Blameless Austerity via AI

Austerity proves the "political third rail". Imposing it, naively, risks up-ending the entire political and bureaucratic system within the United States.

Whether Republican or Democrat, absolutely no-one wants to own or be accountable for the necessary austerity that would preserve the American Treasury market.

To give context, I will compare the austerity situation in America to another sticky situation: the Exchange Rate Mechanism of the early 1990's, which fundamentally over-valued the British pound relative to the German mark.

Remember Soros and UK's Exit from the ERM?

In 1992, Soros famously "broke the Bank of England", supposedly through his spectacular shorting of the British pound against the German Deutschemark (Euro did not exist, yet).

Now, I can let you in on a wee secret: if Soros' position indeed did present a systemic threat to the Bank of England and the British capital markets, his firm and the brokerages serving it would all get, at first, a polite tap on the shoulder, and if they persisted, their positions would simply be closed - period.

You don't tilt at HRH in his own Bourse. That just doesn't happen.

John Major & Parliament Needed a Story & Way-Out

Soros provided an invaluable service to the British economy, allowing the British pound to float lower against the German mark and spare the country a financial and political crisis: no political party in Britain could own the devaluation of the pound against the mark without suffering serious long-term consequences. The Bank of England would ruin its reputation and credibility, if it acted unilaterally.

No - the British need a story - a convincing story - to get out of the ERM and preserve the reputation and credibility of both parliament and the BoE: enter Soros.

Notably, most of the windfall from his trade found itself funneled into a nonprofit, not his own pocket. That, alone, suggests what really occurred.

Today: America & Austerity

Replace the ERM of 1991 UK with American social spending cuts and Soros with AI, and you have a rough template of what's to come: massive spending cuts by dint of a third party - not a political decision by politicians or a policy decision by bureaucrats, but instead, an independent entity impelled change, on its own.

That entity is AI.

AI: The Perfect Political Enemy; The Perfect Austerity Tool

AI is the perfect political enemy. The entire American population can hate AI, and the Establishment, staffed by people, faces no tangible or intelligible threat to its stability.

No sitting congressman risks his seat by blaming AI for "accidental" social service austerity cuts (which would only be modestly reversed, if at all).

BBB Saved the Treasury Because AI Will Ruthlessly Gut Social Spending

With AI gutting spending across the board, Congress has the enviable position of simply restoring some of the social spending, and every sitting congressman gains prestige and influence in his district.

AI will save the Treasury market precisely because it can unilaterally do the unthinkable, impose brutal austerity across America, without endangering a single member of the political or bureaucratic establishment.

Conclusion: Buy 30-Year Treasury Bonds

There's a good reason why rates are coming down: brutal austerity beckons, on the horizon, and the usual beneficiaries will have to lobby extra-hard to get their snouts back into the trough. Those without lobbyists or a coordinated voting bloc will find themselves patriotically contributing to the "savings" required for the Treasury market to thrive, for another generation.