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Many brothers ask, why are U.S. government bonds so high?
A while ago, those stupid media outlets were saying that a lot of maturing U.S. bonds in June were going to explode, so why haven't we heard any news about it?
The rapid increase in U.S. Treasury bonds is mainly in two phases,
The first phase was during the Obama era with three rounds of QE, which increased the national debt by 9 trillion dollars to save the major crisis brought about by the 2008 subprime mortgage crisis, raising the US national debt from 8 trillion to 17 trillion.
Then the second term slowly increased to 20 trillion. The national debt has more than doubled.
The second phase of significant increase was after the pandemic in 2020, when money was distributed to everyone, $1,200 per person per month, to 330 million people, for 18 months, which increased the national debt by $7.2 trillion. Then, during Biden's years, there has been a continuous slow increase. But the main two phases are the ones mentioned above.
As shown in the figure, it has currently exceeded 37 trillion dollars, the average bond weighted interest rate on U.S. Treasury is 3.4%, which means interest is paid twice a year, requiring 1.258 trillion dollars annually. The U.S. federal government revenue is 4.4 trillion dollars per year, and currently, 28.5% of the revenue is needed to repay interest.
It can be expected that as the total supply increases, the interest he pays will also inevitably increase. Therefore, Trump is strongly urging Powell to lower interest rates, thereby reducing the financing rates for government bonds.
Otherwise, when the US national debt reaches 50 trillion dollars, even with such high interest rates, it won't be sustainable. Those domestically shouting about a US debt explosion in June did not take this into account and are just making noise.