MeidasTouch Chief Economist Justin Wolfers breaks down the Treasury’s unusual bond market move and what it could mean for interest rates, debt, and your wallet
So piggy F's every thing up and most likely croaks then who's left to clean up his criminal mess. It had better not be regular US. We must win and when we do OVERTURN CITIZEN'S UNITED AND THEM MAKE SURE THOSE FOLKS WHO'VE BEEN SKATING ON PAYING TAXES PAY THEIR FAIR SHARE. Those billionaire's who now keep piggy afloat and still use EVERYTHING we're paying taxes for NEED TO PAY THE PIPER.
I am right there beside you on this Madannie. Citizens United has to go and the bill for the the billionaires needs to be paid like us regular folks have been paying. Then we also need to clean up the unsupreme court that has been raking in the money and goodies from the billionaires.
I'm no trained economist, but as I understand this situation it is not unlike what ordinary Americans are wrestling with in their personal lives. They are seeing the balance on their credit card increasing and it is understandably a big concern. So some of them are trying to pay down credit card debt with HELOC loans or other loans with long maturities. A HELOC takes a chunk of home equity to pay down the credit cards. That can't go on for very long before the family is in more serious financial trouble.
It's not just higher credit card interest but eventually (TYE 2026?) higher personal federal income TAXES (unless you're a million/billionaire?). Only Congress can approve higher US debt fed by higher income taxes. Where is Congress on this latest debt scheme?
Or...(and I know this sounds crazy) we could simply tax the wealthiest people and corporations, balance our budget, then start paying down the debt with any surplus.
"IMPOSSIBLE!" you might say.
Well, Clinton did it...and WITHOUT "geniuses" like fElon Musk gutting our government and making us less healthy and destroying our institutions.
Budgets indicate priorities and values: once Americans take our government back from Republicans, we can prioritize the things that help THE MOST Americans and the things we value like food inspection, guardians of our nuclear stockpile, watchdogs and crime solvers, HEALTHCARE for all Americans...all the things Republicans hate and worked to destroy the past 2 years.
VOTE IN NOVEMBER! We can't do ANYTHING until we excise the cancer that is the Republican cult destroying our economy, trade, alliances, union, justice, peace, defense, wellbeing, and peaceful transfer of power (in other words, violating the ENTIRE FKING PREAMBLE AND MOST OF THE REST OF THE CONSTITUTION!)
Sounds like a logical solution to me: tax the wealthiest people and corporations, balance our budget, then start paying down the debt with any surplus. Yes, Clinton did it. It's a real world solution to unchecked greed
Keynesian Economists Now Getting Real With American People
Wolfers is echoing the red flag that Paul Krugman has said today, "don't panic". When Keynesian economists say don’t panic, that means we should panic. Keynesians believe that excessive money printing aka QE is A-OK are now concerned that central bank policy is leading the country into a debt trap. That's defined as when a country cannot afford its debt now at $40T. To service that debt is more than the revenues taken in through taxes.
The country has been on this course for sometime and is the reason that gold and silver are in increasing new highs. It's not that gold and silver are increased in price, it's that the purchasing power of the currency is going down. That's called inflation.
The Keynesian economists like Keynes himself have denigrated a gold standard and have called it a "dangerous relic" to borrow Keynes' words. But gold is money, not a currency which is just a form of credit, not real money.
This debt trap has been accelerated by Cheeto's illegal war, the loss of strategic oil reserves, and most importantly the loss of foreign investors buying our bonds unless they are adequately compensated for taking on the risk of default as measured by increasing bond yields. The danger point is a 5% 10y bond yield.
When Prof Wolfers says bondholders are starting to worry whether or not the US Govt will pay them back that is the biggest of all red flags. Donald Trump sees bankruptcy as a tool to be used. He thinks it makes him smart. He used it 6 times in his personal business life. Why does anyone doubt that he would use it at the level of the American Govt. The answer...you better believe it!
Outstanding program. Thank you Ben and Justin. Next time with Justin, perhaps cover what happens when credit card debt becomes overwhelming and folks start defaulting on their credit card payments, and possibly an increase in mortgage defaults. Please begin with the facts and a historical comparison of where we are in terms of credit card debt. It concerns me and could lead to another depression.
