OPINION — According to an adage, it is not a good idea to bite the hand that feeds you. Evidently, President Trump does not buy into this adage as he weaponizes U.S. financial policy and arbitrarily imposes punitive import tariffs even on traditional allies.
Trump seems impervious to the fact that the U.S. government has enormous borrowing needs and depends heavily on the kindness of strangers to finance them. Inviting foreigners to go on a U.S. government bond-buying strike is likely to end badly for the U.S. bond and stock markets. In turn, a further spike in long-term interest rates risks roiling the U.S. and the world economies.
It would be an understatement to say the U.S. government has huge borrowing needs. It is running a budget deficit of around $2.1 trillion, and — according to the Congressional Budget Office — that deficit is like to remain above $2 trillion as far as the eye can see. At the same time, because of the government’s increased resort to short-term borrowing to cover its borrowing needs, it now needs to roll over more than $3 trillion of maturing Treasury bills and bonds each quarter.
