introduction
The U.S. debt is snowballing, and it's getting bigger and bigger every day. According to the latest data released by the US side, the total debt of the US is close to $34.6 trillion.
China alone holds $800 billion in U.S. bonds. Equally, each U.S. citizen would be at least $94,000 in debt.
Anyone with a discerning eye can see that a debt crisis is on the way. Fearing that the U.S. bond would collapse, countries have sold U.S. bonds and increased their holdings of gold, resulting in a depletion of liquidity in U.S. bonds.
The United States owes so much debt, even if it takes one-tenth of the average annual federal tax revenue of more than 4 trillion yuan to pay it off, it will take more than 70 years to pay it off.
Yet, despite its high levels of debt, the United States does not seem to be panicking. So, with a debt of 34 trillion, what does the United States plan to pay back?
1. What Should We Do About Debt Crashes? The United States: Printing money to buy debts and passing on the crisis
In fact, the U.S. debt crisis has erupted more than once, but the United States has never thought about repaying the money properly, but is constantly looking for more countries to take over for him.
This is because the United States believes that maintaining a certain level of debt is conducive to the development of its own economy. As a result, strategic allies of the United States, such as Japan, South Korea, and the European Union, have become the most common "pick-up man" for U.S. bonds.
It can be said that the reason why U.S. bonds have not exploded is because people continue to buy them, but this is not the same as in the past.
Today, the United States is facing a debt crisis like never before. So much so that the former pick-up man is now going to fall apart.
According to the international capital flow report released by the United States, the size of US bond holdings in various countries is shrinking.
In particular, Japan, the largest overseas debt taker of the United States, reduced its holdings of U.S. bonds by 224.5 billion yuan in 2022, 30.4 billion yuan in May 2023, and 28.5 billion yuan in September.
These data reveal a message all the time, that is, the allies have also done their duty, and no one dares to accept this hot potato.
However, even if things have developed to this point, the solution that the United States has come up with is not to cut back on food and clothing and reduce unnecessary spending.
Instead, they printed money to buy bonds, cut interest rates and expand their balance sheets, activated the harvesting tools, and passed on the crisis to other countries.
In response, the Fed first issued a large number of dollars to recover U.S. bonds from various countries and reduce its own debt pressure.
The Federal Reserve's money printing machine can print as much as it wants, which will help alleviate the crisis in the United States, but for creditor countries, it is undoubtedly to use the real money lent out in exchange for a large pile of waste paper, and directly lose all their money.
Moreover, most of the Treasury bonds issued by the Fed are long-term bonds with a maturity of 10 years, which gives the Fed more room to operate.
Under the Fed's frenzied money printing, 800 billion yuan of interest every year can be dissolved invisibly.
As for how the creditors suffered, the United States can turn a deaf ear. But the side effect is that if the amount of money issued exceeds the amount needed to circulate in the market, it will cause inflation and hurt the United States itself.
Even today's high inflation rate in the United States is actually the result of continuous money printing.
In order to defuse inflation, the Federal Reserve will use a combination of punches after the frenzied printing of money, that is, raising interest rates and shrinking the balance sheet.
The so-called interest rate hike refers to the fact that the Federal Reserve stimulates major US commercial banks to raise the interest rate on lending money to each other by raising the interest rate on its own foreign loans.
The logic is to stimulate the willingness to deposit and reduce the amount of money in circulation in the market in order to increase the value of the currency.
However, the Fed's approach is not mandatory, and it can only guide major banks to raise interest rates, and cannot go against market principles to order them.
This requires other complementary means, such as balance sheet reduction. The result of raising interest rates and shrinking the balance sheet is usually the appreciation of a country's currency.
But the U.S. dollar is not only legal tender in the United States, but also an international currency. Most countries hold a certain amount of U.S. dollars as foreign exchange reserves.
Therefore, the Fed's monetary policy often extends beyond the United States itself.
Not only will the surplus currency in American society be collected by the banks, but even the international dollar capital will flow back to the United States in large quantities.
Second, raise interest rates and harvest, draw wages from the bottom of the kettle, and resolve the crisis
The currencies of advanced economies such as the yen, South Korean won, and euro are based on US dollar reserves. A decrease in dollar reserves means that the value of the currency is unstable.
Currency depreciation will cause assets to shrink, so that Wall Street capital will use the dollar with stronger purchasing power to harvest the bottom.
Judging from past experience, the United States can quickly dissolve its huge debts by controlling the most profitable enterprises of other countries and reaping the fruits of other countries' development.
Historically, both Japan and South Korea have been cut off by the Fed, but America's appetite clearly won't stop there.
After harvesting the leeks of these advanced economies, the United States has set its sights on developing emerging economies, such as Egypt.
The country's financial regulations are lax, so it has become a lamb to be slaughtered in front of capital.
