Alexander Hamilton went to great lengths to protect the bond holders of Federal debt dating back to the Revolution. Any move that threatens U.S. government bond default would instantly raise interest rates and potentially cause a financial crisis.
We Are Blundering Our Way Into a Financial Crisis
By Wendy Edelberg and Ben Harris, The New York Times, Feb. 18, 2025
…
The Trump administration has made obvious the real source of risk. It isn’t federal borrowing grinding ever higher. The true risk is our political leaders doing something wildly irresponsible that unnerves financial markets…
When Mr. Trump asserts he can pick and choose which payments to make, regardless of laws enacted by Congress, it is not impossible to imagine the president declaring he can pick and choose which holders of United States Treasury securities should be paid.
During his first term, senior officials from Mr. Trump’s administration reportedly considered the idea of canceling some of the payments on U.S. Treasuries held by China as retribution for its purported role in the pandemic. Now, with DOGE itching to meddle in Treasury payment systems, the president may soon have the means to withhold payments at his personal whim. “We’re even looking at Treasuries,” he told reporters ominously when discussing his plans to commandeer the payment system. “It could be that a lot of those things don’t count.”… [end quote]
OMG! Could Trump really be that stupid? Doesn’t he have advisors who understand the implications of a president who would unilaterally, selectively default on Treasury debt?
First, we are talking about someone who has used default, multiple times, to enrich himself, and leave others holding the bag. First thing that crosses my mind is the Treasuries in the SS Trust Fund are a special series. He could default on those, without defaulting on bonds “held by the public”.
But why? He owns the presses now. He can simply print his way out of any debt he wishes.
Since bonds “held by the public” are bought and sold constantly, you really cannot default on one particular issue, and have all the hurt visited on only one holder. That is what makes SS such an appealing target: those are a special series, with only one holder.
Besides, defaulting on one bond, would make the interest rate on the others soar to banana republic levels. Say the US defaults on half it’s bonds, but the price received on new ones crashes, because holders demand triple the pre-default interest rate. What has he gained?
Are they going to think this through more than the current frenzy of EOs and DOGE massacres? Didn’t he say government will be financed by foreigners through tariffs anyway?
I am not so sure about that. You can likely refuse to submit any coupons to any treasuries held by foreign brokerages.
You could also likely find a way to refuse to submit any coupons based on the zip code of the recipient. Additionally, “Tax/bank Levys” are fairly common so it would not be a stretch to think this could be done on an individual level.
In February 2025, Vanguard announced its largest fee reduction in history, cutting expenses for more than 168 mutual fund and exchange-traded fund (ETF) share classes. The reductions are estimated to save investors over $350 million annually.
What’s changing?
The reductions apply to Vanguard’s U.S. equity, international equity, and money market funds.
The reductions are effective immediately.
The fees are expressed as percentages of the average net assets of the affected fund share classes.
The fees are also known as expense ratios.
How do these changes impact investors?
The lower fees allow investors to keep more of their returns.
The savings compound over time.
The changes are detailed in the funds’ prospectuses.
The prospectuses of all affected funds were updated in filings with the Securities and Exchange Commission on February 3, 2025.
Additional information
Vanguard has lower average expense fees than its peers.
The only thing, in my mind, keeping Treasuries safe is my theory that if you don’t hurt rich people you can do whatever you want. This is why Maddoff went to prison, he hurt rich people. This is why Kenneth Lay went to prison, he hurt rich people. If they had only hurt little people they would be free.
Rich people park lots of cash in Treasuries because it is by far the easiest and safest place to park huge sums of money. Look at how much Buffet has in “cash”, for example. If The Don did anything to upset that market, to say he put a target on his own back would be an understatement.
Maybe they will sense that the safer place is TI backed “NFT tokens”, “crypto”, or gold sneakers and Bibles. with TI taking a skim off the top of every transaction?
As the surrogate Board monitor, I would like to remind you that politics is not allowed on the METAR Board. Regretfully, I will be reporting your post to Wendy for final disposition.
