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Jamie Dimon warns US bond market will 'crack' under pressure from rising debt

11 points by wslh 1y ago

deleted 1y ago
[deleted]
mooreds 1y ago
https://archive.is/VnjHo https://archive.is/VnjHo
mooreds 1y ago
It's a bit weird. He says there'll be a 'crack', which sounds pretty bad to me, but that we'll be fine. > The JPMorgan Chase chief executive said on Friday that he had cautioned regulators: “You are going to see a crack in the bond market.” He added: “I’m telling you this is going to happen. And you are going to panic. I’m not going to panic. We’ll be fine.” After scanning the transcript, I'm pretty sure he is referring to JP Morgan being fine, rather than the US economy or Americans in general. Here's the whole interview: https://www.youtube.com/watch?v=1NHLha3jG2g https://www.youtube.com/watch?v=1NHLha3jG2g
oldpersonintx2 1y ago
but if you look at bond yields, there really isn't that much of a freakout something like the "Big Beautiful Bill" is going to pass, so its not like the bond market is working in a vacuum anecdotally, if the world didn't meltdown at the outrageous levels of ten, twenty, thirty trillion in debt...why would the world all of a sudden collapse at forty trillion in debt? if debt was a timebomb, it should have detonated decades ago
- taylodl 1y ago
  Ships may list for a long time before they suddenly and dramatically sink.
  - oldpersonintx2 1y ago
    if the USD sinks, the entire world sinks backing off the USD is a hundred year project...you need an currency from a relatively open and law-bound Great Power that has demonstrated its staying power through conflict there isn't anyone else who fits the bill...yet
    - taylodl 1y ago
      We were talking debt, not USD. The federal government does not have the power to create money, despite what people think, and so they can't print money to pay off their debts.
      - seanmcdirmid 1y ago
        > The federal government does not have the power to create money The federal government choose not to have that power, they could technically take it back at any time with only political/market confidence consequences. With a crazy guy running things, anything is possible at this point.
        taylodl 1y ago
        > with only political/market confidence consequences That's one way of downplaying what happens next...
        seanmcdirmid 1y ago
        Yep. But we live in interesting times.
idrathernot 1y ago
So why doesn’t he lower the interest rates? Money is fiat and the reserve requirement is 0.
- seanmcdirmid 1y ago
  Jamie Dimon? He isn't the fed. Also, the interest rates set by the FED only apply to banks, not the yield of US treasuries, which is set by supply and demand for those treasuries.
- tossandthrow 1y ago
  You might ask why the fed does not reduce the interest rate to "save" the usd. The reason is that it makes no difference. The usd is a fiat currency and relies on trust in the institutions, in this case the fed. If they bail out the government, then other investors will loose confidence and the rate will go up, manifest as inflation. At this point the US citizens are going to pay massively for this. Either through hyper inflation or. Increased taxes to pay the debt.

11 points by wslh 1y ago

deleted 1y ago

[deleted]

mooreds 1y ago

https://archive.is/VnjHo https://archive.is/VnjHo

mooreds 1y ago

It's a bit weird. He says there'll be a 'crack', which sounds pretty bad to me, but that we'll be fine. > The JPMorgan Chase chief executive said on Friday that he had cautioned regulators: “You are going to see a crack in the bond market.” He added: “I’m telling you this is going to happen. And you are going to panic. I’m not going to panic. We’ll be fine.” After scanning the transcript, I'm pretty sure he is referring to JP Morgan being fine, rather than the US economy or Americans in general. Here's the whole interview: https://www.youtube.com/watch?v=1NHLha3jG2g https://www.youtube.com/watch?v=1NHLha3jG2g

oldpersonintx2 1y ago

but if you look at bond yields, there really isn't that much of a freakout something like the "Big Beautiful Bill" is going to pass, so its not like the bond market is working in a vacuum anecdotally, if the world didn't meltdown at the outrageous levels of ten, twenty, thirty trillion in debt...why would the world all of a sudden collapse at forty trillion in debt? if debt was a timebomb, it should have detonated decades ago

taylodl 1y ago
Ships may list for a long time before they suddenly and dramatically sink.
- oldpersonintx2 1y ago
  if the USD sinks, the entire world sinks backing off the USD is a hundred year project...you need an currency from a relatively open and law-bound Great Power that has demonstrated its staying power through conflict there isn't anyone else who fits the bill...yet
  - taylodl 1y ago
    We were talking debt, not USD. The federal government does not have the power to create money, despite what people think, and so they can't print money to pay off their debts.
    - seanmcdirmid 1y ago
      > The federal government does not have the power to create money The federal government choose not to have that power, they could technically take it back at any time with only political/market confidence consequences. With a crazy guy running things, anything is possible at this point.
      - taylodl 1y ago
        > with only political/market confidence consequences That's one way of downplaying what happens next...
        seanmcdirmid 1y ago
        Yep. But we live in interesting times.

idrathernot 1y ago

So why doesn’t he lower the interest rates? Money is fiat and the reserve requirement is 0.

seanmcdirmid 1y ago
Jamie Dimon? He isn't the fed. Also, the interest rates set by the FED only apply to banks, not the yield of US treasuries, which is set by supply and demand for those treasuries.
tossandthrow 1y ago
You might ask why the fed does not reduce the interest rate to "save" the usd. The reason is that it makes no difference. The usd is a fiat currency and relies on trust in the institutions, in this case the fed. If they bail out the government, then other investors will loose confidence and the rate will go up, manifest as inflation. At this point the US citizens are going to pay massively for this. Either through hyper inflation or. Increased taxes to pay the debt.