Milk Road Macro Why Government Debt Is Breaking the Global Economy w/ Quinn Thompson
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Sep 4, 2025 Quinn Thompson, Founder and CIO of Lecker Capital, shares his insights on the global economy's challenges. He discusses the alarming rise in global bond yields and how the Federal Reserve is caught between inflation and recession. Governments are still overspending, but buyers are losing interest in their debt. Thompson suggests that gold and Bitcoin might be the only safe havens left amidst this turmoil, as investors reconsider strategies in a world of fiscal instability and shifting market dynamics.
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Persistent Fiscal Deficits Raise Long Yields
- Governments kept COVID-era deficits and never rebalanced, driving a long-term rise in long-term bond yields.
- That secular trend makes bond demand structurally weaker and pushes capital into non-sovereign stores of value.
Hold On To Good Mortgages
- Keep a long-duration fixed-rate mortgage if you have a good rate because rising yields make that a powerful asset.
- Treat home mortgage exposure as a way to lock in cheap long-term financing.
Bond Vigilantes Are A Liquidity Signal
- Bond vigilantes are investors punishing governments by refusing to buy long-dated debt when fiscal policy is irresponsible.
- The current selloff reflects a liquidity and issuance problem, not just a simple Fed policy error.