r/PoursTea • u/Simpleximo • 10h ago
FinancialTea 💵 Trump’s $5,000 pledge and the bond market revolt shows it’s a voter bribe — costing every American $8,000. $8k to get $5k explains why Trump as a business leader went bankrupt six times.
https://finance.yahoo.com/economy/policy/articles/trump-5-000-pledge-bond-173415026.html9
u/SketchSkirmish 8h ago
All I know is most authoritarian leaders have horrible ends that history books vividly remember.
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u/Rich_cranium2025 2h ago
I’ve told many that, history shows it doesn’t end well for these types, be patient.
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u/afriendofnature 9h ago
I am surprised he made it this far. Something, something malice and greed that cannot be attributed to the stupidity of the people.
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u/Alone-Promise-8904 5h ago
This is a good way to look at the issue. How would the government raise the money to make the payment? Issue 10-year bonds at ~4.92%. That will cost about $8,000 in interest and repayment of the principal. There's no free lunch here.
Who's buying the bonds? Other governments, rich people, corporations, etc.
Who is paying the interest? Taxpayers. Another stinky Donny deal.
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u/Simpleximo 4h ago
With the highest reckless deficit spending of any president the bond market is at a 30 year high (charging more) driving the government deeper in to debt faster.
Treasury Secretary Scott Bessent's answer has been to try to throw money at the problem, bragging that "I am the house now," which is flailing in plain sight. Bessent has initiated Treasury buybacks, which amount to issuing new bonds at higher interest rates to buy back older bonds issued years ago, at a lower interest rate – which is a bit paradoxical as this creates an effectively higher cash interest rate the U.S. government has to pay.
Furthermore, Bessent has accelerated a pattern he previously attacked the Biden Administration for doing, of retiring longer-term notes by issuing more short-term bills – which amounts to switching fixed low rates for floating high rates, making the U.S. government even more vulnerable to every tiny move in short-term interest rates. In short, Treasury is buying bonds with money it raises by selling more bills. Evercore's Krishna Guha called it "a weak form Operation Twist." It is almost akin to bailing water while the captain drills holes in the hull.
Markets have seen through the emptiness of Bessent's remedy, as 'bond vigilantes' have driven bond yields even higher despite Bessent's band-aids. That hasn't stopped Bessent from continuing to throw more money at the problem.
In August, he doubled Treasury's buybacks of long-dated bonds to $4 billion per operation, declaring "we have a big toolkit" and insisting that yields "don't reflect the underlying fundamentals." On Wednesday, the same day Trump promised $1.3 trillion, Treasury went to $6 billion. Yields rose anyway, counteracting Bessent's move entirely. Despite Bessent's braggadocio that "I am the house now", the house is evidently undercapitalized, as bond traders mint fortunes calling out the fact that the emperor has no clothes.
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u/D3LiverAnce 2h ago
"Paying $8K to $10K per person to receive $5K per person may help explain why President Trump as a business leader went bankrupt six times."
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u/Famous-Decision-1017 2h ago
The junk bond market explains the bankruptcies. Lots of money to be made off bad debt.
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u/ciopobbi 1h ago
Sweeten the deal with a Trump Watch, Trump Wine, Trump Steaks, a copy of Trump Magazine, a round trip ticket on Trump Airlines, a three night stay at a Trump Casino, a donation to the Trump charity and a free business class at Triumph University
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u/jackcanyon 19m ago
Trumps schemes will destroy this country .He will never get to spend all the money he’s grifted.Hopefully the end is near for him and his rotten family
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u/CherryQuiz 10h ago
Classic Trump move—make you pay more for less and call it a deal!