The government wants money. One of the ways it can get money is by borrowing it. One of the ways it can borrow money is through bonds, which, when the government issues them, are sometimes called treasury bills, sometimes called treasury notes, and sometimes called treasury bonds. When the government issues a bond, it basically says: “if you buy this bond for $100, then in X years (printed on the bond) I will give you back $100 + Y” – where Y is some extra percentage. The government offers many of its bonds at auction, where Y is not directly set by the government, but they offer to pay the lowest Y that bidders at the auction are willing to buy them for.

In Siggy's OP, he observes that the "lowest Y" at the most recent government bond auction rose considerably. According to CNBC, yields rose on every single bond offering of the US government, with the highest rise being in the US 20 year bond, which rose from 4.605% to 4.752%. That's a rise of 0.148% in one day, which is well within normal range for something like bitcoin, but not for US bonds. They are supposed to be very steady.

A rise in yields such as this is usually treated by the media as an indicator that something went wrong in the bond markets. But whenever I read headlines about yields rising and how that's a bad indicator, they seem confusing to me at first because rising yields sound positive: when something's price rises, that usually means lots of people want that thing, signaling confidence.

But remember, the government auctions treasury bills for the lowest price bidders offer. When their price rises like it did today, that means no one wanted these treasury bills at a lower return, i.e. no one bid to accept a lower yield than 4.752%. i.e. "I won't take your terrible bonds unless, when they mature, you pay me almost 5% more than I'm giving you now." Not wanting the government’s bonds might mean inflation expectations are high. I.e. buyers might think the dollar will be worth less when the bond matures than it’s worth now, perhaps by an amount close enough to the treasury bond’s yield percentage (e.g. 4.752%), so they want more than that to break even.

Importantly, every time the government sells a bond, it takes out a loan, which means they owe more than they got. Where do they get the extra money they need to pay back the loan? They have four options:

Usually they use option 3, but these loans keep getting more and more expensive, adding to the federal deficit, so that every year it gets harder and harder to keep doing that. In theory they can keep taking out more and more loans forever and keep paying them off, but that only works if people keep buying their bonds. If buyers will only do so while simultaneously asking for higher and higher yields (due to higher and higher inflation expectations), the government will end up paying ridiculous amounts of money to bond buyers, indicating that #2 is occurring. Eventually this goes the way of #1, #2, or #4, none of which are good: high taxes, high inflation, and theft are all very bad.

Thanks for posting on the bond market for dummies. They way I always look at this is the U.S. is going to die by fire (hyperinflation) or die by ice (austerity). No path is appealing, but the more appealing path for them is by fire - as many of the politicians and those connected to them are asset holders.

Do they still beat inflation at maturity?

"And we will see in the coming weeks and months the Japanese rushing to buy Bitcoin after the yen collapses, isn't that likely?"

It seems to be global. The US sneezes and the whole world catches a cold.

Why would anyone want to lend the US gov money after that shitshow of a debate?