Hello there.

Greetings, and welcome to a particularly Garfieldian Monday.

If we completely devalue our currency by printing more to buy back our debt, then our remaining debt will also be devalued… that’s a silver lining, right? Yeah, we take those. Let’s get into it. 👇

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America's national debt just crossed $40 trillion for the first time ever last week. Ten years ago that number was $19.4 trillion, which means we literally doubled our national credit card balance in less than a decade. Cool, cool, cool.

Unfortunately, this isn’t just some abstract problem for economists to argue about on Twitter. When the government needs to borrow this much money, it has to offer higher interest rates to convince people to lend to it. And when those rates go up, so does everything else. That means mortgage and car loan rates, along with credit card interest. It's like a terrible domino effect, except instead of falling dominoes, it's your ability to afford… uh, well, literally anything.

The government is now spending more money just paying interest on this debt than it spends on defense or Medicare. Let that sink in. We're basically making minimum payments on America's credit card bill, and it's eating up money that could go toward, you know, literally anything else.

Some say the strong US economy means we can keep shouldering this burden. Others say we're one recession or AI bubble burst away from foreign investors pulling their money out entirely. Either way, the debt puts upward pressure on borrowing costs for everyone, and nobody in Washington seems particularly motivated to do anything about it heading into midterms.

So naturally, when bond markets started freaking out this week and 30-year Treasury yields hit levels not seen since 2007, the government decided to do something. Treasury Secretary Scott Bessent announced the government would more than double its bond buybacks to at least $4 billion per operation, basically stepping in to buy back its own debt to calm everyone down.

For better or worse, the announcement worked immediately, with yields dropping and the stock market bouncing back. But here's the catch: this is basically a band-aid on a bullet wound.

The buyback program is tiny compared to the $30 trillion government debt market, so it's more about the vibes than actually solving anything. It’s apparently enough to make investors chill out for a minute, but the core problem hasn't changed. The government still needs to borrow massive amounts of money, interest payments keep growing, and nobody's really talking about cutting spending or raising taxes to fix it. Some economists think this could even make inflation worse by artificially keeping rates lower than they should be.

The real question is whether this quick fix will actually hold or if we're just postponing the inevitable market meltdown. Either way, our generation is probably going to be dealing with this mess for decades, so maybe we should start learning what a Treasury bond actually is.

Elected officials have had a tremendous amount of success in the market recently.

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That’s all for today. Write us and let us know your thoughts on the market, the newsletter, or the weather—we’d just love to hear from you.

Till next time,
— Brandon and Blake with Invested Inc.