Great piece again today, Fred. No one is saying much about the sales of US. Bonds that has been taking place. I wonder how long it will be before someone in the US government ( Congress or Senate) will step up and start following the money
Bond markets tend to move quietly, which is why they don’t get much public attention until something breaks. By the time politicians start reacting, the money has usually already moved.
What we’re seeing right now isn’t panic... it’s a gradual shift in trust and pricing of risk.
Back in the day when I was a financial analyst for GMD (yes, it's a long and winding road..) I remember PET complaining "they want me to run the country like General Motors!" The answer was a loud and resounding YES, and the electorate proved that by electing Brian Mulroney.
He paid down debt by creating the GST and improved revenue by co-creating, with Ronny Raygun, NAFTA. He was reviled for both, but balanced the books and reduced the deficit. I'm not a PC fan but I have to give credit where it's due; Mulroney understood the problem and took steps to improve it.
And yet, the most successful country in the world spends money like it grows on trees. For the U.S. it does, because they just print more when they need it. You may have seen pictures of people with wheelbarrows of money out to buy a loaf of bread in post-war Germany. Then there were the pictures of people jumping off buildings in 1929. Money only has value if you believe it has worth.
Somehow they have failed to recognize that when the world loses trust about one thing, that blossoms into losing trust about everything. U.S. gained trust by their WWl and WWll efforts, by their NATO commitment, with the Marshall plan (more self-serving but good PR) and by accepting the mantle of World Peacekeeper from Great Britain. They built and kept that trust for decades. They lost it in one year due to the foolish actions of one man run amok while supported by sycophants hoping to get aboard the billionaire bus.
So they are slowly being abandoned. New trade systems, defence systems, financial systems and credit systems are being developed. Trust is earned over time but sometimes lost in moments. I had believed that no one could be so inept as to bankrupt a casino. Thumper said "hold my beer" and is proceeding to bankrupt the world's wealthiest country.
The USSR dissolved partly because side they couldn’t afford the arms race with the US and going bankrupt. Welcome to Putins revenge. And the price? Allowing Trump to get richer.
Many Americans may not realise it yet, but almost everything Trump does adds to or subtracts from the world's view of the country.
# Insult your allies - they look elsewhere for future support.
# Increase tariffs on a whim (remember the Heard Islands with only penguins?) - trading partners look elsewhere for their goods.
# Threaten to annex territory (Canada, Greenland) - they gather their new partners to make sure it doesn't happen.
# Play flip/flop with Ukraine and Russia - Europe starts paying attention and steps up to help Ukraine.
# Slow release the Epstein Files - everyone wonders what Trump is hiding, does some investigative work themselves, and heads start to roll.
Economies are built on trust, stability, fair trading, predictability. Everything that Trump can't provide.
Celtic Lady, trust is currency in global economics.
When uncertainty rises, countries hedge. They look for alternatives. That’s just rational behavior.
The long-term effects of credibility shifts usually show up years later, not immediately... which is why people underestimate them in the moment.
Good comment.
It’s clear that Putin owns Trump & is making him trash America & by extension the West. What else explains Trump’s behavior besides?
Taras... there are a lot of theories out there.
I try to stay with what can actually be observed... like policy choices, reactions from allies, economic consequences.
Outcomes tell us more than speculation about motives ever will.
That’s where the real analysis lives.
This is quickly becoming one of my favorite reads.
Christine, I appreciate that a lot.
Knowing people are finding value here is what keeps me writing.
Glad you’re here.
Great piece again today, Fred. No one is saying much about the sales of US. Bonds that has been taking place. I wonder how long it will be before someone in the US government ( Congress or Senate) will step up and start following the money
Thank you, Gail... and you’re exactly right.
Bond markets tend to move quietly, which is why they don’t get much public attention until something breaks. By the time politicians start reacting, the money has usually already moved.
What we’re seeing right now isn’t panic... it’s a gradual shift in trust and pricing of risk.
Those signals matter a lot more than headlines.
I appreciate you following along.
Back in the day when I was a financial analyst for GMD (yes, it's a long and winding road..) I remember PET complaining "they want me to run the country like General Motors!" The answer was a loud and resounding YES, and the electorate proved that by electing Brian Mulroney.
He paid down debt by creating the GST and improved revenue by co-creating, with Ronny Raygun, NAFTA. He was reviled for both, but balanced the books and reduced the deficit. I'm not a PC fan but I have to give credit where it's due; Mulroney understood the problem and took steps to improve it.
And yet, the most successful country in the world spends money like it grows on trees. For the U.S. it does, because they just print more when they need it. You may have seen pictures of people with wheelbarrows of money out to buy a loaf of bread in post-war Germany. Then there were the pictures of people jumping off buildings in 1929. Money only has value if you believe it has worth.
Somehow they have failed to recognize that when the world loses trust about one thing, that blossoms into losing trust about everything. U.S. gained trust by their WWl and WWll efforts, by their NATO commitment, with the Marshall plan (more self-serving but good PR) and by accepting the mantle of World Peacekeeper from Great Britain. They built and kept that trust for decades. They lost it in one year due to the foolish actions of one man run amok while supported by sycophants hoping to get aboard the billionaire bus.
So they are slowly being abandoned. New trade systems, defence systems, financial systems and credit systems are being developed. Trust is earned over time but sometimes lost in moments. I had believed that no one could be so inept as to bankrupt a casino. Thumper said "hold my beer" and is proceeding to bankrupt the world's wealthiest country.
Jim, this is a terrific perspective... especially the point about trust being built over decades and lost quickly.
Currency dominance isn’t about printing presses. It’s about confidence.
And confidence is fragile when policy starts looking chaotic.
History shows great powers don’t usually collapse overnight… they drift until the world quietly adjusts around them.
Appreciate you sharing the insider lens.
The USSR dissolved partly because side they couldn’t afford the arms race with the US and going bankrupt. Welcome to Putins revenge. And the price? Allowing Trump to get richer.
Blame fucking Reagan and Thatcher for that’s