A big part of why the bond market hates the GOP tax cuts is how they increase the debt: The bill cuts taxes for the rich while cutting spending on social safety net programs. Overall, economist Justin Wolfers summed it up as “the largest redistribution from poor to rich in American history.”
As a result, the GOP budget bill won’t just increase the annual government deficit, it will hurt economic growth. That’s because tax cuts to the rich provide less juice to the economy than other types of spending. Rich people are, well, already rich, so they have less of what economists call “marginal propensity to spend” the extra money they get to keep. Trump’s budget also cuts programs that directly increase economic growth, like clean energy tax benefits from the Inflation Reduction Act.
Add to that the fact that Trump’s tariffs remain at levels that amount to one of the greatest tax increases in American history, the cost of which will be borne disproportionately by middle- and lower-income consumers, and the outcome is simultaneous and wildly hypocritical fiscal austerity and profligacy that will hamper growth and increase the national debt.
I think the big takeaway here is that American exceptionalism is over. America's aura has gone from fading to faded.
We are seeing bond yields go up and the value of the dollar go down, a rarity in our lifetimes. Typically when yields go up, the demand for US securities and, therefore, the US dollar goes up, increasing their respective value.
The fact that demand is not increasing despite better yields points to investors having lost faith in the US government to pay back its debts. A tax and spending bill that adds 3.8 trillion dollars to the deficit over 10 years is not reassuring.
We're seeing more and more typically direct relationships become inverse relationships which really just point to one central idea - people have lost faith in the USA.
Most governments, especially Western governments, count on the wealthy to see their securities as a safe place to store their money. Its why they're able to run massive deficits to provide services for their constituents (and also, at times, gives them room to be fiscally irresponsible). We are seeing this paradigm shift gradually with Japan's and the UK's yields having also gone up due to fiscal mismanagement as the list of nations having AAA credit ratings becomes smaller.
As a Canadian, most people I know talk about actively avoiding American products forever more.
America is fucked.
You did the ultimate betrayal, which the world got to see, and then the rest to follow.
Good luck, you guys have one single route to redemption, and there is no sign of it happening.
To be fair, we Canadians have an awful lot to fix that isn't going to get fixed.
Did you read about the recent uncovering of the government report that said that poor people were going to be foraging in the woods for food in the next decade or two? Sure I'm glad that we keep on focusing on the keeping rich people in Europe happy.
Lol source?
https://horizons.service.canada.ca/en/2025/01/10/future-lives-social-mobility/index.shtml
The government of Canada.
"People may start to hunt, fish, and forage on public lands and waterways without reference to regulations."