Normally, investors rush into Treasurys at a whiff of economic chaos but now they are selling them as not even the lure of higher interest payments on the bonds is getting them to buy. The freak development has experts worried that big banks, funds and traders are losing faith in America as a good place to store their money.
“The fear is the U.S. is losing its standing as the safe haven,” said George Cipolloni, a fund manager at Penn Mutual Asset Management. “Our bond market is the biggest and most stable in the world, but when you add instability, bad things can happen.”
That could be bad news for consumers in need of a loan — and for President Donald Trump, who had hoped his tariff pause earlier this week would restore confidence in the markets.
The “debt” of a monetarily sovereign state is really nothing like the debt of a household or business. The US could pay off all its debt in an instant by an act of Congress. Not saying that would be a good thing, but there are no financial constraints stopping Congress from doing that; only political ones.
Yes, of course it could. But then, nobody (except maybe some terminally stupid MAGA-heads) would ever lend the US any money. The treasurey could mint a bunch of trillion dollar coins to the same effect, so congress would not be needed. But the (devastaing) effect would be the same.
This does not mean I would put such a dumb move beyond Trumps reach. Big photo op, “See, I’ve eliminated the whole national debt with a stroke of my sharpie! Biden was too stupid to do this!”