American Economy in a Tailspin

[Exidous]

Basically, Trump may be ruining the economy purposely in order to force the fed to lower interest rates.

This is plausible, Trump very obviously wants low interest rates and he may think that early term economic pain is the best way to get it (rather than taking on the Fed directly).

A large portion of the US debt is set to be refinanced soon, and if that is done at a much lower rate than its currently high point, then the US will have more time to pay things off without having to worry about interest.

This is not plausible. It's trivially true that lower interest rates mean less interest accrues for the borrower to pay, but the vast majority of the interest rate generated by US government bonds is from the so-called inflation rate. If the Fed cuts interest rates, and inflation makes up the difference (inflation generally ^ when interest rate v), then there is no effective change to US debt burden - no bought time. The intended effect you're describing isn't a new plan, it's been going on since at least the Obama administration. Set interest rates too low, get inflation.

The driver of relatively low US borrowing costs hasn't been the Fed funds rate (being kept artificially low). It's the size and strength of the US economy, the confidence that the US will repay its debts...

I'm not saying Trump doesn't believe this. I'm saying the plan doesn't work.

EDIT:

The US debt is definitely near a breaking point.

The US has had an enormous and close-to-unsustainable debt burden for over a decade. But 'near' a breaking point is not at all clear. Timing is a bitch.

 

[ChronosNotashi]

* I'm actually a bit annoyed by the whole egg-price thing. There's bird flu, okay? That's why there are less eggs, and that's why they're more expensive. Yes, Trump has given the wrong signal by also cutting into the health and safety inspection side of government, but otherwise this is beyond his control. Focussing on it is a false signal, as this will stabilize in a couple months.

Might be a little longer than a couple months, actually. It'll depend on how quickly farmers can get new egg-laying chickens in to replace the ones lost to bird flu - including those that weren't showing symptoms, but were culled to prevent it from spreading. Which isn't an unexpected scenario, since it's a lot harder to quarantine farm animals than for humans to quarantine themselves when sick (since viruses like bird flu aren't exclusively carried or spread by pets and livestock), but given how many chickens have died/were culled as a result, we may be looking at long-term impacts on the egg industry that could take up to a year or two to resolve.

P.S.: This also depends on when there is confirmation that there are no more signs of the bird flu, since it won't be entirely safe to start replenishing egg-laying chicken numbers until then. Basically, the only way egg prices will stabilize and go down before then will be if demand goes down enough, which may not be likely.

 

[Viri]

Salaries were increasing

Yeah, as everything was getting expensive as shit.

Stocks were booming.

I don't give a shit about stocks. lmao

American eco has been shit since 2020. Media spent years telling us it was great, recession didn't exist, and to stop bitching about food prices.

 

[LagunaLoire88]

Just wait until they start fucking with social security checks, that's all the money some people have to contribute to the economy. I do think pushing us toward a recession/depression is intentional though, it allows billionaires and corporations to buy up an even bigger slice of the pie for pennies on the dollar, much like they did following the 2008 crash.

Yes lets the cash flow 150, 200 and even 300 year olds... lets think about giving away money to ficitional characters.

 

[SeltzerMist]

Yes lets the cash flow 150, 200 and even 300 year olds... lets think about giving away money to ficitional characters.

Huh???? What are you even taking about??

 

[gamefan5]

The US debt is definitely near a breaking point. This video really opened my eyes on what Trump may be trying to do. It's kind of a crazy but smart plan if true. It also kind of puts a lot of Trump's comments about hurting a bit into context.

Basically, Trump may be ruining the economy purposely in order to force the fed to lower interest rates. A large portion of the US debt is set to be refinanced soon, and if that is done at a much lower rate than its currently high point, then the US will have more time to pay things off without having to worry about interest. I didn't realize, but the US is currently paying more on interest than military spending currently. That's CRAZY!

Oh, this is a great video. Thank you for this, because kt does make more sense of what he is doing.

