When Treasury Secretary Scott Bessent says that “current yields don’t reflect market fundamentals” he is correct. Bessent is 100% correct - except for the fact his sentiment is 100% opposite to the truth. Treasury yields on long bonds ought to be in double digit percentage territory. The U.S. is bankrupt. The U.S. will never repay its $40 trillion debt load unless radical change occurs to fiscal spending. In the absence of radical spending reform, head-in-the-sand Treasury traders need to wake up and demand way more yield by dumping Treasuries en masse. Why would you ever want to hold paper when the issuer - the U.S. Government - is bankrupt? Treasury’s QE program won’t help.
How to fix the U.S. Debt Problem:
Wind down social security and Medicare programs and the related taxes. Stop taxing people with the promise of returning $0.05 in the future for every $1 Dollar of social security and Medicare taxed today. This would save approximately $3 Trillion of annual spend of the $8 Trillion of total annual fiscal spend.
Shrink defense spending. Currently $1 Trillion plus whatever DoD pulls from Dept of Energy and Dept of Education. Breakup Lockheed, RTX, Northrup and Boeing. There were over 100 defense contractors in WW2, now we have a cartel. We buy ineffective, expensive weapons in a world where wars are fought with drones. This spend could be cut to $200 billion or less.
Health. 13% of total annual fiscal spend. Kill the income tax and people will be able to afford healthcare. I bet private citizens would volunteer to cover the expenses of those that can’t afford health care. Also, if we get Government out of healthcare and force the Pharma cos and Insurance cos to compete rather than enjoy Government regulated oligopolies, the cost of Healthcare would come down. Read Jonathan Bush.
Income Security. 10% of total fiscal spend. Kill the income tax and we won’t have this budget item.
Veterans. 6% of total spend. Give Veterans vouchers to spend on any healthcare program they wish, but kill the VA. Government does not know how to run operations. The VA is a picture of Administrative bloat. Kill it.
