Scott Bessent is Selling Payday Loans

Let’s start with a situation of which almost every one of us has personal knowledge.  You have overspent your income, probably without intending to, but stuff happens.  You are running behind on your bills and think, “I just need enough money to get by for the next month, then I can get things under control.”   So, you take out a loan, pay some bills, buy some groceries and get the kids some shoes.  But at the end of the month, you are more in debt than before.  You try for another loan, and then another, and another.  Soon the only people who will loan you money are demanding you pay exorbitant interest.  You know you have hit bottom when you are thinking about a pay day loan.

The United States government does the same thing.  When a government needs to raise money that it hasn’t raised in taxes, it sells bonds.  But if all they do is pay interest on the debt, instead of paying down the debt, we keep getting in more trouble. 

Are we paying down the debt?  No.  The debt grew by $1TRILLION just in the last six months.  We are now at a place where our national debt exceeds the entire GDP of the country.  Our debt is growing as fast as inflation, which fuels more inflation. 

The interest the Treasury pays (that you pay) is the “yield.”   High yields mean high interest rates, which means a high tax burden.  But those yields make the bonds more attractive.  When Secretary of the Treasury, Scott Bessent, smugly says that there is nothing to worry about in the bond market because, “…we sold all our bonds…” he is counting on you not knowing what that means.  In truth, the government kept raising the interest offered until very rich people saw a deal they couldn’t turn down and plopped down $10,000 per bond.  With the resumption of missile attacks on Iran, the yield on America’s 30-year bonds went to 5.28%.  In Japan they only pay 3% to get people to buy their bonds and that is a 30 year high. 

These bonds and their high yield affect your mortgage rate as well as your car loan, your retirement plan, the new factory a company wants to build and the jobs it will create. The bond market has been in serious trouble for months and it is worrying economists the same way cracked support beams worry engineers. 

This administration has damaged the bond market by increasing the deficit and the debt.  It has damaged trust in our banks, our government and our ability to satisfy our creditors.  Instead of a safe haven for investment, we are now looking like a poor risk.  And it isn’t just the poor decisions made by the White House, or its ultra-wealthy bias.  Our Republican controlled House of Representatives is more at fault than the President. It is the House that holds “the power of the purse.”  They are supposed to set the budget and appropriate money, but they are not.  They are supposed to check the excesses of the Presidency, but they do not.  The Republicans have chosen to do none of this.  They have chosen to increase the deficit. They have chosen to increase the debt.  What they are doing is damaging the economy and hurting the buying power of every person, especially the ones who do not have $10,000 lying around to buy a 30-year bond. 

Hold your elected representatives accountable for their actions.  The Republican party is not keeping the faith. 

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