- Original Poster
- #1
(I am putting this here and not in the "Time Out" section, because this will affect every business in the UK.)
Trump's letter to the Prime Minister of Norway was a triumph of self-indulgent rhetoric over reality. It was the day satire became truly redundant. A schoolchild could have told him it was a very bad idea!
It was the day we realised that he operates without constraint, self-control or advice.
He wrote
But back in 2022, there was one force that Liz Truss failed to see - and Trump is failing to see that force today. What threw Truss out of office wasn’t the voters. It wasn’t Parliament. It wasn’t even the opposition. It was the bond markets. And Trump is heading down the same pathway.
The moment markets concluded that fiscal promises were uncosted, monetary credibility was expendable, and leadership didn’t understand second-order effects, they did the only thing that matters: they repriced risk instantly.
That’s the moment when interest rates stop being a policy choice and start being a penalty. The US is not immune to this. But it will take a while because the dollar still sits at the centre of the system. But that centre is hollowing. The gold price tells us that it is hollowing.
As a result, gold keeps going up and seems to be heading to $5k an ounce. Gold at 5k says that future cash flows are suspect, long-dated promises are being discounted and political control over rates is no longer credible or possible. At that point, Trump’s “lower rates will boost the economy” fantasy runs headfirst into a wall.
You cannot suppress rates and defend a currency when confidence is gone. And we, as business people, will have to prepare for a dollar (and possibly a pound) that is falling even faster than before.
One of those must yield. History tells us which.
When the bond market does when it intervenes, US Treasuries will start behaving like UK gilts did in autumn 2022, you’ll see long-dated bonds demand higher yields (i.e. interest rates). US borrowing will become unaffordable. And this will probably affect UK gilts in much the same way. This is not fireworks. It’s erosion.
The dangerous bit is that it happens faster than politics can respond. So we are all going to have to button down for a storm.
Trump's letter to the Prime Minister of Norway was a triumph of self-indulgent rhetoric over reality. It was the day satire became truly redundant. A schoolchild could have told him it was a very bad idea!
It was the day we realised that he operates without constraint, self-control or advice.
He wrote
All that refuses to acknowledge that the Peace Prize decision was not made by the government, and was made in October, long before he was even elected. The US cannot buy Greenland even if Denmark wanted to sell, because the US cannot pay in freshly printed dollars, as that would crashthe dollar. Also, Congress would have to agree to military action. And last but by no means least, any order for military action against an ally would be an illegal order, and no general would want to spend the rest of his life in prison because the president was a nutter!
But back in 2022, there was one force that Liz Truss failed to see - and Trump is failing to see that force today. What threw Truss out of office wasn’t the voters. It wasn’t Parliament. It wasn’t even the opposition. It was the bond markets. And Trump is heading down the same pathway.
The moment markets concluded that fiscal promises were uncosted, monetary credibility was expendable, and leadership didn’t understand second-order effects, they did the only thing that matters: they repriced risk instantly.
That’s the moment when interest rates stop being a policy choice and start being a penalty. The US is not immune to this. But it will take a while because the dollar still sits at the centre of the system. But that centre is hollowing. The gold price tells us that it is hollowing.
As a result, gold keeps going up and seems to be heading to $5k an ounce. Gold at 5k says that future cash flows are suspect, long-dated promises are being discounted and political control over rates is no longer credible or possible. At that point, Trump’s “lower rates will boost the economy” fantasy runs headfirst into a wall.
You cannot suppress rates and defend a currency when confidence is gone. And we, as business people, will have to prepare for a dollar (and possibly a pound) that is falling even faster than before.
One of those must yield. History tells us which.
When the bond market does when it intervenes, US Treasuries will start behaving like UK gilts did in autumn 2022, you’ll see long-dated bonds demand higher yields (i.e. interest rates). US borrowing will become unaffordable. And this will probably affect UK gilts in much the same way. This is not fireworks. It’s erosion.
The dangerous bit is that it happens faster than politics can respond. So we are all going to have to button down for a storm.
