US deficit averaged 3.9% 1995-2024. It's expected to come in at about 6.2% this year, more than half of which is already interest...That could turn into a feedback loop: too big an interest bill, fewer buyers for such an uncreditworthy issuer, higher interest bill...

Yep.

I posted on the BRK board a couple of months ago "Historically, a given fiat currently is stable until it’s not – that moment being when it loses trust as a permanent store of value. Exactly when that shift happens is, I think, most akin to Hemingway’s description of going bankrupt: gradually, then suddenly."

Another analogy occurred to me when using my Visa card yesterday at the grocery store. I know it has a credit limit, but it's high enough to where (as long as I pay it off each month) I never see the shore nor hear the distant surf and can go sailing comfortably along.

But I know what the credit limit is. And if it's, say, $20K and somehow I run up $18K on it, then I need to alter my habits right now. And even if I do, should I routinely start running a higher balance, I wouldn't be surprised to hear from the Visa issuer next month that my limit is now $10K.

The US's problem here is that while there's a peak borrowing limit, no one knows what it is.

But I think we're all pretty sure that that limit is substantially lower than it was a month ago. Not good.

-- sutton