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As we all know, U.S. debt is fundamental to maintaining the efficient operation of the United States fiscal machine. For many years, the United States government has maintained its hegemony and political and economic influence around the world by constantly borrowing money.
According to the latest data released by the United States Treasury Department, the total US debt has now exceeded the $35 trillion mark. This figure has reached 1.5 times the gross national product of United States.
Recently, former United States President Donald · Trump's remarks have once again drawn attention to the problem of the United States debt crisis.
Once Trump comes to power, the United States is likely to default on the world's debts, which is alarming news for countries such as China and Japan that hold US debt.
However, China seems to have been prepared for this for a long time, and in the face of Trump's move to repay the debt with new means, we directly responded to the US with our own practical actions.
The U.S. debt reached 35 trillion
According to the latest data released by the United States Ministry of Finance, the total debt of United States has now exceeded $35 trillion. This figure is equivalent to the total economic output of China, India, United Kingdom, Japan and other countries, and is also equivalent to 1.5 times the United States's own gross national product.
It is no exaggeration to say that the United States government has no better way to deal with such heavy debt pressure. The only thing they can do is to delay the explosion of the US debt by borrowing new debt to pay off old debts.
However, as the Fed's high interest rate policy continues, there are also more and more pessimistic attitudes about the United States economy and the United States government's fiscal situation.
According to United States calculations by the Peter · Peterson Foundation, if the huge debt owed by the United States government were spread evenly over the heads of every United States citizen, each United States citizen would need to repay at least $104,000 in debt to the government. The result is unimaginable.
At the same time, the exchange rate of the US dollar against sovereign currencies such as the yuan and the yen remains high, which has seriously affected the export trade of United States products.
Faced with this "lack of money" dilemma, former United States President Donald · Trump recently made a series of speeches. But what is surprising is that this time Trump actually started the idea of bitcoin in order to repay the debt.
Trump praised Bitcoin
At the Bitcoin conference held on July 27, local time, Trump changed his previous "anti-Bitcoin" attitude and began to praise the role of Bitcoin in the United States economy. Trump's move quickly drew a lot of media attention.
Trump said that if he can really return to the White House, the future United States government will be committed to making United States the world's bitcoin capital and integrating bitcoin into the United States' foreign exchange management system.
Trump believes that the current momentum of the dollar in the international market is too strong, which in turn causes the United States to lose many opportunities to compete with other countries. Therefore, the future United States government needs to devalue the dollar through a series of means to achieve the purpose of promoting its own exports.
Trump believes that if bitcoin can be incorporated into the United States foreign exchange management system in the future, the impact of the dollar on the United States foreign trade pattern will inevitably be reduced, so United States government can force the dollar to depreciate by raising bitcoin.
Trump is a brilliant businessman, and from a businessman's point of view, there is really nothing wrong with his views. But if the United States really gradually depreciates the dollar by increasing its holdings of bitcoin as Trump said in the future, it will definitely face huge risks.
This is tantamount to defaulting on debts to China, Japan and other United States creditors in disguise. Because United States' Treasury bonds happen to be traded and paid in dollars. If Trump forces the dollar to depreciate, it will be equivalent to evaporating some of the wealth in the US debt.
Countries like Japan, which have formed alliances with United States, are helpless about this invisible means of defaulting. But China is an independent power, and in the face of the potential debt risk of the United States government, we have already made a prediction.
China has also demonstrated our unique judgment to the world with concrete actions. In the future, Trump wants to repay China's debts by raising bitcoin, and I am afraid it will not be so easy to succeed.
China continues to reduce its holdings of U.S. bonds
According to data released by the United States Ministry of Finance, although the total number of investors holding United States Treasury bonds showed signs of rising in May, the two major overseas creditors in the United States have chosen to reduce their holdings of US bonds. This is an extremely unusual signal for the U.S. Treasury investment market.
The first to reduce their holdings of U.S. bonds was Japan of United States's largest overseas creditors. Japan reduced its holdings of U.S. debt by $22 billion in a lump sum in May. Although Japan's total holdings of U.S. bonds remain above $1.1 trillion, Japan's sudden large-scale reduction of U.S. debt holdings is indeed rare.
Therefore, some people believe that Japan's move to reduce its holdings of US bonds may cause a small range of fluctuations in the international financial investment market. This will still have some negative impact on people's confidence in US bonds.
What is even more surprising is that China reduced its holdings of US bonds by another $2.4 billion in May, after increasing its holdings of US bonds in the previous month. This was a bolt from the blue for the United States government, which has been eager to rely on US debt to keep its finances running.
Some analysts pointed out that judging from the overall pattern, China's continuous sell-off of U.S. bonds will not stop. This is because the mainland has recognized the negative impact of US bonds on the mainland's financial market.
At present, the mainland's gradual sell-off of US bonds is to reduce the negative impact of United States on the mainland's economy. Before the U.S. debt problem explodes, China is well positioned to minimize the risk of United States government defaulting on its debts.
No matter who governs the United States in the future, what kind of methods will the United States government try to maintain the operation of the US debt system. China's sell-off of U.S. bonds has become an established strategic layout.
In the future, if Trump wants to "default" on China by raising bitcoin, China will definitely hit back against the United States in its own way. When the time comes, we will be able to do everything we can to recover our losses!
China and the United States have a decisive influence on the world economy, and whether the future United States will be able to repay its debts in the face of China, I am afraid that even the United States itself cannot say.
With the fermentation of the US debt problem, the incomparably crazy faces of United States politicians have also been displayed in front of the world. It is believed that after Trump's sensational statements, investors and financial institutions around the world will also maintain a necessary vigilance against United States.
Bibliography:
1. United States national debt exceeded $35 trillion Global Times