A theory, yes. And if it is true, it is extremely foolish, but it does make sense out of all that nonsense.

Huh???? What are you even taking about??

Don't bother. He bought the Musk spiel, hook line and sinker withiut verifying his claims.

 

[SeltzerMist]

In general that's a pretty good finance channel I've been following for a few years now

 

[gamefan5]

This is plausible, Trump very obviously wants low interest rates and he may think that early term economic pain is the best way to get it (rather than taking on the Fed directly).

This is not plausible. It's trivially true that lower interest rates mean less interest accrues for the borrower to pay, but the vast majority of the interest rate generated by US government bonds is from the so-called inflation rate. If the Fed cuts interest rates, and inflation makes up the difference (inflation generally ^ when interest rate v), then there is no effective change to US debt burden - no bought time. The intended effect you're describing isn't a new plan, it's been going on since at least the Obama administration. Set interest rates too low, get inflation.

The driver of relatively low US borrowing costs hasn't been the Fed funds rate (being kept artificially low). It's the size and strength of the US economy, the confidence that the US will repay its debts...

I'm not saying Trump doesn't believe this. I'm saying the plan doesn't work.

EDIT:


The US has had an enormous and close-to-unsustainable debt burden for over a decade. But 'near' a breaking point is not at all clear. Timing is a bitch.

Oh, that's actually a great retort.

 

[titan_tim]

Yes lets the cash flow 150, 200 and even 300 year olds... lets think about giving away money to ficitional characters.

Please, please, PLEAAAAAAASE tell me that you don't believe that 300 year old's were getting money. Please!

Yes, people were in the computer systems. No, those people weren't getting monthly checks. Here's the biggest admittance that they weren't: They haven't said how much money was saved by removing them from the computer system. There have been no family members paraded out on TV who were collecting this money.

People in a computer system doesn't equate to fraud. Sorry.

Post automatically merged: Mar 11, 2025

This is not plausible. It's trivially true that lower interest rates mean less interest accrues for the borrower to pay, but the vast majority of the interest rate generated by US government bonds is from the so-called inflation rate. If the Fed cuts interest rates, and inflation makes up the difference (inflation generally ^ when interest rate v), then there is no effective change to US debt burden - no bought time. The intended effect you're describing isn't a new plan, it's been going on since at least the Obama administration. Set interest rates too low, get inflation.

The driver of relatively low US borrowing costs hasn't been the Fed funds rate (being kept artificially low). It's the size and strength of the US economy, the confidence that the US will repay its debts...

I'll be the first to admit that I'm not an economist in any way, so I'm trying to rely on the experts to make sense of it all. Sorry in advance if I'm just parroting what it said in the video.

He was mentioning that if things don't change, the US will be paying $1.52 interest on every $1 the country generates. That doesn't sound like a trivial amount to pay when it could be much lower if the rates are cut.

I'm not sure how inflation would affect the government paying out their debt, but it would definitely affect the regular people though. Maybe he expects the economy to recover quickly after the rates are locked in low?

 

[BigOnYa]

Yes lets the cash flow 150, 200 and even 300 year olds... lets think about giving away money to ficitional characters.

Source. Show us proof that any of those people were getting checks. I'll believe that when I believe "88" in someone's Username is related to a video game, as you claim.. You obviously blindly believe anything Trump and Musk lie to about, and then repeat it here as misinformation and/or propaganda.

 

[Exidous]

I'll be the first to admit that I'm not an economist in any way, so I'm trying to rely on the experts to make sense of it all. Sorry in advance if I'm just parroting what it said in the video.

I appreciate it if you are, I hate videos when used as a substitute for text.

He was mentioning that if things don't change, the US will be paying $1.52 interest on every $1 the country generates.

Right, so the more debt you have, the more interest you need to pay to service it. Otherwise you're in default on your debt.

