this post was submitted on 12 Apr 2025
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Freak sell-off of ‘safe haven’ US bonds raises fear that confidence in America is fading (apnews.com)
submitted 3 days ago by [email protected] to c/[email protected]
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cross-posted from: https://lemmy.world/post/28103623

The upheaval in stocks has been grabbing all the headlines, but there is a bigger problem looming in another corner of the financial markets that rarely gets headlines: Investors are dumping U.S. government bonds.

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.

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[–] [email protected] 6 points 3 days ago* (last edited 3 days ago) (1 children)

I got rid of my federal government bonds a few weeks ago because I didn’t want to be lending money to Trump and his cronies.

That’s not how any of this works. The purpose of US Treasury securities is to give the wealthy a safe & profitable place to park their capital, outside of the real economy. The government doesn’t need to borrow your dollars when it has an infinite supply of them.

[–] [email protected] 4 points 3 days ago* (last edited 3 days ago) (1 children)

That's wrong, first of all it's the central bank that controls money supply, which is independent from the government. In addition, even if the government could magically create all the money it needs to pay its debt, without borrowing more, it would completely devalue the dollar.

[–] [email protected] 3 points 2 days ago* (last edited 2 days ago)

first of all it’s the central bank that controls money supply, which is independent from the government.

Michael Hudson on the Federal Reserve System

Congress constitutionally has the power of the purse, and the it’s the US Treasury that creates money[^1]. When Congress created JP Morgan’s Federal Reserve, it partially cede its monetary sovereignty to the cartel of private US banks, and it can destroy the Federal Reserve in the same way that it created it, with the stroke of the pen.

even if the government could magically create all the money it needs to pay its debt, without borrowing more, it would completely devalue the dollar.

I see that you didn’t engage with the materials that I provided. Someone always says this, which is why I provided information on precisely this in my link about hyperinflation.

[^1]: There’s a second way that money is created: Congress deputized the private banks to create money out of thin air in the form of debt, meaning loans & mortgages. Each of those dollars is destroyed when the debtor pays down the principal.