Justin...I am confused about your explanation of Treasury Bonds. Here is my understanding of the issue. The interest rate on bonds is what our government pays to the purchaser of the bond at it's maturity. The bond matures in 10, 20, or 30 years, we pay out it's value plus the interest it's earned. The reason we are offering higher interest rate is to encourage purchasers to buy the bonds. There are fewer purchasers because we are no longer the good risk we once were, so we must increase the interest rate to entice the smaller buying pool to step into our lair AND because: there are a shit load of long term bonds at maturity [I believe they are predominantly in Japan's hands. I believe this is called The Wall??] The US will be required to pay out those bonds + interest. Our huge national debt makes this somewhat problematic…so we need to sell more Bonds to operate the government.
Additionally I believe we have another concern with regard to the Treasury. At some point in the past, the 70s(??), we signed an agreement with Gulf oil producers [was that the birth of OPEC?] that all oil sales would be conducted in USD. And part of that deal included some provision that money would be somehow end up/support the US Treasury/Bond Market. At this time Iran, and probably other Gulf oil producers, are selling crude oil in Chinese currency (Yuan).
If these are truthful/accurate statements, how does this affect/influence our economy and the Bond market?
Are these invalid or incorrect points? If so, why did you not include them in your discussion with Ben?
Here we go again. Kick the can down the road. The tale of the 2 Santa Clauses. The Republicans shit & the Democrats clean it up. Republicans create a huge deficit with their tax cuts for the greedy rich. They're the Santa for the rich. Democrats try to help the working class & the middle class (which grows ever smaller.) Democrats are the Santa for the poor--an ever increasing class. They spend the money to create a strong safety net. However, to do that, they have to dig us out of the hole the Republicans threw us in.
So piggy F's every thing up and most likely croaks then who's left to clean up his criminal mess. It had better not be regular US. We must win and when we do OVERTURN CITIZEN'S UNITED AND THEM MAKE SURE THOSE FOLKS WHO'VE BEEN SKATING ON PAYING TAXES PAY THEIR FAIR SHARE. Those billionaire's who now keep piggy afloat and still use EVERYTHING we're paying taxes for NEED TO PAY THE PIPER.
I am right there beside you on this Madannie. Citizens United has to go and the bill for the the billionaires needs to be paid like us regular folks have been paying. Then we also need to clean up the unsupreme court that has been raking in the money and goodies from the billionaires.
those scotus 6 are traitors and must be held accountable TOO
Absolutely agree. All 6 are corrupted
If he can bankrupt a ca$ino he can take down the U$. Strike that: is taking down …
I'm no trained economist, but as I understand this situation it is not unlike what ordinary Americans are wrestling with in their personal lives. They are seeing the balance on their credit card increasing and it is understandably a big concern. So some of them are trying to pay down credit card debt with HELOC loans or other loans with long maturities. A HELOC takes a chunk of home equity to pay down the credit cards. That can't go on for very long before the family is in more serious financial trouble.
It's not just higher credit card interest but eventually (TYE 2026?) higher personal federal income TAXES (unless you're a million/billionaire?). Only Congress can approve higher US debt fed by higher income taxes. Where is Congress on this latest debt scheme?
The trick is borrow/loan with your family; IRS requires filing.
Or...(and I know this sounds crazy) we could simply tax the wealthiest people and corporations, balance our budget, then start paying down the debt with any surplus.
"IMPOSSIBLE!" you might say.
Well, Clinton did it...and WITHOUT "geniuses" like fElon Musk gutting our government and making us less healthy and destroying our institutions.
Budgets indicate priorities and values: once Americans take our government back from Republicans, we can prioritize the things that help THE MOST Americans and the things we value like food inspection, guardians of our nuclear stockpile, watchdogs and crime solvers, HEALTHCARE for all Americans...all the things Republicans hate and worked to destroy the past 2 years.
VOTE IN NOVEMBER! We can't do ANYTHING until we excise the cancer that is the Republican cult destroying our economy, trade, alliances, union, justice, peace, defense, wellbeing, and peaceful transfer of power (in other words, violating the ENTIRE FKING PREAMBLE AND MOST OF THE REST OF THE CONSTITUTION!)
