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Intentionally nuking stocks causes investors to retreat for safety in bonds specifically treasuries. Demand for treasuries drives the interest rates on them dow

Intentionally nuking stocks causes investors to retreat for safety in bonds specifically treasuries. Demand for treasuries drives the interest rates on them down. The US has to refinance $10 trillion of existing debt this year. By driving rates down it save the federal government hundreds of billions in interest payments. He has actually reposted a video confirming this outlook. Another angle is he is targeting China. China is in a precarious domestic economic sitaution as well. It weakens China by reducing its exports. In addition tariffs if high enough for long enough encourage local manufacturing. If we go to war with China over Taiwan, it will be very easy for China to convert existing commercial factories to produce military goods. Much harder for us as so much of our manufacturing infrastructure has lain fallow. Its not a good idea to go to war with the country that makes everything you rely on. I'm not saying these are valid ideas or it will play out like that. I'm saying this is what admin is thinking. Also if you feel like a read, this is a paper by Trumps leading economic advisor Stephen Miran https://www.hudsonbaycapital.com/documents/FG/hudsonbay/research/638199_A_Users_Guide_to_Restructuring_the_Global_Trading_System.pdf https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...

rtp4me 2y ago
Thanks for this. To me, this makes more sense than some random "tariffs are bad" messaging on social media. Do you have a link to the video you mentioned above? I would like to learn more. As an aside, for those who have 401(K) and IRA accounts in the US, the stock market plunge might be a great time to convert funds into ROTH accounts (lower taxes now, etc). At least there is a silver lining...
- wonderwonder 2y ago
  Here is the link. Its just a silly TikTok video discussing the point in an over the top way. The only thing important about it is that Trump reposted it. https://x.com/americapapabear/status/1907947224090423367?s=12 https://x.com/americapapabear/status/1907947224090423367?s=1...
apognwsi 2y ago
What do you think you mean by saying 'drives interest rates down'. It seems a leap to think the fed, the entity that establishes the interest rate, will react in the way you describe.
- wonderwonder 2y ago
  Common misunderstanding but the fed does not set rates on treasuries (bills, notes, etc) the primary instrument the government uses to finance its debts. Those rates are set via auctions driven by the demand for safe haven returns on investments, particularly returns when equities are risky. As demand for treasuries (safety) goes up, the rates on those same treasuries go down. The fed sets the interbank exchange rates, these influence treasury rates but are a very different thing.
  - apognwsi 2y ago
    i understand what you mean now. you are referring to the yield of treasury bonds, which, at least historically for <10 year tbills, do track the fed rate.

rtp4me 2y ago

Thanks for this. To me, this makes more sense than some random "tariffs are bad" messaging on social media. Do you have a link to the video you mentioned above? I would like to learn more. As an aside, for those who have 401(K) and IRA accounts in the US, the stock market plunge might be a great time to convert funds into ROTH accounts (lower taxes now, etc). At least there is a silver lining...

wonderwonder 2y ago
Here is the link. Its just a silly TikTok video discussing the point in an over the top way. The only thing important about it is that Trump reposted it. https://x.com/americapapabear/status/1907947224090423367?s=12 https://x.com/americapapabear/status/1907947224090423367?s=1...

apognwsi 2y ago

What do you think you mean by saying 'drives interest rates down'. It seems a leap to think the fed, the entity that establishes the interest rate, will react in the way you describe.

wonderwonder 2y ago
Common misunderstanding but the fed does not set rates on treasuries (bills, notes, etc) the primary instrument the government uses to finance its debts. Those rates are set via auctions driven by the demand for safe haven returns on investments, particularly returns when equities are risky. As demand for treasuries (safety) goes up, the rates on those same treasuries go down. The fed sets the interbank exchange rates, these influence treasury rates but are a very different thing.
- apognwsi 2y ago
  i understand what you mean now. you are referring to the yield of treasury bonds, which, at least historically for <10 year tbills, do track the fed rate.