Lead:
As a Chinese saying goes, "the rain is coming and the wind is full of buildings", according to the estimated working capital report released by the U.S. Department of the Treasury on February 16, 2024,
Clearly, however, this well-planned rescue operation may not have had the desired effect, and could instead involve themselves in even greater chaos. Is this a game of dialectics, or a gamble? Or is it just a giant financial delusion?
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The quagmire in the U.S. bond market did not happen overnight. While everyone is trying to get the evidence on whether China's sell-off will trigger a global financial crisis, Britain and Japan have made the bold decision to join forces to buy $467 billion worth of US debt in March alone. That's almost as much as the amount of U.S. debt China sold in the first three months.
The issue of the US national debt has long been in the spotlight. Treasury yields are also rising, which means that the Treasury's interest payments are also rising. All of this has put the U.S. bond market under unprecedented pressure.
At the moment, Japan and the United Kingdom, as allies of the United States, are firmly on the side of the US bond market. Since the fourth quarter of last year, Japan has been buying US Treasury bonds aggressively, and this behavior continued for another six months, until March of this year. In the process, Japan has paid a heavy price.
In order to stabilize the depreciating yen, the Bank of Japan had to spend a lot of money to buy US bonds, until at least $60 billion was needed.
At the same time, in recent years, the United Kingdom has followed the pace of the United States and implemented a large-scale expansionary monetary policy, which has triggered severe inflation and put enormous pressure on the domestic economy.
During the First and Second World Wars, gold was used to pay off debts in order to pay for the huge war costs.
At the same time, the United States took the opportunity to sell strategic goods to Britain in large quantities, which in turn brought more gold back to the United States. Today, the UK no longer has enough gold to support its monetary credit, and can only rely on buying enough US bonds to maintain the value of the pound.
They said they would reduce the monthly sell-off of US Treasuries to $25 billion starting in June. The news quickly sparked a heated debate in the financial community, making the international community realize that the Fed has sold up to $60 billion a month in the past two years.
Perhaps the most difficult thing for Britain and Japan to accept is that while they are spending huge sums of money to buy US bonds, the Fed is selling them off at the same time. Like moths in a quagmire, they willingly plunge into danger, while the Fed on the other side laughs at their approach.
For the already troubled Britain and Japan, it is undoubtedly worse. Therefore, we cannot fail to say that in the process of selling US bonds, the Fed has mostly bought it from the United Kingdom and Japan.
As we all know, the financial markets are a huge gamble, and any win or loss can be reshuffled. The current situation is like a car that is about to get out of control, and there is a kind of thrilling and unexpected beauty.
Are their decisions wise for countries that have spent a lot of money in the U.S. bond market, or even their country's economic future? Is it worth it? Will their efforts be rewarded, or will they be consumed like moths to a fire?
At this moment, the eyes of the world are turned to Britain and Japan, and they spin in the air with coins, and all the answers are hidden on the other side of the coin. Behind this seemingly brainless rescue is their nuanced analysis, a thoughtful consideration of the future, or a superstitious belief in the existing, supposedly stable, imminent collapse of the financial system?
While announcing to the world that everything is normal in the U.S. bond market, they are secretly selling their U.S. bonds to buyers who are willing to pay a lot of money.
Epilogue:
In this 'rescue of US debt', even Japan and the United Kingdom may face the challenge of increasing their holdings of US debt on a long-term scale.
In the end, the United States may have to pay for this bad debt left by the US debt.
#头条创作挑战赛#