Trump's worst fear has come true: US treasuries are being sold off en masse, and the nation's credibility is at risk of collapse.
According to a report by Singapore's Lianhe Zaobao, US treasuries have experienced significant fluctuations for three consecutive days, with a large seller anonymously dumping massive amounts of US government bonds, which could be the largest sale in three years.
As we all know, the United States now survives on borrowed money, with US treasuries being at the core of the country's fiscal system and occupying a position as the foundation of global investment returns. This year and next year will see the peak of maturing US debt, with nearly 17 trillion USD worth of US treasuries needing to be rolled over (issuing new debt to pay off old debt) or redeemed. In June alone, there are 6.5 trillion USD worth of treasuries maturing. Therefore, the massive selling of US treasuries, even to the point of collapse, means that what Trump fears most is happening - the inability to issue new debt and repay old debt, the collapse of national credibility, and the need to print money to survive.
Previously, Trump's sudden imposition of tariffs on the entire world was actually intended to address the US debt issue - the current fiscal revenue in the United States is too low to even cover interest payments, so he imposed tariffs to increase revenue. However, for international capital and the largest overseas holders of US treasuries, Japan and China, such an unstable and unpredictable America is no longer a good choice for holding US treasuries; fleeing before Trump "plunders" the treasuries is the "survival" move.
In particular, China. In recent years, China has been continuously reducing its holdings of US treasuries, with the amount held dropping from about 1.3 trillion USD to 750 billion USD, almost halved. Trump's additional 145% tariff on China has effectively decoupled Sino-US trade. Since it has already decoupled, and US treasuries are no longer a good investment option, what is the significance of China holding a large amount of US treasuries?
The biggest crisis facing the United States has never been the tariff war but the US debt. If US treasuries were to collapse, the global financial order would also be completely overturned, and the United States would not be far from complete collapse.
Original source: https://www.toutiao.com/article/1829071168553993/
Disclaimer: The article solely represents the author's views.