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The ingredients for some sort of American financial crisis are falling into place, disguised by the AI bubble. The global market no longer has full faith in the management of the US Treasury and the Fed.
A dangerous view is creeping into the markets that the US has already gone so far down the path of a debt compound trap that it dare not raise interest rates to control inflation.
The US Treasury has become acutely dependent on short-term funding from hedge funds, many tapping the $US8.3 trillion ($11.8 trillion) money market and some operating with up to 100 times leverage. The share of purchases coming from stable lenders such as foreign central banks and sovereign wealth funds has been drying up.
