Despite the Trump administration’s systematic erosion of America’s capacity to create wealth over the long term, bond markets and investors seem to have fallen asleep at the wheel. But their complacency is not the result of ignorance; it is a highly profitable – and extremely risky – choice.

There is strong evidence to support the case for interest-rate cuts in the United States, given the disproportionate impact of higher rates on the most vulnerable. Yet with Donald Trump loudly demanding that the US Federal Reserve lower borrowing costs, the situation has become more complicated than it needed to be.

The short-term popularity of populist policies can help win elections even as they undermine long-term economic growth. Since this approach inevitably delivers bad economic outcomes over time, populist leaders need low interest rates to prevent their supporters from recognizing how misguided their policies are until it is too late.