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Yahoo
10 hours ago
- Business
- Yahoo
An inflation surge could swamp Trump's presidency. This one investment will keep your money safe.
America's financial outlook has darkened under President Donald Trump's leadership. All three major credit-rating agencies now rank U.S. federal debt one notch below triple-A, and Jamie Dimon, the chairman and CEO of JPMorgan Chase JPM, has warned of a crack in the U.S. bond market. With the 10-year U.S. Treasury yield BX:TMUBMUSD10Y at 4.4% on Wednesday and the 30-year rate BX:TMUBMUSD30Y at 4.9%, holders of nominal U.S. debt should be prepared for significant real losses. The principal risk is not U.S. sovereign default, but rather unexpected increases in medium- and long-term interest rates, owing to market expectations of higher inflation. Fiscal policy under Trump is unsustainable, as it was under former President Joe Biden — but even more so if the Trump administration's 'big, beautiful' budget passes in anything like its current form. 'I'm at my wit's end': My niece paid off her husband's credit card but fell behind on her taxes. How can I help her? Why the biggest-ever 'triple witching' options expiration could deliver a jolt to Friday's trading Israel-Iran clash delivers a fresh shock to investors. History suggests this is the move to make. 'I prepaid our mom's rent for a year': My sister is a millionaire and never helps our mother. How do I cut her out of her will? I'm 75 and have a reverse mortgage. Should I pay it off with my $200K savings — and live off Social Security instead? The January 2025 Financial Report of the United States Government makes this clear. The U.S. ratio of federal debt held by the public to GDP at the end of the 2024 fiscal year was around 98%, although $4.7 trillion of the $28.3 trillion in federal debt was held by the Federal Reserve — meaning it is erroneously categorized as held by the 'public,' when really the central bank's accounts should be consolidated with those of the federal government. Under current policy and based on the report's assumptions, federal debt held by the public would reach 535% of GDP by 2099. Stabilizing the U.S. debt-to-GDP ratio requires that the annual primary federal deficit (excluding interest payments) fall by an average of 4.3% of GDP over the next 75 years. And yet, the federal deficit and primary deficit were 6.4% and 3.3% of GDP, respectively, in fiscal-year 2024 — far above what can be justified with the economy near full employment. Read: America's debt is at a breaking point — Trump's tax bill might just push it over the edge With the U.S. Congress so dysfunctional, no one has any faith that it will deliver the required deficit reduction. Democrats do not do permanent spending cuts, and Republicans do not do permanent tax increases. The federal government does own about 28% of U.S. land (roughly 640 million acres), as well as other real commercial assets that could yield significant additional nontax revenues if properly managed. But neither party — nor even the misnamed Department of Government Efficiency — appears to have considered this option, so the federal deficit as a share of GDP is likely to rise over the next few years. With no foreseeable improvement in fiscal policy, there are two possible outcomes. First, the U.S. government could default. There has long been a small, but recurrent, risk of a technical, short-lived default if Congress fails to raise, suspend, extend, revise or abolish the federal debt ceiling on time. Fortunately, it has averted this scenario 78 times since 1960, and we expect it to continue doing so. As matters stand, the debt ceiling (including debt held by federal agencies) is set at $36.1 trillion, and debt subject to the limit is also $36.1 trillion. If needed, the Treasury has a highly liquid asset (the Treasury General Account held with the Fed) worth $332.9 billion that it can use to meet its obligations, and it may temporarily use 'extraordinary measures to continue to borrow additional amounts for a limited time.' The second, more likely possibility is that the Fed will monetize enough federal debt to prevent default. Since U.S. federal debt is serviced in dollars, 'printing money' is always an option. But, as the Fed well knows, a large-scale monetization of federal debt would result in significantly above-target inflation. We believe the Fed will do this without its operational independence being revoked by Trump. To get the Federal Open Market Committee to do something