Capital Flight: The US is Losing Confidence, and It's Going Global

Capital Flight: The US is Losing Confidence, and It's Going Global

The United States is now experiencing capital flight, where investors and individuals are taking their money out of the US and putting it into safer havens like China, Europe, and Japan. The result? The US dollar is weakening, stock markets are falling, and bond yields are rising—a combination that signals a loss of confidence in the US economy.

Why does this matter?

Loss of Confidence: When the dollar drops and bond yields climb, it's a scary situation. It means borrowing money is about to get a whole lot more expensive for the US government, just as we're about to enter a potential recession and pass a budget that could add $7 trillion to the debt.

A Shift in Behavior: Historically, in times of crisis, people flocked to the US as a safe haven. Investors and nations would buy US debt, supporting the economy. But now? That confidence seems to be slipping. Experts argue that Trump’s policies and constant defiance of court orders have broken the country financially.

A Crisis of Trust: According to economist Noah Smith, the world is starting to treat the US like a developing nation. With Trump threatening to fire Powell, enacting extreme policies, and creating uncertainty across the nation, people are pulling their money out.

The unsettling reality: The world has subsidized America's way of life for decades, but it’s all starting to come undone. Unless something drastic changes, the US might be in for a painful wake-up call.