This Happened in 2007, Then Economy COLLAPSED - USA Treasury Yields Hit 5% Again

本站添加: 2026-05-19

[00:00:00]Yesterday, the United States Treasury auctioned $25 billion in new 30-year government bonds. The yield, the interest rate the government has to pay investors to convince them to lend it money for three decades, came in at 5.046%.

[00:00:16]This is the first time the 30-year Treasury yield has crossed 5% since 2007. If that year sounds kind of familiar, it should. 2007 was the year before beer Sterns collapsed. The year before layman brothers filed the largest bankruptcy in American history. The year before the global financial system came within hours of complete seizure and had to be rescued by the largest government intervention in modern economic history.

[00:00:44]The last time the US government had to pay this much to borrow money for 30 years. The world economy was 12 months away from the worst financial crisis since the great depression. Nobody's saying that 2008 is about to repeat itself in the same form exactly, but bone heels are the financial system smoke detector. And right now, the smoke detector is screaming. I'm El. I have a PhD in computer science and I use data analysis to spot patterns in geopolitics and economics. And the pattern in the bond market right now in the US is one that anyone with a background in financial data recognizes immediately.

[00:01:19]Yields do not rise to these levels because things are going so well. They rised because investors are demanding more compensation for risk. The risk that inflation stays elevated, the risk that the government cannot control its own spending, and the risk that the country borrowing the money is becoming structurally less creditworthy. All three of those risks are flashing red simultaneously. The immediate trigger is energy prices. Since the Iran war began in late February, oil prices have surged roughly 80%. The US Treasury Borrowing Advisory Committee, thus the US government's own panel of bond market experts, wrote a formal letter to the Treasury Secretary on May 5th, stating that oil prices are up nearly 60% since the start of the conflict and that the broad commodity index has now risen above its pandemic era peak set in 2022.

[00:02:12]We covered this in a video before when it happened. Consumer prices in April rose at an annual rate of 3.8%, 8%, the highest since May 2023. Inflation swap markets, which track where professional traders expect inflation to land, have jumped by 75 basis points in the US and 100 basis points in Europe since the war started. Before the conflict, markets were confidently pricing in interest rate cuts by the end of 2026. They are now pricing in the possibility of rate hikes. The war flipped the entire monetary policy outlook of the world's largest economy in under three months.

[00:02:50]If you've been following this channel's playlist on how US policy decisions are systematically undermining American economic power, this is the bond market piece of that puzzle. The numbers here do not require interpretation. They require a calculator and a strong stomach. The United States government currently carries nearly $39 trillion in national debt. The projected cost of servicing that debt, just the interest payments, not paying any of it down, is $1 trillion for fiscal year 2026. That is not a projection from a think tank with an agenda. That is the Congressional Budget Office's own baseline estimate, $1 trillion in interest payments alone. Just to put that in context, the federal government is now spending more on interest payments than it spends on national defense, Medicaid, veterans benefits, transportation, food assistance, education, science, and energy. For every single dollar the government collects in taxes and fees this year, 19 cents goes straight to paying interest on money it already borrowed. Not schools, not roads, not hospitals, not infrastructure, debt servicing. If you're trying to understand how to see through official narratives and read what the structural data actually shows, my book Awake the Practice of Critical Thinking in an Age of Soft Lies is available as an ebook and audiobook.

[00:04:08]Subscribers get 10% off and you can grab the first chapter for free in the description links below. Now, here is where the feedback loop becomes visible and once you see it, you kind of cannot unsee it anymore. The war in Iran drove oil prices up 80%. Higher oil prices drove consumer inflation higher. Higher inflation pushed bone yields higher because investors demand more return to compensate for the erosion of their purchasing power. Of course, higher bond yields mean the government has to now pay more interest every single time it borrows. Higher interest costs widen the deficit because the government is already spending far more than it collects. A wider deficit means more borrowing is required to cover the gap.

[00:04:49]And that additional borrowing now happens at the new higher yields, which means next year's interest bill is even larger than this year's, which widens the deficit further, which requires yet more borrowing at yet higher rates. The Congressional Budget Office projects that interest payments will grow from $1 trillion this year to 2.1 trillion by 2036, which is an 106% increase in a single decade. By 2048, interest on the national debt is projected to become the single largest line item in the entire federal budget, surpassing Social Security, surpassing Medicare, surpassing everything basically. And that projection was made before the Iran War pushed yields to 5%. The Treasury Borrowing Advisory Committee's letter is worth reading in full, by the way, because it is the closest thing you will ever see to a formal warning issued from inside the system itself. It states that the surge in commodities has been felt most acutely in global rates markets and that the increase in inflation expectations has forced a significant hawkish repricing of central bank policy. Meanwhile, the incoming Federal Reserve Chair Kevin Worsh inherits what CNBC describes as the most divided Federal Open Market Committee in more than 30 years. The Fed has kept rates steady between 3.5 and 3.75% since December. The bond market is now telling the Fed that was just not enough. FWD Bonds chief economist Chris Rupkkey wrote after the April inflation data that it was another nail in the coffin of the idea that Fed officials have to welcome the new Fed share with an interest rate cut this year. The United States government is currently paying $88 billion per month in interest, 22 billions per week, by the way, on money it has already spent. That monthly figure is roughly equal to what it spends on defense and education combined over the same period. And every single basis point that yields rise from here makes that bill larger permanently because 30-year bonds lock in their rate for three full decades. The bonds auctioned yesterday at 5.046% will still be paying that rate in 206.

[00:07:02]Every dollar borrowed at these level stays expensive for an entire generation. These videos are not financial advice and please do not change any of your positions of the pack of them. But in terms of what's going to happen next, I think the prediction is that yields will probably not return below 4% on the 30-year this calendar year. The Iran war will likely continue to put sustained upward pressure on energy prices. Inflation will likely remain very sticky above 3% through at least the third quarter. And the federal deficit will likely exceed $2 trillion for fiscal year 2026. The feedback loop war drives inflation, drives yields, drives interest costs, drives deficits, drives more borrowing, drives higher yields and all of that is now structurally embedded in the fiscal architecture of the United States. The last time yields were at this level, the financial system had 12 months before everything broke. The structure of the risk is different this time, but the smoke detector is exactly the same one, and it is not a drill. The video on your screen right now covers how record numbers of Americans are actually leaving the country and moving to Europe for the first time since 1935. It connects directly to the economic pressures building inside the system this video describes. Thank you all so much for watching. Subscribe and I'll see you on the next