it does not want to do, the president would need to control the majority of its 12 voting members. These include the seven members of the Federal Reserve Board of Governors and five (out of 12) regional Federal Reserve Bank presidents who vote at any given FOMC meeting. Neither the president nor Congress can appoint or fire Federal Reserve Bank presidents. The Board of Governors must approve them, and only the board can remove them. The president nominates board members, but the Senate must confirm them. Board members' current term limits imply that, assuming none are fired, Trump will have the opportunity to nominate only two new members. True, with the power to fire board members 'for cause' — meaning 'inefficiency, neglect of duty, or malfeasance' — Trump could try to replace a majority of the members with loyalists. But this seems unlikely. Whether the 'for cause' criterion has been met will be contested in the courts, and the Senate would have to confirm Trump's appointees. Read: Trump's pick to replace Fed Chair Powell could rock your mortgage and retirement. Buckle up. Similarly, Congress could revise the Federal Reserve Act to replace the Fed's monetary-policy objectives with a mandate to buy or sell sovereign debt according to the wishes of the Treasury. But this, too, is unlikely. And the same goes for a scenario in which the Treasury sets a rapidly depreciating exchange-rate target for the dollar DXY that can be achieved only through large-scale Fed purchases of U.S. public debt that generate high inflation. However, fiscal dominance — indeed, fiscal capture — is very likely, because the need to avoid a domestic and global financial crisis will force the FOMC's hand. It will do whatever is necessary to prevent a U.S. government default, because the Fed's financial-stability mandate (the Financial Stability Act of 2010 mentions the Fed 179 times) undoubtedly trumps its monetary-policy mandate of maintaining maximum employment, stable prices and moderate long-term interest rates. The Fed cannot credibly threaten to refuse to monetize debt and deficits to compel fiscal retrenchment by the Treasury, let alone Congress. Thus, the Fed will have no choice but to engage in sovereign-debt purchases that it knows to be incompatible with its monetary-policy objectives. With nominal interest rates for medium- and long-term U.S. sovereign debt far below the levels consistent with realistic expectations of future inflation, serious capital losses on nominal debt instruments (public and private) are likely. The inflation surge could be no more than three years away. As the prospect of fiscal capture comes into view, investing in Treasury inflation-protected securities (TIPS) and other indexed public and private debt instruments will become increasingly attractive. Willem H. Buiter, a former chief economist at Citibank and former member of the Monetary Policy Committee of the Bank of England, is an independent economic adviser. Anne C. Sibert is professor emerita of economics at Birkbeck, University of London. This commentary — 'U.S. Debt Holders Should Brace for Impact' — is published with the permission of Project Syndicate. Read: 'You are going to panic,' Jamie Dimon tells regulators about what will happen when the bond market cracks More: What's at stake if world's most powerful market finally buckles after decades-long U.S. debt splurge 20 companies in the S&P 500 whose investors have gained the greatest rewards from stock buybacks Israel-Iran conflict poses three challenges for stocks that could slam market by up to 20%, warns RBC I'm 51, earn $129K and have $165K in my 401(k). Can I afford to retire when my husband, 59, draws Social Security at 62? 'It might be another Apple or Microsoft': My wife invested $100K in one stock and it exploded 1,500%. Do we sell? Why the stock market will be performing a high-wire act over the summer, according to UBS
The Hindu
2 days ago
- The Hindu
From The Hindu, June 19, 1925: Unexplored continent
London, June 18: An Arctic expedition headed by Mr. Donald MacMillan has started from Boston. It consists of two ships Bowdoin and Peary, the latter carrying three aeroplanes. It will proceed to Etah (Greenland) with the object of investigating the supposed existence of a vast unexplored continent between the North Pole and the North-west passage. The expedition, with which the United States Government is co-operating, has aroused particular interest in Canada in view of her claim to all the territory between Canada and the North Pole.
