SaadH
Elite Member
The biggest foreign investment in US is in the T-bills and everyone is dumping them now.
China hits back at Canada with fresh agriculture tariffs
- Thread starter Beijingwalker
- Start date
Developereo
Elite Member
EU is resisting so far but Trump is trying to use divide and conquer and do deals with individual European countries. Middle East will be the first to fall with their slave mentality. India wants to reduce dependence on China anyway but might use this to squeeze something out of the US.
The world survived COVID, it will survive the loss of the USD.
There will be turmoil but the whole world is not going to commit suicide.
Life goes on. Always.
MH.Yang
Trusted Member
Let's start with Trump fixing the restructuring of the $6.2 trillion in U.S. debt due in June.
Now that US bond rates have risen to close to 5%, countries including Japan and the UK are dumping US debt, and China hasn't even begun to do so yet.
it's June that's going to be a fight to the death between Trump and the US. If Trump's reorganization fails, America is the next Weimar Republic. With the way the world is treating US debt right now, the likelihood of Trump's restructuring failing is very high.
arjunk
Trusted Member
Relevance wise it is a small country.
gangsta_rap
Trusted Member
We are already seeing signs of the current admin attempt to reduce the value of the USD though. A repeat of what was done a few decades back.
j_hungary
Professional
That's what he try to do, but Fed won't allow it, that's why he is going on and on about the Fed Chair at the moment. US dollar can be weakened, but again, by the aforementioned issue, it will always bounce back.
j_hungary
Professional
well, first of all, I wouldn't say Japan and UK "dump" US treasury bond when there are less than 10% changes (There were online "rumour" stating Japan sold 1.7 trillion bond, which is impossible as Japan estimated hold 1.1 to 1.2 trillions bonds only) It's quite obviously Japan is doing this to offset the Tariff policy
as for the June debt, they are going to have a bill to raise the debt ceiling, again, GOP control both House, it's very easy for them to do, unless there are significant change to US borrowing status, nothing is going to change in June. Trump policy is hurting US economy in the long term, even if it is possible to have short term effect, this will only show in 3 or 4 years, that's after his term, if GOP remain and the direction unchanged after 2028, maybe, we will have another financial crisis, but this currently is what we refer to as "Market Correction" in response to Trump policy, and again, as I said in the above post, Fed is not going to allow US Dollar to depreciate, and Powell is going to be there until at least May 2026.
j_hungary
Professional
T-Bill is a very small fraction of US national debt (6 trillion T-bill against 36 trillion debt), and they aren't dumping, I don't see any news other than Japan dumping 1.7 trillion T-Bill when they only hold around 1.1 trillion (1.08 trillion last report in Nov 2024)
Japan is indeed selling some of their T-Bill, but it estimated not more than 160 billions worth (total amount is unknown since you need to have buyer to buy them, and that ususally is the US government. Which is going to report in2 to 3 months) People are selling T-Bill because it up high now, and Japan is undoubtedly doing so to offset the Tariff Policy.
MH.Yang
Trusted Member
It's not the debt ceiling that's the problem, it's the sale of the debt. 6.5 trillion dollars for 40 million middle and upper class American families, each buying $150,000 in U.S. debt, right?
Or drain all the liquidity from the US stock market and transfer it to the bond market? What about the 3 trillion dollars of US debt maturing later this year?
j_hungary
Professional
Well, since USD is roughly 58% of world reserve currency, so you are talking about if this is withdrew overnight (Not saying they will do it or if it was possible), you lost that 58% capability for the world to settle their transaction, which mean about 60% of trade worldwide have to be cut
And that is not until a replacement currency can be found, which you can't just boost the other currency, considering the next up is Euro, and it's roughly 20% of world currency now. Which mean for them to cover half that USD left out, they would need to triple their currency flow to be able to do that, they aren't going to be able to do that at least for a decade with any sort of healthy inflation (below 8%) which mean at least for the next 10 years, we need to shut over half of world trade, COVID is only 1.5 years and we have a financial meltdown worldwide.....And we are talking about a decade long trade inhabitation.
j_hungary
Professional
Do you know what does it mean by raising the debt ceiling? So you can borrow more money, and I will give you 3 guesses on why the US need to borrow more.....
MH.Yang
Trusted Member
So who does the U.S. borrow from? Or do you mean an additional $9.5 trillion in bills this year, another $9.5 trillion after the inflation brought on by the additional $2 trillion during the COVID epidemic hasn't been eliminated to this day? Isn't that the Weimar Republic way?
j_hungary
Professional
Dude, it's not the first time ever T-Bill is mature and you have to pay out, and first of all 5% is not a big change (By the way it's 4.22 now) What usually been done in the last 50 years or so when US debt shot up is US Treasury will raise the debt ceiling, then issue mor T-Bill, and more bank (both domestic and international) loan. Again, unless there is a significant change to US borrowing power, it's not going to change. I mean US currently at AA+ not B or BBb....
On the other hand, can 6.5 trillion (9 even if you count by the end of 2025) debt can lead to a Weimar Republic way of hyperinflation (Over 100,000%)? Well, I can tell you this, Russia defaulted their debt, their inflation rate currently is at 10.5, which is very unhealthy by the way, it's gonna need decade to fix, and Russia no longer have credit rating. That wasn't at Weimar Republic level.....And you think US even if they indeed defaulted that 6.5 trillion debt (Which again, almost impossible) will lead to another Weimar Republic situation? Well, if they do default on that, that will be bad, but not THAT bad.......I mean this is not even QE bad, let alone hyperinflation like back in 1923...
drkrn86
Registered Member
US citizens are sure to pay the price. But I don't see why US will collapse.
Chinese manufacturers are showing how overpriced the products are by the time they reach USA.
Over time another country will willingly take over Chinese manufacturing role while offering a better deal to USA.
