...higher inflationary expectations alongside falling consumer sentiment = indication of stagflationary forces at work
During Trump's first term, consumer sentiment was at cycle high and inflation expectations were at cycle low. Now, consumer sentiment is at cycle low and inflation expectations are at cycle high. Pundits will keep telling everyone to ignore the "soft data" until the Idiocracy is righteously buried. https://x.com/SuburbanDrone/status/1923422216588337472
...Porter Stansberry's dire warning of what could happen when the foundations are weak and fragile. And Trump's disruption isn't making it any easier.
Bank of America’s sitting on $700B in bonds bought at 1% yields in 2020. Those bonds are down ~40%, hiding $100B in losses. Meanwhile, the Treasury needs to refinance $9T and issue $2.5T in new debt this year.
Foreign buyers like China are dumping Treasuries for gold. If Trump disrupts this debt recycling, we’re staring at a failed auction or Fed QE that’ll spike inflation expectations.
When yields hit 7-10%, Bank of America’s equity won’t survive. A run on the bank? ATMs down? It’s not “if” but “when.” Fractional reserve banking fails-it’s built to. See 1932. https://x.com/porterstansb/status/1923425584803152299
Moody’s Breaks the Seal: The U.S. Enters the Post-AAA Era Overview:
On May 16, 2025, Moody’s downgraded the United States’ credit rating from Aaa to Aa1, officially ending the U.S.’s status as a top-rated sovereign across all three major agencies.
Moody’s had been the final holdout after S&P’s downgrade in 2011 and Fitch’s in 2023. Now, for the first time since 1949, the U.S. carries no perfect sovereign credit rating. This isn’t just about optics. It’s a formal, institutional recognition that the U.S. fiscal trajectory has crossed a structural threshold. The downgrade is a symptom of rising debt, uncontrollable deficits, eroding political will, and weakening global trust.
⸻ What Moody’s Cited And What It Really Means
•Explosive Debt Growth: The federal deficit is already running at $1.05 trillion just halfway through FY2025, up 13% from last year. Moody’s expects deficits to reach nearly 9% of GDP by 2035, with federal debt hitting 134% of GDP, up from 98% in 2024.
•Rising Interest Burden: Interest costs are crowding out the budget expected to overtake Medicare and defense spending. This is fiscal dominance: the bond market, not the Fed, now determines policy limits.
•No Path to Reform: Moody’s directly stated: “We do not believe that material multi-year reductions in mandatory spending and deficits will result from current proposals.” This is a judgment not just on economics, but on the credibility of U.S. governance.
Historical Echo: The 1970s U.K. Moment
This mirrors Britain’s descent from global reserve status in the 1970s: a once-unquestioned sovereign began facing rising external financing costs, political dysfunction, and downgrades from institutions once designed to uphold its credibility. The U.S. is entering the same liminal space where the dollar is still dominant, but increasingly doubted.
⸻ Strategic Inflection: The Myth of Infinite Demand Is Breaking Moody’s flagged it clearly: “less foreign demand” for Treasurys is a growing risk. The pile of debt that must be constantly refinanced is ballooning, while international demand is thinning.
That means:
•More debt must be absorbed by domestic buyers or the Fed.
•The cost of borrowing will rise over time, even in a deflationary growth environment.
•Any future Fed pivot to suppress yields will look more like yield curve control and less like optional monetary policy.
⸻ Conclusion: This Is the End of Assumptions
This downgrade is not a shock. It’s a seal-breaking event a signal that the world’s most structurally important borrower can no longer sustain the illusion of limitless credibility.
The debt is too large.
The interest cost is too high.
The political system is too frozen.
The world is watching.
This isn’t a crisis yet. But the math is now louder than the myth. https://x.com/onechancefreedm/status/1923508713039471047
