preface
What was once a superpower is now a "debtor power".
According to data released by the United States Ministry of Finance, the total national debt of United States has risen to a staggering $35 trillion in July, much higher than the GDP of the whole of United States.
However, while United States' debt continues to grow, China, once the largest holder of US debt, has been reducing its debt, and has so far reduced its trillions of US debt to just over 700 billion.
So, what will happen if China sells off all its remaining treasuries amid growing United States debt?
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Soaring debt
How to solve the problem of high debt? This is a problem that every United States president has wanted to solve since the 21st century, and United States' debt has been rising since the Reagan era.
But in recent years, the speed of the US stock market has risen particularly rapidly, in 2017, the United States debt reached the $20 trillion mark, but who would have thought that in just seven years, the US debt soared by 15 trillion, reaching a staggering $35 trillion.
Such rapid debt growth naturally puzzles many people, why do these United States have to continue to borrow on a large scale? It all starts with the Jamaica system......
Jamaica system
After the end of World War II, Western countries built the "Bretton Woods system", but this system was terminated in the seventies of the last century due to a series of crises in the Western economy.
Under such circumstances, the world needed a new international monetary system, so at the same time as the Bretton Woods system collapsed, Western countries led by the United States created a new "Jamaica system".
There are many contents of the Jamaica system, but as a monetary system created under the form of United States hegemony, the United States can naturally obtain a lot of preferential treatment under this system, which to a certain extent establishes today's dollar hegemony.
Not only that, but in the Jamaica system, United States Treasury bonds have become especially "fragrant and sweet", in this system, United States Treasury bonds have become credit money, and its credit is so high that Americans are theoretically not required to pay these debts.
However, while United States are theoretically not required to repay their debts, such an approach would greatly damage the long-term operation of the Jamaica system.
Therefore, in the eighties and nineties of the last century, the United States side still regularly repaid part of its debts, in order to make such an international monetary system conducive to United States run for a long time.
However, with the collapse of the Soviet Union, United States, which has become the world's only superpower, seems to be a little "floating", and since the end of the nineties of the last century, the United States side has been constantly waging wars against foreign countries, which has led to a significant increase in the United States's war expenditures.
Although the United States has basically defeated its opponents in these wars, the United States do not seem to be prepared for how to manage the chaos on the ground after defeating their opponents.
In particular, what is the concept of the war in Afghanistan, which began in 2001 and in which the United States invested about $2.3 trillion?
Russia, the old rival of the United States, will only have a total GDP of $2.02 trillion in 2023.
It can be said that the United States spent a lot of money on the war in Afghanistan, but it did not bring any decent changes to itself and Afghanistan.
The total spending of the United States, including the war in Afghanistan, has directly led to the rising number of United States national debt, and these rising national bonds have also created the huge national debt of United States today.
However, as mentioned above, the United States' national debt does not have to be repaid in theory, after all, in the face of United States' strong military strength, it is naturally impossible to collect the debts of the United States by force.
However, under the Jamaica system, the increasing national debt of United States is also very bad for the global economy in the long run.
Because these US debts are just a string of numbers or waste paper for United States, but for the rest of the world, they have paid a huge amount of labor, but they can only exchange for a piece of waste paper, which is undoubtedly unacceptable.
Therefore, in the past decade or so, many major countries in the world, including China, have been reducing their holdings of U.S. bonds.
Like the mainland, the United States national debt in our hands once reached trillions of dollars, but through years of efforts, it has also been reduced to more than $700 billion.
However, although the amount of US bonds held by the mainland is decreasing, can't we just sell all the remaining US bonds?
The consequences of selling all US bonds
The consequences of selling off all U.S. Treasuries are enormous, as such a method can be seen as a "table-turning" act.
Because under the existing Jamaica system, the role of US bonds is very crucial, and if we sell a large number of US bonds, it will not only damage the original economy of United States, but may also affect United States its own hegemony in the world.
However, such measures are also very harmful to the mainland, because under the existing international financial system, in addition to US bonds, the US dollar is also very important, and all countries hope that their own US dollar foreign exchange reserves can be sufficient.
If the mainland sells off a large number of US bonds, it will have a great impact on the security of the mainland's foreign exchange reserves, and even without considering United States economic retaliation, the mainland's existing economic development will be greatly limited.
It can be said that the act of selling all US bonds is actually not very wise under the current international financial system, because it will have an unpredictable impact on itself and the world economy.
But at the same time, in recent years, other economic powers other than the United States have been reducing their holdings of U.S. bonds.
It is not difficult to understand at all, after all, the various practices of today's United States are constantly overdrawing the international credit of the US dollar and US bonds, and if this continues, perhaps such an international financial system that is conducive to United States today will be buried by United States himself.
Resources
Upview News: "Investigative journalism – 'The most predictable crisis' – Total U.S. debt surpasses $35 trillion and continues to rise," July 31, 2024
Beijing News: "United States Federal Government Debt Exceeds $35 Trillion Mark, Huge Debt Problem Still Difficult to Solve" July 30, 2024
Shangguan News: "35 trillion dollars! Why does United States' "explosive debt" repeatedly hit new highs? July 31, 2024
Sina Finance: Why Does China Sell US Bonds? December 21, 2023
Sina Finance: "If China sells a lot of US bonds, what will be the impact on United States?" April 28, 2020