Since the 2008 financial crisis, American economic policy has rested on the seemingly unshakable conviction that global markets for US government debt were bulletproof. This fact would supposedly allow the state to run enormous deficits indefinitely, financing massive tax cuts for the wealthy even while military spending approached $1 trillion.

The same confidence underpinned the idea that the Federal Reserve possessed virtually unlimited firepower to contain economic crises. Yet in recent weeks, this assumption has begun to look considerably less secure. It turns out that even the American state is subject to the discipline of capital after all.

As concerns over inflation mounted — and, perhaps more important, doubts about the willingness of the Fed to act to contain it grew — borrowing costs for the US state rose sharply. Last week, the ten-year Treasury rate crossed the symbolic threshold of 5 percent, its highest level since 2007. Although Donald Trump continued to loudly demand lower interest rates, the Fed saw little alternative but to raise them, while indicating that further hikes lie ahead.