Yes. And no.

I am an amateur. The Economy has many interacting feedback loops that can become virtuous cycles or vicious cycles.

I do not fully understand all of them. Nor can I price all of them in. And neither can anyone else. ( that is why there is always a buyer on the other end of a sale~ they disagree on the future value)

Throw in highly disruptive Black Swan events like Hormuz, and one has to focus more on vicious cycles.

If D💩Trump gets the Fed to lowers rates while year over year inflation is above the frequently stated goal of “close to 2.0” it encourages borrowing. Borrowers then believe, no matter how smartly or stupidly they use the $, they will be paying back in nominal dollars of less value due to raising inflation. That increases the $ in circulation.

And

The Federal budget is crazy big again this year. That is causing the Treasury to sell bonds and print $ as fast as it can. That also puts more $ into circulation, driving inflation.

And, selling bonds while inflation is rising means the Treasure has to accept selling bonds ( borrowing $) at higher and higher interest rates. That itself increasing demand for bonds while at the same time, contributes to weakening the U.S. currency later on vs other internationally traded currencies.

The higher and higher interest rates the U.S. will be paying reflects default risk.

(In his businesses D💩Trump has always considered himself a genius because he DOES NOT CARE IF HE DEFAULTS. Business defaults are paid for by all the other people in the deal much more so than the borrower)

Default risk is something the U.S. market has not had to factor in much in the past. Inflation plus even a low likelihood default risk pushes Bond rates higher still.

Anyway. More resultant nominal $ chasing less productive economic activity leads to yet more inflation.

The interest the US pays with borrowed $ is NOT $ invested in American production. Therefore the economy is proportionally less productive, on any full accounting calculation, than it would otherwise be.

Lower employee and machine productivity values across an economy also raises prices, and inflation.

Not sure yet, but I am guessing the lower 2/3 of US households are becoming poorer in real terms right now.

The net worth of that lower 2/3 of households does not include a high enough % of assets that typically keep up with inflation.

I also believe the wage earnings on that lower 2/3’s networth households will not likely keep up with inflation on non- discretionary expenses (food, fuel, housing, health care),

China just has to be smart enough to do nothing at all while watching the American economy eat itself alive.

Or, China could just provide a little push by selling chunks of their U.S. bond holdings every time America sells bonds. That will tweak up the interest America has to pay just a tiny bit more.

China has been working on creating a group of buyers and sellers (BRICS et al) who will trade in yuan. If China can convince another major oil producer besides Russia and Iran to accept yuan in payment for oil instead of paying in $ that would also reduce demand for American bonds ant tick the interest rate a very tiny bit more, too.

I see a bad moon rising’