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What will curb Donald Trump? Right now, as European leaders agonise over how to respond to his aggression over Greenland, it’s hard to plot a positive course of action.

Retaliate on his tariff threats? Yes, the EU could do that, but it would hurt Europe as much as America. Beef up Denmark’s military presence in Greenland with other European troops? They had a go at that, but it seems to have enraged the US President even more. Press on with reasoned arguments, coupled with a charm offensive? Doesn’t work, and you simply humiliate yourself.

There is, however, one weakness in the Trump administration’s armoury. It is the US fiscal deficit. This gap between what the government is spending and what it is raising in taxation is running at more than 6 per cent of GDP. There are not enough savings in America to cover it. So foreign investors have to carry on buying US Treasury debt to keep the country afloat. If they stop, or worse, start selling, their existing holdings in significant long-term dollar bond yields rise. That’s not only the interest that the government has to pay, but what all dollar borrowers have to stump up: companies, home buyers and so on.

While for a period the US Federal Reserve can keep funding the government by issuing short-term debt – in effect printing the money – that has the effect of increasing inflation and probably undermining international confidence even more.

The result? Well, we had a mini-version of what happens when international investors lose confidence in a government in September 2022, when Liz Truss and her chancellor, Kwasi Kwarteng,........

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