If you have a structural fiscal deficit of 6-7 percent of GDP, a savings rate near zero and a reliance on the goodwill of foreigners to fund an explosive increase in debt issuance, you might wish to treat global creditors with a little care. The US treasury sold $654 billion of federal debt over the four days from January 12-15, about the same in one week as the annual GDP of Argentina or the United Arab Emirates. It did not go well. The market yields on long-term bonds are refusing to come down as the Fed cuts rates, and it is the long end that sets the borrowing cost for mortgage debt, car loans, student loans and corporate debt securities.

This rising spread may simply reflect fears of resurgent inflation as front-loaded stimulus from the “one big beautiful bill” juices the economy over the coming months, with the risk of full-blown overheating if Trump hands out $2,000 a head as a pre-electoral bribe. But it may also be the first sign that America is starting to pay a price for the collapse of political credibility.