Our True Enemy Has Yet to Reveal Himself
May 5, 2025·63 comments
In 2008, Wall Street watched recession signals while hidden systemic risk gathered beneath the surface. Today the pattern repeats: recessions, jobs, tariffs dominate the conversation while the real threat sits in plain sight unseen. The full faith and credit of the United States has become negotiable. When a president treats national debt as leverage rather than obligation, markets will eventually stop believing it's risk-free. The question is what happens when they do.
- The Treasury market briefly broke in April. A one-week spike pushed 30-year rates to nearly 5 percent, something that shouldn't happen when global growth is slowing if investors still trust American debt. The administration's immediate tariff retreat showed how fragile the moment was.
- The same thing happened in 2008 with mortgages. Everyone talked about subprime being contained while delinquencies were already spreading through prime loans and every geography like a virus. The "crisis narrative" and the "actual crisis" were describing different problems.
- The UK's Liz Truss tried an unfunded tax cut in 2022 and gilt rates spiked 100 basis points in three days. The Bank of England had to bail out pension funds. But rates didn't normalize until the policy was abandoned and she resigned.
- The people who see this most clearly work inside institutions that would be destroyed by it. Acting on that knowledge is career suicide. So the system is structurally prevented from protecting itself.
- Trump is unlikely to back down like Truss did. Another market break could force the Fed into yield curve control, buying Treasuries to prop them up. That's the Weimar playbook with no clear ending.
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