No. of Recommendations: 3
Oh, yeah.
Let's just leave this one here, too:
reason.com - Interest rates are falling thank government spending cuts for thatInterest rates
Interest Rates Are Falling—Thank Government Spending Cuts for That
Cuts to government spending mean fewer bonds, lower borrowing costs, and potentially a break for borrowers.What, pray tell?
The 10-year interest rate has fallen by half a percentage point in the past month—from approximately 4.8 percent to 4.3 percent. Several factors determine interest rates, including inflation and economic growth, but perhaps the most consequential is the supply of and demand for government bonds.
If the Department of Government Efficiency (DOGE) continues at its current pace—which according to its website includes approximately $52 billion in cuts to date—it could possibly cut $1 trillion in spending in its first year. This will mean $1 trillion fewer bonds being issued, reducing the overall bond supply. A lower supply drives the bond price higher, and because bond prices move inversely to interest rates, this will result in materially lower interest rates. This shift is already being reflected in the bond market.
Government borrowing "crowds out" private borrowing—a concept familiar to anyone who has taken a high school economics class.(Nobody here is going to understand crowding out. They're just not.)
I don't believe the $1T in spending cuts for a second. HOWEVER, even 1/10th of that would still be more progress on this than at any point in my lifetime, so I'll take it.
