[[link removed]]

BOND VIGILANTES ARE NOW THE UNCHALLENGED KINGS THANKS TO A FECKLESS
CONGRESS AND RECKLESS TRUMP  
[[link removed]]


 

Jeet Heer
April 11, 2025
The Nation
[[link removed]]


*
[[link removed]]
*
[[link removed]]
*
*
[[link removed]]

_ A president who bullies Congress kowtows to the bond market. _

A screen displays financial news on the floor at the New York Stock
Exchange in New York, Thursday, April 3, 2025., Seth Wenig / AP Photo

 

After weeks of playing chicken with the global economy by launching a
mindless tariff war against more than 180 countries
[[link removed]],
Donald Trump blinked. On Wednesday, Trump announced a 90-day pause on
many (although not all) of those tariffs. This gave the stock market a
brief respite from its steep decline of the last few days. However,
once the reality that China was still subject to harsh tariffs became
clear, the market tumbled the next day.

The good news is that even as uncertainty continues to hobble the
global economy, the limits of Trump’s ability to capriciously
sabotage global trade are becoming clear. The bad news is that these
limits are not being imposed by the democratically elected body that
has the constitutional power to check a dangerous president—and the
legal authority to set tariffs: Congress. In fact, Congress has become
even more irresponsible and cowardly, cowering before Trump and
irresponsibly ceding its tariff powers to the executive.

In April’s continuing resolution to the budget (which was supported
by Chuck Schumer and nine other Democrats in the Senate), Congress
explicitly renounced the ability to end the emergency power
[[link removed]] declaration that
underwrites Trump’s tariff policy. The budget resolution passed by
the House on Thursday went even further. As Sahil Kupar of NBC
News reported
[[link removed]] on Wednesday:
“House Republicans tucked language into the budget [resolution]
‘rule’ that bans the House from voting to terminate Trump’s
emergency declaration used to impose tariffs…. lawmakers who vote
for this are officially giving up their power to revoke his tariffs
until October.”

As I noted in a previous column
[[link removed]],
the tariff crisis is also a constitutional crisis. Constitutional
powers are also constitutional duties. Congress, with the same
abdication of responsibility that led them to hand over war-making
responsibility to the commander in chief, have now surrendered their
responsibility to set tariff rates, further empowering the imperial
presidency. The centralization of power in the oval office is bad
enough when the president is a power-hungry goon like Nixon or George
W. Bush, but even more disastrous when the chief executive is imperial
in the sense of having the character of a mad emperor like Nero or
Caligula. Nero, as the saying goes, fiddled while Rome burned. How
much worse is Trump, who dances
[[link removed]] while lighting the
world on fire.

To the extent that the arsonist has been—temporarily—stopped from
some of his incendiary activities, this is due not to the proper
constitutional and democratic actions of Congress but by the actions
of the ultra-wealthy. Wall Street played a role, not only with the
stock market tumble but also by lobbying the White House and Trump’s
GOP allies. But much more important was the intervention of bond
holders, who started selling Treasury bonds at a rate that could
easily have precipitated an economic meltdown on the order of the
Great Depression. It’s worth remembering that bond holders are
overwhelmingly the economic elite—much more so than the stock
market. While the stock market is hardly a democratic institution,
pension funds give a majority of the population some stake in stocks.
By contrast, a 2016 report found
[[link removed]] that
only 1.3 per cent of the population—almost all of them very
rich—directly participate in the bond market.

Initially, Treasury Secretary Scott Bessent and Secretary of Commerce
Howard Lutnick were touting the possibility that a stock market
correction would lead to more money going into Treasury bonds, which
would help the US government deal with its debt by allowing for lower
rates. Unexpectedly, there was a move away from Treasury bonds. As
Willian D. Cohan of _Puck_ explains:

On Monday, the 10-year Treasury yield backed up from 3.89 percent to
around 4.12—a 6 percent move in one day, and a clear signal that
bond investors are getting very nervous about whatever the heck is
going on at the White House. On Tuesday, it backed up even more, to
4.25 percent—a 9 percent increase over two days. By Wednesday, the
10-year Treasury was yielding 4.54 percent. (After Trump announced the
90-day pause, the yield moved down slightly, to 4.4 percent; I’m
sure he was hoping for more.)

