Since no one is mentioning it I will. If the stock market crashes, dollars move to treasuries. If the demand for treasuries skyrocket, the interest rate on treasuries drops dramatically. There's 9.2 trillion dollars US debt in the form of low interest treasuries up for refinancing this year. Refinancing them at the current treasury rate will add a huge burden to government expenditures.
However, if you drop the nominal interest rate to say 2%, that saves about $460 billion a year in interest on the 9.2 trillion, or $3.58 trillion over the life of the treasuries.
It's just a dumb theory, but blow the stock market up, lower treasury rates, refinance, prop the market back up again.
Seem's like a buying opportunity ahead perhaps.
Fun fact since you bring up treasuries, Marjorie Taylor Greene appears to have moved several hundred thousand dollars (probably most of her assets) into treasury bills a few days before the tariffs announcement, pretty much like she knew exactly what was coming. I noticed that tonight with a new site someone else here made: https://www.capitoltrades.com/politicians/G000596
I suspect there's real corruption to be found, anyone who knew the contents of "Liberation Day" could make millions off a very obvious bet. Too bad we don't care about corruption anymore!
I am no fan of the administration or Greene, but the tariff day was well communicated beforehand (though, not the magnitude). Getting out of the market before the chaos hit the fan, seems like a fiscally savvy move.
Not really. Nothing has been removed. So far everything is just a panic. Anything critical will continue to flow, just at a higher cost. Most already healthy companies will survive. This is bad, but it's not as terrible as the panick is making it out to be. The thing that's making it look worse is how overvalued the market has been.
Not many people realize that the Fed can’t really increase rates any more, because of that debt service. That’s a problem because if inflation comes back with a vengeance, the Fed can’t pull its anti-inflation lever.
It’ll be interesting to see what the Fed does but I’m inclined to think they’ll be dropping rates to near-zero sometime this year like they did in 2020. That would at least somewhat offset increased prices from the tariffs, while applying “expansionary” force on the economy through cheap money. There’s a nonzero chance this tariff game ends up reviving the economy (let’s be real, Biden Admin avoided a “recession” but the economy was/is on life support) by encouraging companies to spend more on expansion while simultaneously suppressing consumer spending. I’m no economist but it’s actually low-key genius… if it works. It probably won’t work.
Yes Trump came up with his tariff plan in the 1980s (and explained it on Opra) because he knew it would help with interest on bonds in 2025. Just more Trump 5d chess.
Personally I can't wait for the 'defend everything' theory as to why penguins on their own islands are bad. It looks like it's going to be 'those penguins were going to arbitrage Chinese goods into the USA'.
In 2024, the United States recorded imports valued at approximately $1.4 million from Heard Island and McDonald Islands, according to World Bank data. These figures are likely the result of misclassified shipments rather than actual trade with these uninhabited territories.
Just adding some context, not saying I agree with tarrifing penguin island.
However, if you drop the nominal interest rate to say 2%, that saves about $460 billion a year in interest on the 9.2 trillion, or $3.58 trillion over the life of the treasuries.
It's just a dumb theory, but blow the stock market up, lower treasury rates, refinance, prop the market back up again. Seem's like a buying opportunity ahead perhaps.