TechFlow news, July 1 — Global capital markets commentary firm Kobeissi Letter posted on social media stating the irony regarding the situation between Musk and Trump is that eliminating the U.S. fiscal deficit could actually achieve all of President Trump’s economic goals at once.
First, eliminating deficit spending would reduce Treasury issuance, thereby lowering Treasury yields. This would also reduce inflation, enabling the Federal Reserve to cut interest rates and calm bond market volatility. Indeed, the bond market was precisely what caused the trade war to pivot in April, when the 10-year Treasury yield surged above 4.60%. To some extent, reducing deficit spending would allow Trump to impose greater tariff pressure to narrow the trade deficit. While the trade war is seen as "short-term pain for long-term gain," this phrase truly applies to cutting deficit spending.
As Musk continues raising public awareness about the debt crisis, more and more Americans are beginning to pay attention to this issue. Since the pandemic stimulus measures began in 2020, bankruptcy has been the inevitable endpoint of the current U.S. fiscal trajectory.