Boston Globe
09-06-2025
- Politics
- Boston Globe
Trump charts new territory in bypassing Newsom to deploy National Guard
Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up Trump invoked a section of the US code that allows the president to bypass a governor's authority over the National Guard and call those troops into federal service when he considers it necessary to repel an invasion or suppress a rebellion, the law states. California's Democratic governor, Gavin Newsom, has sharply criticized the move, saying state and local authorities have the situation under control and accusing Trump of attempting to create a 'spectacle.' Advertisement The directive, announced by the White House late Saturday, came after some protests against immigration raids turned violent, with protesters setting cars aflame and lighting fireworks, and law enforcement in tactical gear using tear gas and stun grenades. Trump claimed in his executive order that the unrest in Southern California was prohibiting the execution of immigration enforcement and therefore met the definition of a rebellion. Advertisement Legal experts said they expect Trump's executive order to draw legal challenges. On Sunday, Newsom asked the Trump administration to rescind his deployment of the National Guard, saying the administration had not followed proper legal procedure in sending them to the state. Trump said the National Guard troops would be used to 'temporarily' protect Immigration and Customs Enforcement officers and 'other United States Government personnel who are performing Federal functions, including the enforcement of Federal law, and to protect Federal property, at locations where protests against these functions are occurring or are likely to occur based on current threat assessments and planned operations.' Goitein called Trump's exercise of the statute an 'untested' departure from its use by previous presidents. She said presidents have in the past invoked this section of federal law in conjunction with the Insurrection Act, which Trump did not. The Insurrection Act authorizes the president to deploy armed forces or the National Guard domestically to suppress armed rebellion, riots or other extreme circumstances. It allows US military personnel to perform law enforcement activities - such as making arrests and performing searches - generally prohibited by another law, the Posse Comitatus Act. The last time a president invoked this section of US code in tandem with the Insurrection Act was in 1992, during the riots that engulfed Los Angeles after the acquittal of police officers in the beating of Rodney King. The Insurrection Act has been invoked throughout US history to deal with riots and labor unrest, and to protect Black Americans from the Ku Klux Klan. Advertisement During his 2024 campaign, Trump and aides discussed invoking the Insurrection Act on his first day in office to quell anticipated protests, and he said at an Iowa rally that he would unilaterally send troops to Democratic-run cities to enforce order. 'You look at any Democrat-run state, and it's just not the same - it doesn't work,' Trump told the crowd, suggesting cities like New York and Los Angeles had severe crime problems. 'We cannot let it happen any longer. And one of the other things I'll do - because you're supposed to not be involved in that, you just have to be asked by the governor or the mayor to come in - the next time, I'm not waiting.' Trump's willingness to use the armed forces to put down protests has drawn fierce blowback from civil liberties groups and Democrats, who have said suppressing dissent with military force is a violation of the country's norms. 'President Trump's deployment of federalized National Guard troops in response to protests is unnecessary, inflammatory, and an abuse of power,' Hina Shamsi, director of the National Security Project at the American Civil Liberties Union, said in a statement. 'By taking this action, the Trump administration is putting Angelenos in danger, creating legal and ethical jeopardy for troops, and recklessly undermining our foundational democratic principle that the military should not police civilians.' Goitein said Trump's move to invoke only the federal service law might be calculated to try to avoid any political fallout from invoking the Insurrection Act, or it's merely a prelude to doing so. 'This is charting new ground here, to have a president try to uncouple these authorities,' Goitein said. 'There's a question here whether he is essentially trying to deploy the powers of the Insurrection Act without invoking it.' Advertisement Trump's move also was unusual in other ways, Goitein said. Domestic military deployments typically come at the request of a governor and in response to the collapse of law enforcement control or other serious threats. Local authorities in Los Angeles have not asked for such help. Goitein said the last time a president ordered the military to a state without a request was in 1965, when President Lyndon B. Johnson sent troops to Alabama to protect civil rights demonstrators. Georgetown law professor Steve Vladeck wrote on his website that invoking the Armed Services Act - and not the Insurrection Act - means the troops will be limited in what role they will be able to perform. 'Nothing that the President did Saturday night would, for instance, authorize these federalized National Guard troops to conduct their own immigration raids; make their own immigration arrests; or otherwise do anything other than, to quote the President's own memorandum, 'those military protective activities that the Secretary of Defense determines are reasonably necessary to ensure the protection and safety of Federal personnel and property,'' Vladeck wrote. Rachel E. VanLandingham, a former Air Force attorney and professor at the Southwestern Law School in Los Angeles, echoed the point. Unless acting under federal orders from the president, National Guard units are state organizations overseen by governors. While under state control, Guard troops have broader law enforcement authorities, VanLandingham said. In this situation, the service members under federal control will have more restraints. 'But it can easily and quickly escalate to mortal and constitutional danger,' she said, if Trump decides to also invoke the Insurrection Act, which would give these Guard members and any active-duty troops who may be summoned to Los Angeles the authority to perform law enforcement duties. Advertisement During his first term as president, Trump suggested invoking the Insurrection Act to deal with protests over the 2020 police killing of George Floyd, but his defense secretary at the time, Mark T. Esper, objected and it never came to fruition. Trump asked the governors of a handful of states to send troops to D.C. in response to the Floyd protests there. Some governors agreed, but others turned aside the request. National Guard members were present outside the White House in June of that year during a violent crackdown on protesters demonstrating against police brutality. That same day, D.C. National Guard helicopters overseen by Trump's Army secretary then, Ryan McCarthy, roared over protesters in downtown Washington, flying as low as 55 feet. An Army review later determined it was a misuse of helicopters specifically designated for medical evacuations. Trump also generated controversy when he sent tactical teams of border officers to Portland, Oregon, and to Seattle to confront protesters there.
