Biden keeps hyping something he calls ‘Bidenomics’ which sounds a lot like something a marketing scheme on a late-night TV commercial complete with an 1-800 number and a PO Box in South Florida that really goes to Nigeria.
In the real world, everyone hates Bidenomics and despite the media’s constant economic hype, things are bad. Nevertheless, the Biden administration (and frankly most Democrats and Republicans) are committed to spending more money and then claiming that any efforts to cut the insane mega-trillion budgets will endanger Social Security. What’s really endangering it is constant spending with no plan as to get more money except maybe peddling some more treasury bonds with insane interest rates.
And even then, good luck.
Nobody wants U.S. Treasury bonds.
Elementary economic forces — too much supply and not enough demand — have collided to create the worst stretch for U.S. government bonds since the Civil War. The government keeps borrowing to cover its budget deficits, while once-reliable buyers of that debt, both at home and abroad, have pulled back.
Auctions of fresh bonds that were once routine are now going terribly. And bond portfolios are getting absolutely hammered.
That includes the Treasury Department.
The government is borrowing more than expected, increasing the supply of Treasurys and dinging their value. Meanwhile, the Federal Reserve is selling down its own holdings, dumping yet more bonds into a market that doesn’t really want them.
Already 2.5% of the U.S.’s economic output is going to service its existing debts, a number that some analysts expect to hit 4% by 2030. Already running huge deficits, the only way for Treasury to pay the interest — along with ambitious spending programs like the CHIPS Act and student-loan forgiveness — is to keep borrowing.
But from whom?
China and Japan, once reliable buyers of Treasury bonds, have been selling them to prop up their weakening currencies. A decade ago they held more than 22% of U.S. government bonds; today it’s 7%.
There was a lady who once said that socialism works until you run out of other people’s money.