Sounds like a logical solution to me: tax the wealthiest people and corporations, balance our budget, then start paying down the debt with any surplus. Yes, Clinton did it. It's a real world solution to unchecked greed
Keynesian Economists Now Getting Real With American People
Wolfers is echoing the red flag that Paul Krugman has said today, "don't panic". When Keynesian economists say don’t panic, that means we should panic. Keynesians believe that excessive money printing aka QE is A-OK are now concerned that central bank policy is leading the country into a debt trap. That's defined as when a country cannot afford its debt now at $40T. To service that debt is more than the revenues taken in through taxes.
The country has been on this course for sometime and is the reason that gold and silver are in increasing new highs. It's not that gold and silver are increased in price, it's that the purchasing power of the currency is going down. That's called inflation.
The Keynesian economists like Keynes himself have denigrated a gold standard and have called it a "dangerous relic" to borrow Keynes' words. But gold is money, not a currency which is just a form of credit, not real money.
This debt trap has been accelerated by Cheeto's illegal war, the loss of strategic oil reserves, and most importantly the loss of foreign investors buying our bonds unless they are adequately compensated for taking on the risk of default as measured by increasing bond yields. The danger point is a 5% 10y bond yield.
I always ask, why not arbitrage? Borrow in say, Switzeralnd at 1% to buy our debt?
Because it forestalls the inevitable. Wait for it, the Fed will begin QE but that will just lead to a deeper trap.
Not meaning to sound snarky, as I'm really trying to learn.....isn't what was done today forestalling the inevitable?
Not true. The house usally wins. The lender is the house.
When Prof Wolfers says bondholders are starting to worry whether or not the US Govt will pay them back that is the biggest of all red flags. Donald Trump sees bankruptcy as a tool to be used. He thinks it makes him smart. He used it 6 times in his personal business life. Why does anyone doubt that he would use it at the level of the American Govt. The answer...you better believe it!
Outstanding program. Thank you Ben and Justin. Next time with Justin, perhaps cover what happens when credit card debt becomes overwhelming and folks start defaulting on their credit card payments, and possibly an increase in mortgage defaults. Please begin with the facts and a historical comparison of where we are in terms of credit card debt. It concerns me and could lead to another depression.
Very satisfied with the wrap-around expertise provided by Meidas and its affiliates. Thank you. Worth the price of admission.
There should be no billionaires. I don’t know how to actually get there but they are the problem. Well, one of them.
Thanks guys — great report! America is lucky to have you!
And the deal ends on day after midterms. Hmmm
I think we are heading for a fiscal cliff. This govt debt growth is not sustainable.
You two are always the most interesting and thought provoking part of my day!
Thank you so much. Economics was not my best subject.
Justin...I am confused about your explanation of Treasury Bonds. Here is my understanding of the issue. The interest rate on bonds is what our government pays to the purchaser of the bond at it's maturity. The bond matures in 10, 20, or 30 years, we pay out it's value plus the interest it's earned. The reason we are offering higher interest rate is to encourage purchasers to buy the bonds. There are fewer purchasers because we are no longer the good risk we once were, so we must increase the interest rate to entice the smaller buying pool to step into our lair AND because: there are a shit load of long term bonds at maturity [I believe they are predominantly in Japan's hands. I believe this is called The Wall??] The US will be required to pay out those bonds + interest. Our huge national debt makes this somewhat problematic…so we need to sell more Bonds to operate the government.
Additionally I believe we have another concern with regard to the Treasury. At some point in the past, the 70s(??), we signed an agreement with Gulf oil producers [was that the birth of OPEC?] that all oil sales would be conducted in USD. And part of that deal included some provision that money would be somehow end up/support the US Treasury/Bond Market. At this time Iran, and probably other Gulf oil producers, are selling crude oil in Chinese currency (Yuan).
If these are truthful/accurate statements, how does this affect/influence our economy and the Bond market?
Are these invalid or incorrect points? If so, why did you not include them in your discussion with Ben?
Here we go again. Kick the can down the road. The tale of the 2 Santa Clauses. The Republicans shit & the Democrats clean it up. Republicans create a huge deficit with their tax cuts for the greedy rich. They're the Santa for the rich. Democrats try to help the working class & the middle class (which grows ever smaller.) Democrats are the Santa for the poor--an ever increasing class. They spend the money to create a strong safety net. However, to do that, they have to dig us out of the hole the Republicans threw us in.