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   John Coates (jciv@mastodon.social)'s status on Friday, 14-Feb-2025 05:48:38 JST John Coates

   The news today that the DOJ won't defend the independence of independent regulatory agencies -- here,

   https://fingfx.thomsonreuters.com/gfx/legaldocs/movawxboava/2025.02.12-OUT-Durbin-530D.pdf --

   should begin to trigger a spike in bond yields and the cost of paying for our massive deficit.

   To understand why...

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   • Embed this notice
     feld (feld@friedcheese.us)'s status on Friday, 14-Feb-2025 05:48:37 JST feld

     in reply to
     @jciv I think it's pretty funny that Trump believes if he can influence the 10yr Treasury yield he will magically :shopkeeper: coerce mortgage rates to go down
   • Embed this notice
     John Coates (jciv@mastodon.social)'s status on Friday, 14-Feb-2025 05:48:38 JST John Coates

     in reply to

     The only way the Fed can fight inflation is if it's independent.

     Imagine Jay Powell doesn't cut rates when Trump wants him to do that, to juice the economy when it eventually slides into recession.

     If the DOJ's position is upheld by the SCOTUS, then Trump could fire Powell and install anyone (Musk, Bannon, my dogwalker) with strict instructions to cut rates.

     2/n

   • Embed this notice
     John Coates (jciv@mastodon.social)'s status on Friday, 14-Feb-2025 05:48:38 JST John Coates

     in reply to

     If the Fed cannot fight inflation, then the bond markets will predictably expect inflation.

     Inflation effectively raises the cost of lending (it erodes the value of repayment in the future).

     Rational lenders and bond buyers will price that risk in.

     They will raise interest rates.

     That will make it vastly more expensive to sustain our deficit, since we pay most of our debts as a country by borrowing more.

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