America's Treasury market faces threats from debt, fragmentation, and trade policy
By
The Economist
A good honest bake. Not flashy, but you'll finish the whole bagel.
Summary
The article discusses the critical importance of U.S. Treasury bonds as the world's primary safe asset, and warns that high government debt, fragmented markets, and aggressive trade policies are threatening the stability and reliability of this cornerstone of global finance. It traces the issue back to the 1971 Nixon shock that ended the gold standard, and argues that the Treasury market's dysfunction poses systemic risks to the global financial system.
Key quotes
· 4 pulledSINCE RICHARD NIXON broke the link between the American dollar and gold in 1971, global finance has floated on a sea of Treasuries.
No asset is more important than America's government debt.
It provides a haven for investors at dangerous moments.
Trillions of dollars of contracts and securities worldwide are priced with reference to Treasury bonds.
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