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The funny thing is that with $40T of public dept US is basically taking money from other countries (in exchange for a pice of paper saying IOU) and then using t

The funny thing is that with $40T of public dept US is basically taking money from other countries (in exchange for a pice of paper saying IOU) and then using that money to force these countries to do what’s in US best interests (real or perceived). And the bigger that pile of debt is the more every government is invested in us not going bankrupt, hence the leverage just gets stronger. US is basically a private equity typo of global power - getting others to lend them a knife it stabs them in the back.

_mitterpach 21d ago
Wouldn’t that necessarily mean that if the US keeps making enemies of allies, then the premium required for these countries to give US money would be higher? Sure, I’ll lend you some, but I don’t trust you that much, you’ll have to pay me more.
- Wololooo 21d ago
  Go further with your reasoning... Why would anyone lend the US more...
  - georgeecollins 21d ago
    I am not defending the US government but the reason why you hold treasuries is because if you want to buy something in two years, or ten years, etc. there is a good chance you will want to buy something with dollars. Oil, soy beans, New York real estate..
    - anon84873628 21d ago
      Until you can buy oil without dollars. This was an explicit agreement called the Petrodollar system, which was premised on the US navy securing international trade. If the US navy proves unable to do that (and exhausts its arms and demonstrates unpreparedness for future conflicts) then the whole premise falls apart. You might also stop buying real estate if the government seems unstable and economy is poised to collapse. Good soybeans also depend on fuel prices and the continued flow of fertilizer...
      - disdegeneration 21d ago
        Until you find a more thrustworthy stewart of the international order. Everyone yells loudly about how bad the us is, but then you realize that the whole world voted with there feet that every other alternative is worse. The russians tried for years to write some replacement fiction into reality (BRICS) even though they would be the first to get shanked if the old great game returned. Its a absurd situation where empire cosplayers long for the times of "greatness" while struggling on even small "to real" acts ..
        anon84873628 21d ago
        China is "trustworthy" in the sense that they have obvious, rational, consistent motivations and very stable government.
        nradov 21d ago
        China's government is "very stable" until it's not. As a society, China has a long history but the central government has essentially collapsed or experienced violent revolution in 1976, 1969, 1949, 1927, 1911, 1850, 1796, 1644, etc. Perhaps we have reached "the end of history" and the Chinese Communist Party will now maintain stable control forever. Or maybe it will all fall apart again in a few decades due to resource shortages or factional power struggles or a foreign war.
        lumost 21d ago
        The loss of a succession strategy with an elderly leader at the helm seems like a major issue.
        disdegeneration 21d ago
        [dead]
        spwa4 21d ago
        ... for everyone, Chinese or not, except the elderly leader in question. Same for Russia.
    - strken 21d ago
      In a way, the bond market tracks international central banks' confidence that this will continue to be true. If they lose some of that confidence, their stock of bonds moves from USD to RMB/EUR/JPY/AUD/CAD/SGD/etc.
      - spwa4 21d ago
        True, except you're being way too easy on those other currencies. Currencies need to be issued by groups able to guarantee international trade, otherwise there's no point. RMB - maybe, but nobody sane trusts China to not immediately change priorities on a dime EUR - imho (much) less chance than RMB, but they're using a hack: of EUR is a massive entity and internally there's no choice. Literally not allowed (due to tax reasons) (exceptions of course made for favored entities) (I feel that those favored entities exist, and how big they are, should be a huge red flag for anyone considering using EUR) JPY - can't project force ... and doesn't even try AUD - no CAD - no SGD - no I don't understand why you're not listing GBP, as they have at least at some point done this. Of course they were a worse steward of international trade than the worst point of the US. Also, you consider AUD, but not CHF? So what choice is there, really? This is really a way to try to push the US to do more, for less "exorbitant privilege" (especially EUR). Of course, a great many people are very interested in doing just that. It strikes me as an extremely dangerous game to play. Yes, the odds of winning are good, but if you lose, you lose everything.
        c0ndu17 21d ago
        Pretty confident it’s going to be EUR, note how they dealt with Trump tariff’s shenanigans. Took it slowly, and decidedly, sure let the countries say words and what not, but at the end of the day it’s decided by the EU. Just one persons opinion.