In his substack _Chartbook_ on Monday, Columbia University historian
Adam Tooze, who has written extensively on economic crises, laid out
a scenario
[[link removed]] where
a run on Treasury bonds could lead to a wider economic crisis:

What if providing liquidity does not cool the panic? What if
investors, both American and foreign decide, that they no longer wish
to hitch their wagon to the empire of the mad king? What if they
decide that the US is indeed exceptional, but that it is exceptional
in rather nasty ways? What if the report in the UK Telegraph is more
than mere rumor and Germany’s leaders are seriously considering
pulling its remaining gold reserves out of the USA
[[link removed]],
because of Trump-risk? Well in that case, holding billions in dollars
newly created by the Fed does not give you the security you want.

So you sell the dollars. You just want out of the mad house.

This, Ladies and Gentleman, would be the truly big disaster. It would
be a sell out not just of US stocks. Not just of US fixed income. But
of dollar assets tout court. This would be the long heralded crisis of
the dollar.

While Tooze described this scenario as “unlikely,” the panic of
Tuesday and Wednesday suggests at least the beginning of a nightmare
crisis. This is why Trump blinked. Explaining on Wednesday his 90-day
tariff pause, Trump told reporters
[[link removed]]:

“Well I think people were jumping a little bit out of line. They
were getting yippy…. Bond market is very tricky. I was watching it.
But if you look at it now, it’s beautiful. The bond market right now
is beautiful. But, yeah, I saw last night where people were getting a
little queasy.”

To be sure, Trump isn’t the first president who has had to learn the
hard way that finance capital calls the shots. In 1994, Bill Clinton
was quoted in Bob Woodward’s book
[[link removed]] _The
Agenda_ lamenting
[[link removed]], “You mean to
tell me that the success of the program and my re-election hinges on
the Federal Reserve and a bunch of fucking bond traders?” In the
same book, Clinton adviser James Carville is quoted memorably as
saying, “I used to think that if there was reincarnation, I wanted
to come back as the president or the pope or as a .400 baseball
hitter. But now I would like to come back as the bond market. You can
intimidate everybody.”

As powerful as bond traders have long been, they are even stronger
now. They have been empowered by both Trump (whose reckless policies
gives them even greater leverage over the US government) and by the
pusillanimity of Congress. At the end of the day, it shouldn’t be
the job of bond traders to rein in an out-of-control president.
That’s the duty of Congress, but that august body has gone AWOL. The
infamous bond vigilantes didn’t need more power. But they have it
now.

_JEET HEER is a national affairs correspondent for The Nation and
host of the weekly Nation podcast, The Time of Monsters
[[link removed]]. He also pens
the monthly column “Morbid Symptoms
[[link removed]].” The author
of In Love with Art: Francoise Mouly’s Adventures in Comics with
Art Spiegelman [[link removed]] (2013)
and Sweet Lechery: Reviews, Essays and Profiles
[[link removed]] (2014),
Heer has written for numerous publications, including The New
Yorker, The Paris Review, Virginia Quarterly Review, The American
Prospect, The Guardian, The New Republic, and The Boston Globe._

_Copyright c 2023 THE NATION. Reprinted with permission. May not be
reprinted without permission
[[link removed]].
Distributed by PARS International Corp
[[link removed]]. _

_Founded by abolitionists in 1865, The Nation has chronicled the
breadth and depth of political and cultural life, from the debut of
the telegraph to the rise of Twitter, serving as a critical,
independent, and progressive voice in American journalism._

_Please support progressive journalism. Get a digital subscription
[[link removed]] to
The Nation for just $24.95!_

* Donald Trump
[[link removed]]
* global economy
[[link removed]]
* Tariffs
[[link removed]]
* Bond market
[[link removed]]
* Constitutional Crisis
[[link removed]]
* Finance Capital
[[link removed]]
* US Congress
[[link removed]]

*
[[link removed]]
*
[[link removed]]
*
*
[[link removed]]

 

 

 

INTERPRET THE WORLD AND CHANGE IT

 

 

Submit via web
[[link removed]]

Submit via email
Frequently asked questions
[[link removed]]
Manage subscription
[[link removed]]
Visit xxxxxx.org
[[link removed]]

Twitter [[link removed]]

Facebook [[link removed]]

 




[link removed]

To unsubscribe, click the following link:
[link removed]