Maybe this stuff works on TV or on the stump. But it doesn't work on Wall Street, where people can count.

Don't believe the bond market. Believe me.

It's even worse than you think.

In response to the growing crisis surrounding the bond market and the national debt, President Donald Trump, Vice President J.D. Vance and Treasury Secretary Scott Bessent are trying to talk the crisis down.

And they are doing so with their usual brand of nonsense and ... er ... "alternative facts."

The most charitable explanation is that they simply think the $40 trillion Treasury bond market has somehow got it wrong and is mispricing interest rates and risk. That would be truly remarkable - and would offer the greatest one-way bet in financial history.

Presumably, if the administration honchos really think that is the case, they will rush out today and throw all of their money into these grossly undervalued bonds.

And presumably the same goes for MAGA supporters across America. If short- and long-term interest rates got back to where they were when President Donald Trump left office in January 2021, the Pimco 25+ Year Zero Coupon U.S. Treasury Index ETF ZROZ, which holds the longest-dated U.S. Treasury bonds, could be expected to rise more than 150% from current levels.

Good luck with that.

Trump's remarks were actually the least egregious of the trio. He said on Thursday that because the U.S. economy was "strong," interest rates "should go down." This is not correct, but it's just false reasoning.

Trump, as a businessman who made infamous use of excess debts during his decades reeling from one corporate bankruptcy to another, is likely confusing the interest rate on corporate debts - like the ones his company issued - with the interest rate on national debts.

When a corporation is doing well and is financially secure, then, yes, the interest rate on its bonds will decline because investors will consider them safer.

But government bonds are different. When a national economy is strong - let's assume, for the sake of argument, that it is right now - that doesn't mean the interest rates on those bonds should go down. On the contrary, when a national economy is strong, bond rates typically rise, partly because there are so many competing demands on the money - i.e. investment - and partly because a booming economy tends to push up inflation.

This is why Treasury interest rates collapse in a recession or depression - such as during in the global financial crisis or the pandemic lockdowns.

Vance, meanwhile, blamed the looming bond crisis on the "debt bomb" this administration supposedly "inherited" from the Biden administration. Maybe this stuff works on TV or on the stump. But it doesn't work on Wall Street, where people can count.

The gross U.S. national debt at the end of 2024 - in other words, at the end of the Biden administration - was $35.2 trillion, as reported by the independent Congressional Budget Office. (See Table B-3, here.)

Today it's $40 trillion. It's risen nearly $5 trillion in a year and a half.

In January 2025, when Trump took office for the second time, the CBO projected that the national debt would reach $39.2 trillion by the end of 2026. We have already blown past that, months ahead of schedule. In other words, the debt hasn't just risen by almost $5 trillion so far under Trump, but it's already risen about $1 trillion more than was forecast.

Darn that Joe Biden!

Meanwhile, Bessent was on TV claiming that there is a "very good chance" that federal deficits have "peaked." He also claimed the U.S. economy could "grow our way out" of the debt problem.

Both these claims would come as news to anyone looking at the data. According to the last analysis by the CBO, the deficit this year is higher than last year and will continue to climb for the rest of Trump's term in office. The 2025 federal deficit was $1.78 trillion. This year's is forecast to be $1.85 trillion. Next year, it will be $1.89 trillion, and in 2028 it will be $20.8 trillion. If Bessent's calculator is telling him those numbers are going down, he can borrow mine.

Actually, the picture is even worse, because this week the CBO said that the Supreme Court ruling against most of the Trump administration's tariffs would add hundreds of billions more to these deficits. While Bessent says new tariffs will replace the old ones, that won't affect the numbers, which already include the tariffs.

As for growth, the CBO predicts that U.S. annual GDP will grow by $14.8 trillion over the next 10 years. The national debt, meanwhile, will grow by $24.3 trillion, or nearly $10 trillion more than GDP.

The U.S. economy would have to grow 25% faster per year than forecast just to keep up, meaning a growth rate of 5% a year instead of the expected 4%.

If you really believed what Trump, Vance and Bessent are saying about the debt, you would be buying high-risk, long-term zero coupon Treasury bonds. So too would all the members of the administration's "Hallelujah" chorus in Congress. And those members of the administration's extended circle who are, ahem, free to trade.

The bullish case for bonds rests more on hopes that the Federal Reserve will bring back "quantitative easing" and start printing money to buy up long-term Treasury bonds. Stay tuned.

-Brett Arends