The US debt burden is enormous, and it's estimated that $1 trillion is the interest rate payments for the US national debt in 2025. Not paying back the principal, just talking about the interest payments to service existing debt.

One component of that debt service is the interest payments paid to US bondholders.

That doesn't sound like a trivial amount to pay when it could be much lower if the rates are cut.

When they talk about the Federal Reserve lowering rates, they're not talking about lowering the interest rate amount paid on US government bonds, directly.

https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/

The Fed 'lower interest rates' is lowering the federal funds rate - the amount of interest banks earn on particular common baseline activities. It's the indirect effects of this change that eventually influence nominal (the posted amount) US government debt interest rates. Influences, not necessary lowers. Sometimes you could get a higher US bond interest rate from a rate cut, if the Fed's rate cut turns out very inflationary in effect.

I'm not sure how inflation would affect the government paying out their debt, but it would definitely affect the regular people though.

The way inflation affects the government paying back its debt is by making those future dollars less valuable. If we suffered hyperinflation, and say you needed $100m to buy a car, the size of the (same, current, nominal) US government debt needing to be paid would indeed be smaller, less onerous, when measured by the number of 'cars' it would cost.

Maybe he expects

lol

the economy to recover quickly after the rates are locked in low?

If he's not attacking the independence of the Fed, just scaring the stock market this time, to make the Fed do what he wants, this time, then when inflation further increases from the interest rate cut (or at least, stays high) the Fed will want to raise rates later to tame inflation, especially if the stock market recovers. So that plan doesn't work for 'locking in' low interest rates.

It's possible he intends to attack the independence of the Fed and just isn't ready to do it now, so tanking the stock market for this singular interest rate change is a stopgap.

 

[notsu]

Look on the bright side, at least it made browsing r/wallstreetbets more entertaining

 

[titan_tim]

One component of that debt service is the interest payments paid to US bondholders.
When they talk about the Federal Reserve lowering rates, they're not talking about lowering the interest rate amount paid on US government bonds, directly.

Oh wow, this was all a very interesting read! Don't mind me if I keep poking you for more info.

In the video, they mentioned that it was around 7 trillion which are up for refinancing this year. So I'm not sure if that 7 trillion out of the 36 trillion debt has to do with any bond interest payouts. But still interesting to learn about.

The Fed 'lower interest rates' is lowering the federal funds rate - the amount of interest banks earn on particular common baseline activities. It's the indirect effects of this change that eventually influence nominal (the posted amount) US government debt interest rates. Influences, not necessary lowers. Sometimes you could get a higher US bond interest rate from a rate cut, if the Fed's rate cut turns out very inflationary in effect.

I read this a few times and still can't wrap my head around it. I'd like to think that I'm a fairly learned individual, but this made me feel really dumb. I'm guessing you're an economist or accountant in your regular life.

The way inflation affects the government paying back its debt is by making those future dollars less valuable. If we suffered hyperinflation, and say you needed $100m to buy a car, the size of the (same, current, nominal) US government debt needing to be paid would indeed be smaller, less onerous, when measured by the number of 'cars' it would cost.

This I can wrap my head around! So yes, if inflation goes haywire, the 7 trillion which was refinanced would still be paid at that lower rate. But even if the money is barely worth the paper it's written on, they'd still be able to pay it off in USD. If they had to pay in pounds or euros, that would be a bigger problem.

It's possible he intends to attack the independence of the Fed and just isn't ready to do it now, so tanking the stock market for this singular interest rate change is a stopgap.

Well, he has been on record implying that the fed was being controlled by Obama and Biden in the past when they got rate cuts when their economies were doing well. So that may be him priming the pump for him to forcefully attempt what he's accused others of doing.

If we're talking about this potential strategy here, then I'm sure the fed is also seeing what he's potentially trying to do as well.

 

[urherenow]

• Freedom of movement: Forced deportation

Reaching much? More unhinged idiocy.
ALL deportation is forced. You can't name a single President who never deported anyone. Get out of your fantasy land.