In March this year, affected by the Federal Reserve's interest rate hike, foreign capital flowed out of Egypt, and foreign exchange reserves bottomed out. The Egyptian pound collapsed suddenly, depreciating by 40% overnight. The monthly income of the people is not enough to buy 20 catties of beef.
The poor currency performance has completely disappointed the country's financial institutions and a large number of retail investors, and they can only sell stocks.
So we can see that Wall Street capital is plundering everything they can see.
In order to repay its debts, the Egyptian government had to abandon a large number of state-owned enterprises and surrender to the IMF in exchange for international aid.
The price is to accept a host of humiliating conditions and to allow foreign capital to acquire more high-quality assets in the country.
In fact, for this feast of capital, the United States has been planning for four years. The sharp depreciation of the Egyptian pound began in 2021, and it has only recently been completely "broken", during which it has also experienced a series of tenacious financial defense battles.
In other words, it will take the United States several years to complete a round of harvesting, which is too slow for the United States.
The U.S. debt crisis is on the verge of breaking out, so in order to speed up the harvest, the U.S. has begun to manipulate geopolitics and ignore international security.
For example, in Egypt, why did the depreciation rate in the first three years still persist from 15% to 30%, but only a few months later this year, it suddenly fell below 40% and approached 50%?
This is because geopolitical factors played a catalytic role in it, which became the last straw that crushed Egypt.
What happened has to start with last year's Palestinian-Israeli crisis. Last October, the United States intervened in the conflict, detonating the powder keg in the Middle East, making the problem endless.
In order to bring down the Israeli economy, Yemen's Houthis announced the use of anti-ship missiles to blockade the Red Sea, triggering a crisis in the Red Sea. Coupled with the-for-tat confrontation between Iran and the United States, no one dared to go to the Persian Gulf.
And this route from the Red Sea to the Persian Gulf involves the Suez Canal, Egypt's most important source of foreign exchange earnings.
Before the Houthis could stop Israel, they pushed Egypt to a dead end.
After the closure of the Red Sea, the Suez Canal halved, the deficit deepened, and the exchange rate hit rock bottom overnight, which is what the United States wants to see most.
Not only that, but in fact, the stalemate Russia-Ukraine conflict is also a bureau set up by the United States. Everyone knows that the United States is a veritable warmonger.
For them, war is the most effective way to resolve the debt crisis. Historically, the United States has relied on wars to make a windfall and clear its debts.
For example, before World War I, the United States owed Britain, France, Germany and other countries $6 billion. After the war, Britain, France and Germany owed the United States 9.4 billion.
It relied on borrowing money to expand production before the war, selling weapons at both ends of the war to earn foreign exchange during the war, and then forcing one of the creditors to death when the war was almost over, so as to gain the right to speak on the reconstruction of the post-war international pattern in order to resolve the crisis.
At the beginning of the Russian-Ukrainian conflict, Russia's assets worth $300 billion in Europe and the United States were frozen by the United States in an instant.
Russia's holdings of US dollars and US bonds have also been largely invalidated. Afterwards, the United States also righteously said that it was fighting for Ukraine. In fact, this is just a reason to take advantage of the fire.
And that's not all. Immediately after, Russia's Nord Stream oil and gas pipelines were suddenly bombed, causing an increase in energy prices in the European Union.
For a time, Europe was not safe anymore, everyone in the EU was in danger, and rich people immigrated to the United States one after another.
The United States has not only "extubated" the EU, but also created anxiety, forcing EU countries to implement an open immigration policy and opening their doors to welcome the influx of refugees, thus adding a whole host of racial problems to many traditional single-ethnic countries in Europe.
After a set of operations, it directly led to the local rich and big capitalists in Europe taking their families and small ones one after another, taking away their assets and immigrating to the other side of the strait to avoid danger.
The arrival of these people has contributed to the United States' efforts to resolve its fiscal deficit and reduce the pressure on its foreign debt.
Seeing that the United States has recently harvested Egypt and stumbled the European Union, the tragic situation is vividly visible, and many people may be worried.
The United States is heavily indebted to the United States, and as these countries gradually fail to satisfy the appetite of the United States, will the scythe of the harvest finally be swung towards China?
The answer is that the United States has long set its sights on China, but it is stunned that it will not reap the harvest. The data speaks for itself, the recent decline in the yuan is less than 0.5%, and with ample reserves of dollars and gold, there is no need to worry about this problem at all.
In addition, China's resilience to risks should not be underestimated. China's strict financial regulatory policies have left foreign speculators with nowhere to hide.
And, like a growing number of other countries, China is aware of the risks associated with holding U.S. bonds. Therefore, it is systematically reducing its holdings of U.S. bonds and increasing its gold reserves.
epilogue
There is no doubt that the rolling interest rate of US bonds and the drying up of liquidity have reached the point where they are unsustainable. The United States is also becoming more and more frenzied about harvesting other countries.
In the current international environment, countries should improve their financial resilience and remain vigilant against US dollar and US bonds to avoid becoming the next lamb to be slaughtered.