Yahoo
19-05-2025
- Business
- Yahoo
GOP—With Some Key Dem Support—Poised To Give Trump The Green Light On Crypto Schemes
Here's an example of the kind of compromise included in the Senate's updated crypto bill. After bipartisan negotiations this month, the GENIUS Act will now ban stablecoins from using 'United States,' 'United States Government,' or 'USG' in their name. In some ways, it's important: stablecoins, typically used to purchase other, more volatile forms of cryptocurrency, are pegged to the dollar. But, alas, they are not dollars. That's left a world where companies that issue stablecoins seek to project a sense of stability by naming and marketing these digital currencies as closely tied to the stability of the U.S. government. After negotiations, a handful of Senate Democrats who support the new version of the bill say that changes to it would ban certain forms of that. But a venture by President Donald Trump shows the limitations of such a measure. A Trump-linked company has a stablecoin is called USD1. You might be mistaken, given the name and the President's personal involvement, for thinking that it's affiliated with the U.S. government. But it's not, though it would slide through that one provision in the new bill. The stablecoin bill flopped earlier this month on a procedural vote, a delay prompted by a cascading series of crypto-related Trump corruption scandals. Republicans, who almost unanimously support the bill, will hold a cloture vote tonight, Senate Majority Leader John Thune (S-ND), said on Monday. The critical new vote comes after negotiations that, some Democrats say, yielded compromises. Some Democrats who plan to vote for the legislation touted the ban, among others, in a summary of 'negotiation wins' that is being circulated on Capitol Hill. TPM obtained that memo, along with drafts of the legislation. And while it's not clear yet if Republicans have secured the Democratic support they need — or, if they haven't, what final form the bill will take — the drafts have sparked criticism that the latest version of the bill does little to address President Trump's ongoing, brazen crypto-involved corruption schemes. Those involve an Emirati firm using Trump's USD1 to close a $2 billion investment; the chief executive's family and friends deeply involved at every level of the company issuing the stablecoin; and top holders of $TRUMP coin, a non-stablecoin asset, gaining access to the President. It's a potpourri of graft, the brazenness of which would make Gilded Age wheeler-dealers blush. Critics say that changes in the legislation, which some Democrats are trumpeting as allowing them to vote for the package amid the Trump corruption, are mere window dressing. 'They look like they are making significant changes, but they are cosmetic,' Mark Hays, Associate Director for Cryptocurrency and Financial Technology at Americans for Financial Reform, told TPM. Sen. Cynthia Lummis (R-WY) said last week at an event hosted by a crypto advocacy group and moderated by Semafor that she expected the stablecoin bill to pass by Memorial Day. That prediction was met with cheers from the audience. At the same event, Sen. Kirsten Gillibrand (D-NY), the first Democrat to co-sponsor the bill, replied to a question about Trump's corruption by noting that the stablecoin law would apply to him, as well. 'If some family member chooses to do so, or if [President Trump] chooses to do it in a blind trust, he is obligated to follow all the same rules as any other participant,' she said. Some of the questions the bill hopes to address are typical for new industries and technologies. The GENIUS Act, the vehicle for stablecoin regulation, will be only the first bill to deal with the issue; a piece of legislation on market structure is expected to hit the Senate floor this summer. All of the Trump corruption has collided with a larger question for Congress: as more people adopt, invest, or gamble with crypto, what should the government do? Should it accept that crypto is here to stay, and find ways to regulate the industry? Should it tighten regulations, or leave them loose to embrace what crypto boosters describe as a realm of technological innovation? Should it follow critics and treat digital currencies as useful only for money laundering and speculation? The Republican majority in Congress is pushing for a light touch to the substantive questions of how to regulate digital assets. In the Senate, they need at least seven Democrats to vote for the legislation. Amid an intra-party fight on the bill, several Democrats have already lined up to signal their support: in addition to Gillibrand and Sen. Angela Alsobrooks (D-MD) — the bill's Democratic sponsors — Sen. Mark Warner (D-VA) said on Monday he will vote for the bill. Meanwhile, Democratic staff on the Sen. Elizabeth Warren-led Senate Banking Committee put out an analysis blasting the bill. 