Where is Lyndon LaRouche when we need him? He should have been listened to 50 years ago.
International speculators are betting on the possibility of a blowout of the U.S. government debt—and are helping to bring it on, in the process. That is the backstory to Treasury Secretary Scott Bessent’s daredevil message earlier this week that he is prepared to throw up to $1 trillion into the market to force Treasury yields down.
Bessent’s approach is to use short-term Treasury bills (less than one-year maturity) to buy back longer-term bonds—he calls it a “Treasury twist”—since interest rates are typically lower for shorter-term paper. In fact, the Wall Street Journal admitted, “Bessent’s mission to tame the bond market could get help from another Trump administration push: crypto legislation…. In that context, it is notable that Bessent has in the past talked about a big potential new source of demand for Treasury bills: stablecoins.”
EIR warned about this unworkable scam a full year ago. What it signalled was the metastasis of the global speculative cancer into the $32 trillion Treasury securities market itself, the cornerstone of the entire trans-Atlantic financial system.
Why are Bessent and the Trump administration so desperate to lower interest rates? The November elections are only part of the story. The real problem is the looming insolvency of the Federal debt itself—absent a Hamiltonian reorganization of the sort specified by Lyndon LaRouche.
The U.S. has just passed the $40 trillion mark for total government debt. Interest payments on that debt will exceed $1 trillion in 2026—almost 14% of the $7.4 trillion total budget, according to the Congressional Budget Office.
The average interest rate on today’s $40 trillion debt is about 3.44%; but new 30-year Treasury bonds are now commanding a 5.3% interest rate. Compare that to a total debt of $27 trillion in 2020, with average interest rates on that debt of only 1.7%. What that means is that, in broad terms, there has been a tripling of the interest burden on the federal budget in just six years!
Furthermore, both the total debt and interest rates on new debt are now rising, at the same time that the maturity profile of that debt is getting shorter and shorter. This is a classic pattern that will be recognized by most nations of the Global South, which have been subjected to exactly this kind of financial warfare by Wall Street and the City of London for decades.
Those same sharks now smell American blood in the water, too.
