I want to lock in my answer before reading and reflect on it afterwards to see what I learn.
My answer: It becomes too much debt when we lose trust it will be repaid.
I don't think there's a specific dollar amount that is too much, I just think the point of debt is having trust it will be repaid and that's why there's a credit rating. Losing your credit rating is an indicator that creditors are losing trust and that the system is degrading.
Also it looks like our expectation of the market falling in the summer has been crushed.
Can't stop the Fed and the US Treasury going into an election I guess.
Also one learning here for me is that I double clicked a bit too much into the geopolitical risk. Should've realized that the US as the most powerful nation on Earth can really move certain policies in their favor when they really need to.
Unless it's like something massive like Russia starting an invasion, smaller skirmishes like what Israel is doing can be quickly moderated by the US government.
I'm working on a new Market Pulse newsletter issue reflecting the new state of things. CPI was a big factor in turning the narrative as well. Every was quite hot but Used Cars was the hero category this CPI report, dragging it down by a lot.
I want to lock in my answer before reading and reflect on it afterwards to see what I learn.
My answer: It becomes too much debt when we lose trust it will be repaid.
I don't think there's a specific dollar amount that is too much, I just think the point of debt is having trust it will be repaid and that's why there's a credit rating. Losing your credit rating is an indicator that creditors are losing trust and that the system is degrading.
Nice. I feel like my answer at a high level was correct, but I'm thrilled your article dove into "what makes creditors lose trust".
1. Paying interest dominates the budget
2. Not enough demand to fulfill the budget
#2 Could be broken down into two reasons for why demand isn't satisfied
2.a There is *already* a lack of trust in debt being repaid, so demand is weak
2.b There is too much supply and demand can't satisfy it; even if trust in repayment exists.
Could you share links to the Net % Interest of Revenue and US T Auctions?
I keep a FRED tab open of US liquidity and want those charts along with it. Good to check on those once in a while
Yup you got it.
Also it looks like our expectation of the market falling in the summer has been crushed.
Can't stop the Fed and the US Treasury going into an election I guess.
Also one learning here for me is that I double clicked a bit too much into the geopolitical risk. Should've realized that the US as the most powerful nation on Earth can really move certain policies in their favor when they really need to.
Unless it's like something massive like Russia starting an invasion, smaller skirmishes like what Israel is doing can be quickly moderated by the US government.
I'm working on a new Market Pulse newsletter issue reflecting the new state of things. CPI was a big factor in turning the narrative as well. Every was quite hot but Used Cars was the hero category this CPI report, dragging it down by a lot.