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China and Japan are the top foreign holders of treasuries, yes, but the story is a little more complicated. https://www.fiscal.treasury.gov/files/reports-state

China and Japan are the top foreign holders of treasuries, yes, but the story is a little more complicated. https://www.fiscal.treasury.gov/files/reports-statements/treasury-bulletin/2021-1.pdf https://www.fiscal.treasury.gov/files/reports-statements/tre... As of the end of 2020, there are 27.7 trillion dollars in outstanding public debt. 10.8 trillion is held by the Federal Reserve and the US government. About 7 trillion (no data since September) is held by foreign countries. Of those, China owns 1.07 trillion and Japan owns 1.29 trillion. I don't think it's reasonable to characterize the US as relying on China and Japan to cover those costs. The other major (all holding > 100 billion) holders of US debt overseas, in order, are the UK, Ireland, Luxembourg, Brazil, Switzerland, Belgium, Taiwan, Hong Kong, the Caiman Islands, India, Singapore, Saudi Arabia, Korea, Canada, and France. This seems like a pretty good mix. NB: Real yields on treasuries are all negative. People are buying treasuries despite knowing they will lose money in real terms. I don't think people giving the US free money just so they can hold t-bills is a sign of the weakness of the US dollar. https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldYear&year=2021&fbclid=IwAR1W18AOoVdMIvbc9SjTf1HECa002DcSWYolpWaw5X9T4xShQML8aZ8klqU#:~:text=Real%20yields%20on%20Treasury%20Inflation%20Protected%20Securities%20%28TIPS%29,by%20the%20Federal%20Reserve%20Bank%20of%20New%20York https://www.treasury.gov/resource-center/data-chart-center/i....

throwaway4good 6y ago
I don't know how much it matters. The numbers sound big but then in different perspective not so big. The internal debt of the US, in some sense, at least when we are thinking about the viability of the US dollar in international trade, cancels itself out. And debt and swaps with Europe or the UK? Perhaps it matters less than debt to other countries. It really boils down to the exorbitant privelige. How big is it really? Who exactly bears the cost and who encurs the benefits? Not exactly clear in the details. However were Japan and China to give up their "mercantalistic" practices of buying US treasuries and instead letting their own currencies appreciate and start trade and investing without using the USD. Then that probably would be quite a thing.

throwaway4good 6y ago

I don't know how much it matters. The numbers sound big but then in different perspective not so big. The internal debt of the US, in some sense, at least when we are thinking about the viability of the US dollar in international trade, cancels itself out. And debt and swaps with Europe or the UK? Perhaps it matters less than debt to other countries. It really boils down to the exorbitant privelige. How big is it really? Who exactly bears the cost and who encurs the benefits? Not exactly clear in the details. However were Japan and China to give up their "mercantalistic" practices of buying US treasuries and instead letting their own currencies appreciate and start trade and investing without using the USD. Then that probably would be quite a thing.