'Under the latest revised draft text: Elected officials and their families, including President Trump and his family, are not prohibited from owning or participating in stablecoin business ventures. Instead, the bill will turbocharge President Trump's ability to benefit from his crypto deals,' the Senate Banking Committee Democratic staff analysis read. On the non-Trump questions, the changes to the bill, per the documents that TPM obtained, could still leave open significant questions around what kind of companies can issue stablecoins, and what happens in the event of insolvency. Per the bill, federal regulators are required to study and issue a report on 'existing gaps' in bankruptcy law as they apply to the new assets. One fight has been over whether big tech firms can issue stablecoins. It's been tried before: in June 2019, Meta announced that it would launch a coin called 'Libra,' pitching it as an alternative to the global financial system. That effort foundered amid regulatory concerns and criticism over the amount of power that it would concentrate in Meta. Some of the recent changes to the bill would force publicly traded companies like Meta and others to receive approval from a new body called the Stablecoin Certification Review Committee before being able to issue the coins. The committee will be composed of top regulatory officials, including the Treasury Secretary, Federal Reserve chair or vice chair, and the head of the FDIC. Apart from all the Trump issues, it raises questions about whether the bill will allow these companies to continue to morph into something like financial institutions, where people store money in the form of stablecoins absent the kinds of protections normally and formally granted to bank deposits, Hilary J. Allen, a professor at the American University Washington College of Law who studies securities regulation, told TPM. 'Do they become too-big-to-fail financial institutions with all the power and the implicit bailouts that come with that?' she said.
Gulf Today
24-03-2025
- Politics
- Gulf Today
Trump revokes Biden, Kamala, Hillary's security clearances
US President Donald Trump made good Friday on a threat to revoke the security clearances of his predecessor Joe Biden and several senior former White House and national security officials. The list of names stripped of their authorisation to see state secrets included Biden, his family members, and former vice-president and Trump presidential rival Kamala Harris. Former secretary of state and defeated presidential candidate Hillary Clinton was on the list, along with Biden's secretary of state Antony Blinken and national security advisor Jacob Sullivan. In a memorandum to agency heads and distributed by the White House communications office, Trump said the named officials should no longer be allowed access to classified material. Hillary Clinton 'I hereby direct every executive department and agency head ... to revoke any active security clearances held by the aforementioned individuals,' Trump said. 'I also direct all executive department and agency heads to revoke unescorted access to secure United States Government facilities from these individuals.' Former US presidents and national security officials traditionally retain a security clearance as a courtesy, and some find it useful in seeking employment with private contractors. But Trump, who continues to falsely claim that Biden schemed to steal the 2020 election, which he lost, has remained furious with his predecessor and lashes out frequently. Trump was himself investigated for breaching security rules during the period between his first and second term in office, by storing classified White House documents in his Mar-a-Lago resort. The investigation was wound up after Trump returned to office. Many of the individuals on Trump's list were high-profile political appointees of his Democratic predecessor, but former Republican lawmaker and vocal Trump critic Liz Cheney is also named. Fiona Hill, a British-born intelligence analyst who served under both Democrat and Republican administrations, including as an advisor in Trump's White House, is targeted. She is joined by former colleague Alexander Vindman, a Kyiv-born retired senior officer in the US Army who fell foul of Trump after expressing concerns about White House contacts with Russia. Agencies
