SalvorHardin wrote:TheMotorcycleBoy wrote:And the yields on the debt suggest that holders of US treasuries currently desired almost 4x as much risk compensation (i.e. the yield) than they do of UK debt. Which suggests that they are less certain of getting their money back if they hold the US debt!
Leaving asides the different expectations of future interest rates and inflation in the UK compared to the US, there's one factor peculiar to America which will give concern to many holders of US Treasury bonds.
The possibility of large scale civil unrest after the election. I used to think that this was a fringe view, the sort of thing mostly discussed by doomsday preppers, communist hippy types and
science-fiction fans...
The SciFi bit is pretty cool coming from one of the "greatest mayors ever to rule Terminus."
Nowadays I'm not so sure. Investors don't like civil unrest, it makes them jittery and if nothing else leads to them demanding higher returns on public debt to compensate for the increased risk.
Definitely. I've watched much footage online across several States, OR, MI, NY, MN, WI, etc. of clear battle lines starting to emerge, and display of raw anarchy. Had such footage been aired a decade or so ago, without sound or indication of location, one would honestly believe that the events were going on in a third world country or a pariah State. Part of me believes that the despite the "most powerful nation in the planet" reference, were it not for America holding the global reserve currency, having been the only country to have ever deployed nukes, plus their holding (probably) the Worlds biggest [expletive deleted] of such weapons, it really would be a failed state.
Russ Robert, host of the economics podcast EconTalk, raised this possibility of post-election unrest leading to civil war in last week's discussion with journalist Anne Appebaum about her latest book and the state of American democracy today. For this to be seriously discussed on EconTalk was quite an eye opener for me (link below, the civil war is mentioned shortly after 32:40).
https://www.econtalk.org/anne-applebaum-on-the-twilight-of-democracy/
Many thanks for sharing this Salvor. I read AA's book "Gulag" once-upon-a-time. So this latest of her's is now on the list. The civil war reference is at 34:00, and whilst I'm aware of there being many armed militia in the US, and many Yanks (even teenagers!!) seem to be armed to the teeth, I imagine that civil war is actually *unlikely* based on the presence of a strong army which would probably stay loyal to the Constitution, presumably at least that spoke by the SCOTUS. If things do break down, my money would actually be on a military coup, the Generals certainly hate Trump.
(On a slightly different note if you are interest in Trump. his administration and how it's viewed from within, I can recommend
Bolton's book which I enjoyed reading since JB sits on a totally different side of the fence to me, but he comes across in the book as being a very clever, rational and patient participant and narrator.)
Matt
PS Thanks for opening my eyes to "econtalk"