Fortune magazine has reviewed a fictional story published by the “No Labels” group, imagining a financial armageddon triggered by a collapse of US bonds in 1929, and they have interviewed one of the authors of the story, Brian Clancy. Clancy stated that the US is running a 6% GDP deficit, and for the first time the deficit is higher than defense spending. Countries are buying fewer Treasuries and central banks are reducing their reserves in dollars. The trend is clear and the day when nobody buys Treasuries any more is getting close, Clancy warns. Already during the Iran war, investors demanded higher yields for US Treasuries. When this becomes a pattern, we are in trouble. You cannot catch a US debt crisis today: in 2008, the government was the fireman; this time there is no fireman.
The urgent concern, however, seems to be of a political nature: a radical populist threat could emerge. “No Labels” deeper fear isn’t purely economic. The organization, whose core mission is combating political extremism, argues fiscal crises historically create the conditions for radical political actors to gain traction. The report depicts a Tucker Carlson-type demagogue rising to power and DSA-aligned politicians gaining influence in the chaos—two very different ideologies united by the conviction that the entire system needs to be torn down.
