Among the crazy things being discussed on the edge of the Trump economic team these days is the issue of “eternal bonds” to refinance the country’s incredible debt, and the Post has learned to do so as part of current trade negotiations.
I have been asserted by people close to Treasury Secretary Scott Bescent, Trump’s trade point man, that floating these 50 or 100-year bonds is not closest to the best of my heart as part of his negotiations or anything else.
“No, we’re not talking about it,” one person close to Bescent told me.
One obvious reason why Bessent is not interested in fascinating ideas is that he has countless tariff-related trade deals with his partners, where he is already fully negotiating his hands.
Some of them could soon bear fruit this week, increasing the likelihood of dealing with Japan.
The other is that after the administration has created a policy that blows up the global trading system at the heart of its economic agenda, markets do not need another sharp change to destabilizing, which could become volatile.
However, there are occasional ways to become mainstream in government debates.
The issuance of eternal bonds was actually seen during Trump’s first term.
Stephen Milan, head of Trump’s Economic Advisory Council, was a follower of eternal bonds as part of a trade deal that brought manufacturing and employment back to the United States.
And he’s quite a person in the Trump world.
A doctoral economist from Milan Harvard University, he is also one of the leading intellectual ideological leaders behind current tariff plans.
Although Super Bond does not appear to be part of the negotiations, last fall, Milan published an essay stating it could be used in trade deals.
His work, entitled “User Guide to Reconstructing the Global Trade System,” certainly caught the eye of Trump.
In it, Milan claimed that the dollar is too strong and would hurt manufacturing.
As a result, the factory is closed and relies on inexpensive Chinese products.
To reindustrialize the country, we need to find ways to curb the “King Dollar.” This will make it cheaper for foreigners to buy the product.
One way to do that is to cut back on transactions, forcing trading partners to sell all their dollar reserves, converting short-term debt holdings into super bonds.
In theory, at $36 trillion, the country’s debt will be restructured at a lower fee, making payments in the future.
Why has it been more than 30 years?
Full disclosure: Milan’s paper doesn’t fully grasp what’s going on here.
(His person did not return a call to comment.)
Most of our debts are funded in the old fashioned way, with 30-year bonds being the longest maturity.
Why do people who hold five-year bonds want to take risks on 100-year bonds? So does that mean regaining the principal in the next century?
Most of my sources on Wall Street agreed that Super Bond doesn’t seem that super.
That’s why they say that during Trump 1 Treasury people retreated the idea.
The CEO of Wall Street, which deals with the credit market for a living, said, “Why do everyone do that? The costs of our debts will explode the deficit.”
The drawbacks will be immediate, experts said.
The market could be concerned that the US would need to restructure its debt load.
We literally tell bond buyers that they can’t repay their obligations now, so we need to push forward enough future interest and principal payments.
It’s called “default,” and bond yields can shoot in the month, causing the stock market to crash, causing the economy to fall into a serious recession.
Heat heat to the new SEC boss
Pressure continues to build up on new Securities and Exchange Commission Chairman Paul Atkins to unleash the dogs of China’s executive branch, which the Post learns.
Atkins will be sworn this week as a top Wall Street police officer by President Trump.
His first major investigation is to determine whether nearly 300 Chinese-based companies (representing a market capitalization of over $1 trillion) should be abolished or removed from the US stock market, according to people with first-hand knowledge of the issue.
The pressure comes from a variety of powerful lawmakers, including the House Selection Committee on China.
Rick Scott (R-Fla.) and Tommy Tuberville (R-Ala.) first pushed the issue, conditioning Atkins to ensure that he would investigate the issue after his tenure to confirm him as a chair in the SEC.
The post learned that Atkins said he would.
The concern is that if US investors become skittish than a story that the dominant Chinese Communist Party has heavy handed how they run, they will look into the stocks of Chinese companies.
Following last week’s column to launch an investigation into Atkins, a spokesman for the House Selection Committee said Post IT was also interested in allegations of tinsel disclosures over Chinese listed companies’ ties with CCP, and those concerns were bipartisan.
The committee was established in 2023 to monitor US competition with China and monitored how the ruling Chinese Communist Party uses China Inc. to advance its strategic agenda of military and economic control.
Management teams running Chinese listed companies argue that evidence that CCPs are involved in the business is either exaggerated or non-existent.
And it is necessary for abolishing that something is far more difficult than prove it.
That being said, given the trade war between the US and China, the pressure to investigate listed Chinese companies will only grow and could lead to stress on those stocks.
