https://www.wsj.com/finance/the-27-trillion-treasury-market-is-only-getting-bigger-a9a9d170?st=qeqyay6pmbakiws&reflink=desktopwebshare_permalink

Translation: we're f'ed.

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Annual issuance of U.S. Treasurys has exploded, nearly doubling since the pandemic began. The government sold a record $23 trillion worth in 2023. And few think the spree is going to slow soon, given the widespread expectation that government spending will continue to rise regardless of who wins November's elections.

Rapid growth in markets from tech stocks to mortgage bonds has ended badly in the past. Treasurys are considered the safest and easiest-to-trade securities on Wall Street, and many worry that any instability there could rapidly spread.

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When the government doesn't take in enough from taxes to fund its spending, the Treasury Department issues bonds to fill the gap. The agency raised a net $2.4 trillion last year to finance the deficit, taking into account what it had to sell to repay holders of maturing debt.

The Treasury market has grown more than 60% to $27 trillion since the end of 2019. It is roughly sixfold larger than before the 2008-09 financial crisis.

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If this is what the CBO believes, then you can almost guarantee it will be much worse:

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The Congressional Budget Office anticipates government spending that continues to climb in the coming years, with an aging population raising the cost of programs such as Social Security and Medicare. Rising interest costs could also boost issuance.

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Interesting tidbits:

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Hedge funds, money-market funds and foreign investors are now America's primary financiers.

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Hedge fundslumped in with households in Fed datahave mostly filled the gap left by the central bank, which is paring its holdings of bonds accumulated in its efforts to prop up the economy.

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Japan surpassed China as America's largest foreign creditor in 2019.

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Someone more in the know can't react to this one:

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The International Swaps and Derivatives Association trade group recently asked the Fed to revive a pandemic-era policy. It would allow banks to exclude Treasurys and deposits held at the central bank from a regulatory buffer that forces banks to hold capital as a percentage of loans and other assets. That would allow banks to finance more U.S. debt and open up their balance sheets when markets become strained.

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Agreed. Any steps take on this front is the equivalent of painting over termites.

Hard money assets are a pretty decent bet for the foreseeable future. Some allocation to gold, Bitcoin, etc. feels like the responsible move.

I like the idea of the allocation being equal to the percentage chance that we see something break in the next 12-18 months. Everyone's answer is different.

I've maintained for years that if the USD actually collapses wealth preservation is the least of your concerns. Guns, ammo and food are going to be more important than gold and Bitcoin will be irrelevant. The dollar underpins the entire global economy and there are no alternatives so if it fails everything fails and violence is the most likely scenario, both domestically and globally. I just can't see a world where the US is in hyperinflation and the rest of the global economy is functioning as if everything is fine.

Back in the colonial days we had multiple economic systems so we had rival currencies and capital could move between them to preserve wealth. This is what led to the poorly interpreted phenomenon of changes in the global reserve that people like Dalio try to apply to today's USD. Today we have one economic system and the dollar has no rivals. There's nowhere for capital to go which has and will prop up the dollar far longer than it should.

Having said all of that we're in the early years of a long run of outsized growth and that combined with a higher than usual tolerance for inflation may end with the Fed coming out looking like geniuses if we can navigate the next 20 years without collapse. 20 years from now most of the boomers will be dead and the strain they're going to put on the system will have ended. There won't be much effort to reign it in before then so we'll just have to see how it goes.

"Picking a fight with the U.S. was a terrible idea" I've thought a lot about this. And I've concluded that, by being involved in Ukraine on the Russian border for two decades, it's NATO that picked the fight with Russia.

Not in disagreement. But just about all of them have openly mentioned that it is their goal. That's why I tagged it with "maybe". When you run each of their actions through that motivation tree, you can start to see why wars are starting to pop up. Either they are trying to get ahead of something or trying to get out from under something.