The debt problem of the United States is already very serious, which is also an inevitable crisis of global financial risks, and if the United States cannot solve it, the consequences will be unimaginable. The United States, however, hopes that China will lend a hand to help it tide over the difficulties.
Not long ago, Yellen visited China and proposed that China buy US bonds, but China did not respond. But just after the United States made such a request, a large amount of gold and Iranian oil arrived in China, and the largest black swan may appear this year.
The U.S. debt crisis
In February, the US debt reached a ceiling of $31.4 trillion, making the US the worst debt crisis in history and potentially triggering a default. To this end, US Treasury Secretary Yellen also urgently held hearings with Congress.
At that time, Yellen proposed that the US debt ceiling should be raised, but Congress did not agree. Today, however, the United States has finally solved its debt problem. Congress finally decided to raise the size of the debt by $4 trillion to ease the current debt pressure.
However, the price of this is also very heavy, and the Biden administration's budget will be severely cut in the next year, which is likely to affect Biden's re-election. After all, the 2024 election is less than a year away.
With such a serious situation, the US government will naturally not sit still. Therefore, it was decided to start issuing $85 million in bonds in the next three months. And who will buy such a huge amount of bonds, the United States will set its sights on China.
The United States asks China to buy U.S. bonds
Just after the US government raised the debt ceiling, the US debt has reached 32.5 trillion, and the US debt rises by $150,000 every minute. This pressure forces the United States to find a way and ease the current pressure.
In the face of so much debt, it is difficult for the United States to pay off its own costs. In particular, U.S. bonds held by China and Japan have led the United States to pin its hopes on both countries. The purpose of Yellen's visit to China is also well known.
As the "god of wealth" of the United States, Yellen naturally came to China without leaving her bank, although she did not bluntly say that she wanted China to buy US bonds. But Yellen's message is clear, hoping that China will help the United States and buy American bonds.
According to the current scale of US bond issuance, at least 1.7 trillion bonds need to be issued if the current problem is to be solved. But no country has the ability to eat this debt in one bite, and China is naturally the same.
The largest black swan will appear
In today's United States, just paying interest on debt has become a major problem. If the bonds are not sold soon, the credit problems caused in the future will be very serious. In particular, it will induce the largest "black swan" to appear within the year.
As an unpredictable, but unusual event, the "black swan" will bring serious risks and negative effects to the market, and even subvert the development of the market. The financial industry in the United States is so developed, the consequences of such a situation are unimaginable.
In particular, the current credit market in the United States is gradually contracting, and the Fed has not relaxed its mouth on raising interest rates. And the successive bankruptcies of two banks have made the development of the US financial industry easier, and even threatened the status of the dollar.
At present, many countries in the world are responding to de-dollarization, and oil-producing countries in the Middle East have abandoned the US dollar and used the currency of third countries as the settlement currency. At this time, Yellen's desire for China to help naturally increased.
A large amount of gold and Iranian oil arrived in China
However, just when the United States wanted to turn its left hand to its right hand to borrow and maintain loans, the development of the international financial market had undergone major changes, which triggered the arrival of the second "Great Depression" in the United States. Especially at a time when debt is accumulating, the problem is even more serious.
In the face of the debt crisis in the United States, the US debt held in the hands of countries around the world has now become a hot potato. Not only are countries selling U.S. bonds, but even the Fed itself has become the biggest short-seller of U.S. bonds.
Changes in financial markets also have a great impact on China, which holds a large amount of U.S. debt. To this end, China is increasing its gold reserves and buying large amounts of oil. Some time ago, it reached an agreement with Iran.
According to foreign media reports, China has imported more than 26 million tons of oil from Iran. At the same time, Swiss customs data shows that China's gold imports also reached 778 tons. All of these data point to a problem, China is preparing for a dollar recession.
Relying on the hegemony of the dollar, the United States continues to accumulate wealth around the world. In this critical period, the Fed's actions of printing dollars and raising interest rates continue. Under such circumstances, the United States also wants China to buy US debt, which is simply passing on risks. To this end, China has enriched its oil and gold reserves to avoid setting itself on fire.