Any doubt Trump manipulates the Working Class for the Billionaire Class has been settled with the BBB

ByMartyn Bradbury

I honestly didn’t believe he could get this BBB monstrosity through, because it is just so damaging to the economy and because it is a naked robbing of the working classes for the Billionaire Class…

The big, bad bond market could derail Trump’s big, beautiful bill

The US issues a lot of different kinds of debt, but the kind you should pay closest attention to are 10-year bonds. These reflect the market’s views on the medium- to long-run trajectory of the government and economy, whereas 30-day or six-month bonds are much shorter-run indicators. The interest rate that’s most informative about government policy and long-run prospects is the “real” rate, adjusted for inflation. If inflation is 4 percent, investors will probably add about 4 percentage points to the real interest rate to make sure their investment doesn’t erode in value. The real rate thus reflects how much they expect to earn for essentially lending money to the US government in addition to just keeping up with overall prices.

Here’s the 10-year, adjusting for inflation, since the start of President Donald Trump’s first term:

In the aftermath of Covid, rates actually went negative after taking inflation into account. This is what’s sometimes called the “flight to safety”: In times of crisis, investors often move away from risky assets like stocks and toward reliable, predictable ones, like US government bonds. That drives interest rates down, sometimes even below inflation.

But since 2023 or so, rates have been much higher. There’s a saying, popularized by economist Scott Sumner, that one should “never reason from a price change”: Changes in the Treasury interest rate (or the price of borrowing) could be from any number of factors, so it’s too simplistic to look at what happened and say “investors decided the US government became a riskier bet.”

That said, when Fed economists analyzed the spike that occurred in 2023, they concluded the spike in rates was indeed due to investors reacting to changing economic conditions: The US was issuing more debt, the Federal Reserve was tightening to try to control inflation, and future economic growth in the US was looking sluggish.

Other observers in the bond market have been sounding alarms, mostly citing excessive US borrowing. In 2023, Fitch, one of the three big credit rating agencies that issues risk evaluations of bonds, downgraded US debt, which previously had a perfect AAA rating. On May 16 of this year, Moody’s, another of the three, followed suit, amid tax cut negotiations in Congress. Standard & Poor’s, the third rater, had already downgraded the US after the 2011 debt ceiling fight, meaning there now isn’t a single rating agency giving US debt top marks.

As the 2023 downgrade indicates, this change isn’t entirely due to Trump. Covid did a number on the US debt picture, with trillions of dollars in relief measures passed and implemented, and many months of lower revenues due to the 2020 recession. But in January, as Trump prepared to return to the White House, bond analysts were already forecasting higher rates, noting his penchant for tax cuts and lack of seriousness about deficits. On May 20, amid the tax fight in Congress, a batch of 20-year government bonds had trouble selling at auction, sending rates flying higher still. The bond market, it is fair to say, is not pleased with the direction this administration is going.

…this insanity by Trump risks a serious economic implosion.

Any doubt Trump manipulates the Working Class for the Billionaire Class has been settled with the passing of this brutal Big Beautiful Bribe.

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8 Comments

  1. The biggest risk to the US working class and the US economy is not growing government debt – it’s the spending cuts. These will contract the US economy much more than expected – workers across all sectors are going lose decent paying jobs as a result and this will stall growth. Just like it has already in NZ.

  2. The UFSA will resemble a dystopian post-apocalypse hellscape within the decade.
    It’s already well on the way.

  4. Gee Trump is a lying fascist wanker, what a shock! How any moron thought after his last trainwreck of a term that he would be any different is astonishing. To be fair the fascist stuff was not so much a lie, but concentration camps are a step further than I thought he was capable . I guess after attempting a coup it was not a surprise. One can only hope he goes a burger too far and keels over.

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