Trump can bully the Fed but he can’t bully the bond markets
The belligerent president has trashed America’s monetary credibility.
The world’s superpower central bank will set interest rates at his whim, much like the Turkish central bank under the Erdogan regime.
They must also assume that Trump will force the Fed to press the pedal to the floor and slash interest rates far below the natural Wicksellian rate until the midterm elections are safely out of the way next year.
Trump has crossed the Rubicon by purging an independent member of the seven-strong Fed board, each appointed for 14 years with Senate confirmation and protected tenure to shield them from pressure.
He cannot force the global bond market to buy US treasuries and fund his debt.
The Achilles’ heel of Trumpism is that the US has a net international investment position of minus $24.6 trillion, or 82pc of GDP.
It has a personal savings rate of 4.7pc, a fraction of US post-war levels or of global levels, and is living off a constant supply of foreign credit to cover day to day spending.
The dollar was already on borrowed time as the world’s hegemonic reserve currency before the death of the Fed. The process will now accelerate, with potent implications for the dollarised system of global finance.
The Bank for International Settlements estimates that $13tn of offshore global debt is denominated in US dollars, or $35tn if you include embedded liabilities in swaps and other derivatives.
Ambrose Evans-Pritchard Telegraph 26 August 2025
The “Sell America’” trade seems to have run its course
https://englundmacro.blogspot.com/2025/08/the-sell-america-trade-seems-to-have.html
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