they ask for higher interest on bonds, which is called a higher yield.

  3. Why It Matters:

    • More Expensive Loans: If bond yields go up, banks might charge more for loans (like for houses or cars), making it costlier to borrow money.
    • Investing Choices: People might choose to invest in bonds instead of stocks if they think bonds are safer or offer better returns.

[–] Cenzorrll@lemmy.world 6 points 3 hours ago (1 children)

Eli5 version:

Sam likes candy, and in the past, Sam has been very good at paying kids back for candy with a little bonus for doing so. Sam wants more candy, but Sam has lately been acting weird and unreliable, so no one wants to give them any because they aren't as confident that they will get paid back. Sam is now offering to give back even more in the future than his usual amount in the hopes that someone will give him candy. Sam is still acting pretty sketch, and getting more sketch every day.

[–] Endymion_Mallorn@kbin.melroy.org 6 points 3 hours ago (1 children)

Then Sam needs to start resorting to force and/or threats of force to ensure his access to candy. Don't bother stealing from the candy store, but beat up weaker kids and take their lunch money to buy candy, with the clear implication that any resistance in the future will lead to more extreme violence.

[–] tormeh@discuss.tchncs.de 1 points 1 hour ago (1 children)

That's just taxation. Which is something Sam really really hates. Easier to just borrow money forever. It's risk free, after all.

[–] Endymion_Mallorn@kbin.melroy.org 2 points 55 minutes ago

No, taxation is beating up people he lives with. I'm suggesting force against those he doesn't care about.

[–] Tar_alcaran@sh.itjust.works 7 points 5 hours ago (1 children)

Also, risk is a factor.

If you lend money to your flaky cousin, you might want more interest to cover the risk of him never paying you back. If you lend money to your twin sister who has never missed a single thing in her life, maybe half a percent will do.

Well, the US just started moving into flaky cousin territory after two centuries of reliable sister.