Drunk Real Estate 98. Why the Bond Market Is Rejecting U.S. Debt
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May 29, 2025 The podcast dives into the chaos of the U.S. debt markets, exploring why bond auctions are failing and the implications for real estate investors. With national debt soaring past $36 trillion, the discussion includes Moody’s downgrade and the Fed’s struggle with rising interest rates. They connect global forces shaping bond demand, and examine the risks of a debt spiral. Personal anecdotes and light-hearted moments add humor, while analyzing how fiscal policies are impacting wealth distribution and housing trends adds depth.
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Government's Growing Economic Role
- The US debt expansion and bond market challenges stem from a long-term shift where government plays a larger economic role since 2008.
- Efforts to fill credit gaps with money printing have led to unsustainable debt and inflation issues.
Bond Market's Supply Problem
- The current bond market stress is largely due to supply oversaturation from massive new debt issuance and the Fed reducing its bond holdings.
- Despite record bond demand, there is a limit to appetite as supply overwhelms buyers leading to rising interest rates.
US Debt Growing Faster Than Economy
- Debt growing faster than GDP and interest rates exceeding growth indicate a looming fiscal cliff.
- Reducing interest rates, increasing growth, or lowering debt are the only ways to avoid disaster, yet current policies fail to do so.
