WHY EVERYONE IS AFFECTED WHEN US BONDS WOBBLE

Imagine the financial system as a gigantic building called the House of Trust, with its solid foundation being US Treasury bonds. Everyone: banks, businesses, families build upon this foundation because they believe it will never collapse. But when the government borrows more and prints more money, small cracks begin to appear, and investors start to worry that the foundation is no longer as safe as before.

To keep them from leaving, the government is forced to raise interest rates to make US bonds more attractive, but this makes borrowing money more expensive for everyone. Before long, mortgage rates, business loans, and credit costs all rise, shaking the entire building. Even those who have never bought bonds will feel the impact because when trust in US public debt disappears, the whole economy is affected.