Saifedean Ammous: The Bond Market Defeated Trump

Financial experts are trashing U.S. President Trump’s tariff policy, while some analysts emphasize that Bitcoin is showing its unique economic properties in a time of global uncertainty.Trump’s decision to take a 90-day pause on reciprocal tariff hikes and return to a 10 percent baseline for most countries (except China) has exposed the vulnerabilities of the U.S. bond market, critics say.Economist and Bitcoin Standard author Saifedean Ammous pointed out that Trump’s decision to cancel the increased tariffs was a reaction to rising bond yields, suggesting the forced nature of the administration’s move.”Trump fought the bond market and the bond market won,” wrote Ammous on April 23 on social media X. “The gambit seemed to work for the first day, and the huge crash in the stock market was presented as a small price to pay for fiscal sustainability.””But then the bonds began to crash, and it became clear how disastrous the tariffs were, and how wrong it was to expect that deliberately crashing the stock market would boost the bond market,” he added.After Trump’s tariff announcement, 10-year Treasury bond yields jumped from less than 4% to 4.5% amid a sell-off driven by inflation and recession fears.1-week chart of 10-year U.S. Treasury bond yields. Source: TradingView”The rise in yields was the exact opposite of what the administration wanted, and reversing course on tariffs half a day after they went into effect was absolutely devastating to Trump’s negotiating position,” Ammus noted.”All the talk about China breaking under Trump’s threat now sounds frankly ridiculous, given that Trump couldn’t even keep his tariffs in place for two days,” Ammus said, adding that China has shown “absolutely no willingness” to reach out and make a deal.The situation has revived long-standing proposals to back the U.S. dollar with Bitcoin.Ammus said the U.S. should continue to buy BTC until the government owns enough to fully back the dollar mass, eventually moving to a Bitcoin standard: “Continue to buy Bitcoin until the value of Bitcoin held by the U.S. government is sufficient to back the entire U.S. dollar mass, then move to a Bitcoin standard in which dollars are exchangeable for Bitcoin, and let the rightHistorically, the dollar was backed by gold and was exchangeable for a fixed amount of the precious metal until 1933, when President Franklin D. Roosevelt suspended gold convertibility in response to the Great Depression.In 1971, President Richard Nixon halted the convertibility of the dollar into gold in an effort to protect U.S. gold reserves and stabilize the economy, marking the beginning of the fiat currency system that exists today.Bitcoin’s fixed supply, hard-coded into its tokenomics, is gradually turning it into a popular alternative to gold.Get Started on Kraken