What do governments do when the Treasury well runs dry?
Why commercial banks will become big buyers of U.S. government debt
“Everyone knows that everyone knows” that the U.S. government is nearly broke and running out of creditors. In this piece, we delve into Treasury Secretary Scott Bessent’s upcoming effort to find new buyers for his bonds. Guess who these buyers are? None other than the nation’s commercial banks.
Yes, Virginia, this will be unambiguously inflationary, but the economic implications go well beyond upward pressure on prices. So, grab your popcorn and check out the video and PDF we’ve stashed below for an eye-opening examination of the government’s latest attempts to keep its financial boat afloat!
In the spirit of innovation, I’ve teamed up with the brilliant producer Kirk Barbera to sprinkle some extra fun into this presentation. Check out the hilarious embedded video at about the 23-minute point to see what I mean!
And for all you multitaskers out there, fear not! I speak at a leisurely pace, perfect for cranking up to 1.25x and still catching all the essential details.
Don't forget to “like” this piece, or you might find yourself missing out on the next big inflation wave!
Thanks for reading,
HardmoneyJim, June 10, 2025
,
Excellent summation. I bought a lot of TLT and long Treasurys, years ago, when I was putting together a "Permanent Portfolio" a la Harry Browne. Now I am replacing them with highly rated corporate bonds, because I think there is something inherently dishonest about a bond that is as long as 30 years, especially a government bond. The only way these are "risk-free" is because the government is planning on collecting taxes from producers, with which to pay you back, in 30 years- so they are depending on the producers that they are effectively mugging. (Yes, I came to this conclusion after a re-read of Atlas Shrugged).
A bank CD (which seems like effectively a "bond" issued from a bank?) almost always has a duration of 10 years or less, and a corporate bond (without government backing) is rarely more than 20 years, often shorter. Also, a corporate bond is issued by an entity that is actually productive themselves- instead of just stealing from productive people like government bonds!
Anyway, I would be curious to hear your thoughts on this, Jim- if this makes sense or I am missing something.
Hi Jim,
Good article as always although I don't have as favorable a view of Scott Bessent as you seem to have (or have had?) What is your view of corporate bonds/bond funds/ETFs (short, intermediate, long, mix) as an alternative to T-bills?