 

[BigOnYa]

You can't name a single President who never deported anyone

George Washington (1789-1797).
The first deportation law in the United States was the Alien Act of 1798.

 

[urherenow]

George Washington (1789-1797).
The first deportation law in the United States was the Alien Act of 1798.

Nope. Served 1789 to 1797. The first deportations from the United States took place in 1794.

 

[BigOnYa]

Nope. Served 1789 to 1797. The first deportations from the United States took place in 1794.

That was not done by the president though, that was the state of Massachusetts.
"The first deportations from the United States took place in 1794 by Massachusetts, following a rush of poor Irish immigrants to the U.S. east coast, under a 1794 Massachusetts law which permitted such deportations."
"The first deportation law in the United States was the Alien Act of 1798, which allowed the president to deport any alien deemed dangerous."
https://en.m.wikipedia.org/wiki/Deportation_and_removal_from_the_United_States

 

[Exidous]

In the video, they mentioned that it was around 7 trillion which are up for refinancing this year. So I'm not sure if that 7 trillion out of the 36 trillion debt has to do with any bond interest payouts.

Most US national debt is in long term bonds, and that's what short term debt issuance gets 'refinanced' into. Those debts have fixed interest rates, most adjusted only for inflation (see that link in my last for how a common US bond interest rate is calculated). The Fed changing the federal funds rate ('lowering interest rates') does not include directly changing such bonds' interest rates.

That's the key takeaway for you here: the Fed 'lowering interest rates' does not directly change US government debt interest rates.

I think your misunderstanding (possibly that video's misrepresentation) is using the Fed's federal funds rate changes as a shorthand for changing the interest rate on US government debt. They're not the same thing. They can even move in opposite directions.

If you want to know how the indirect effect happens it's like federal funds rate v > banks' lending volume/risk ^ > money supply ^

That money supply ^ step is the actual technical definition of inflation, but the vast majority uses 'inflation' to mean consumer prices ^.

Inflation, unlike the federal funds rate, is a direct factor in setting US government debt interest rates (again see that link).

 

[Xzi]

Yes lets the cash flow 150, 200 and even 300 year olds... lets think about giving away money to ficitional characters.

Maybe use your brain instead of letting a drug-addled billionaire sociopath tell you what to believe. The SSA like a lot of agencies uses a default birth date when the actual date is unknown or was lost in agency-to-agency transfer. It would be the same date across several thousand recipients, making it obvious that the entries were intentional. Musk is lying because Trump needs to fund his trillion-dollar handout to the rich somehow, so might as well take it from the poor and middle-class people who spent their whole lives paying into the program.

Besides, even if we set aside seniors who qualify for social security payouts, that still leaves the rest of us. Is seig heil man gonna pay me back for what I've contributed to social security so far if he cancels it? Fuck no. That's theft on a massive national scale, plain and simple.

 

[mituzora]

Maybe use your brain instead of letting a drug-addled billionaire sociopath tell you what to believe. The SSA like a lot of agencies uses a default birth date when the actual date is unknown or was lost in agency-to-agency transfer. It would be the same date across several thousand recipients, making it obvious that the entries were intentional. Musk is lying because Trump needs to fund his trillion-dollar handout to the rich somehow, so might as well take it from the poor and middle-class people who spent their whole lives paying into the program.

Besides, even if we set aside seniors who qualify for social security payouts, that still leaves the rest of us. Is seig heil man gonna pay me back for what I've contributed to social security so far if he cancels it? Fuck no. That's theft on a massive national scale, plain and simple.

exactly! it's almost like if there's no age specified in a database that the database will freak out and segfault. They could have used something like null, but they probably used a specific datatype that doesn't take 'null' and probably has a default date set instead.

If Musk would have, idk stopped acting like a child, and actually spoke to the people running the database, then idk, maybe he'd know this (doubtful) (or he does, and just doesn't give a shit).