        spwa4 20d ago
        And you're not terrified that's the situation? The beef the US has with the EUR is simple: the US is what's defending Europe militarily (nuclear and non-nuclear. The Pentagon is the reason Ukraine hasn't been nuked yet, or more likely, that Kiyv didn't surrender because they didn't have nukes). That was never given freely. It was politically impossible to get governments to actually pay for that, so it was decided to trade in USD (this was before petrodollar), giving the US "exorbitant privilege" (which roughly translates to that the US gets to tax most of global trade at something like 2 to 4% and use that for themselves). That the US got that was not an accident, but a policy decision. The Euro takes that away, but of course, no European country is willing to either now start paying, or to defend itself. To say nothing of France, the Netherlands or Denmark defending remote EU territories like Greenland, ABC islands or Polynesia (which would require, for starters, militarily controlling supply lines to those territories). Given the history of economic sanctions (what the EU is doing) ... of course people don't know that history, but the TLDR is that nearly always economic sanctions are a prelude to war. They don't just not work. In many cases they cause wars. WW1 was caused by economic sanctions (and the scale of EU economic sanctions is 100x bigger than what caused WW1), and often the economic sanctions on Germany after WW1 are generally thought to be the big reason for WW2. It makes sense from a game theory perspective: if a government, whose power is fundamentally based on force, lets economic sanctions convince them, they will be attacked by their own people. So they simply cannot give in, and historically that's what you indeed mostly see: when a country is targeted by economic sanctions, it's government usually decides to attack. The EUR is imposing very large scale sanctions on ... essentially everyone. Russia and China most obviously of course, but sanctions are so widely used by the EU you can literally say it's being used against everyone from Afghanistan to Zimbabwe, or geographically from Paraguay to North Korea. And why is the EU doing this? Exactly the reason Trump is doing it: sanctions are "power without needing parliament to approve the budget for anything". The fear is: the historically most likely outcome of what the EU is doing, what EUR is being used for, is another very large scale war.
  - wnc3141 21d ago
    its mostly because the global economy is dollarized so there's a number of benefits store your wealth in dollars as a hedge or point of stability. If the dollar's dominance wanes, so too will be the appetite for US treasuries.
  - nradov 21d ago
    There is no alternative.
    - IshKebab 21d ago
      What? There's an almost limitless supply of other entities you can lend money to.
      - nradov 21d ago
        None that can absorb such enormous capital flows.
        IshKebab 21d ago
        Nonsense. The USA is not bigger than the rest of the world.
        nradov 21d ago
        US capital markets are the largest and most liquid in the world. It's not even close. There are of course a zillion other borrowers worldwide but they're all much smaller and suffer from a variety of other structural problems. If you need to deploy a huge amount of capital with low risk and high liquidity then US treasuries are still the only realistic option.
  - repeekad 21d ago
    The real answer to your question is the US bond market is an auction, and rates are going up and up, with some sketchy tactics being employed to try and keep them down. What’s happening to US bonds has been compared to using a credit card to pay off your mortgage...
  - lenkite 21d ago
    > Go further with your reasoning... Why would anyone lend the US more... Because if you don't, you are abducted or killed or "regime changed" or sanctioned to famine-level poverty - all for "freedom & democracy". Kindly remember that the Corporate States of America has the world's most powerful military... well I suppose it is nowadays in the top #3.
    - idiotsecant 21d ago
      It's hard to twist the definition of the term in such a way that the US doesn't have the most powerful military.
- delfinom 21d ago
  That is exactly why the bond yields keep rising.
- cyanydeez 21d ago
  Sure, but that premium would still be in dollars; until the world realizes that the US is using the primacy of the dollar as a reason to do whatever they want...
epistasis 21d ago
What you point out here is a major weakness in the typical US citizen's understanding of where US wealth and power comes from. The US prints two kinds of dollars, the regular kind, then the T-bills. T-bills get exchanged like dollars, investors/governments buy them because they are thought to be as stable as dollars, but also bear a bit of yield. The US benefits by printing T-bills over dollars because merely by changing the current interest rate, they change the dollar supply. Increasing interest rates lower the value of T-bills, decreasing the supply of dollars (as Silicon Valkey Bank found out...). This allows the US currency to remain very stable. Referring to the $40T of T-bills merely as "debt" is quite deceptive. It's the global currency. You need enough currency out there to represent the actual amount of wealth, otherwise the values of dollars increases, and deflation is the only thing worse than inflation. The US' $2T budget deficit is basically the rest of the world paying the US for the privilege of using US currency. The US is printing money, and getting the benefits of spending, because the rest of the world needs dollars to transact. They send us goods, we send them printed dollars. And then we get a president who calls this situation bad, because he doesn't understand what a "trade deficit" is. Utter insanity to have such a position and then just throw it all away.
- anon84873628 21d ago
  That said, it's not necessarily a great deal for the US middle class anymore, due to the Triffin Dilemma: https://en.wikipedia.org/wiki/Triffin_dilemma https://en.wikipedia.org/wiki/Triffin_dilemma This 2020 piece by Lyn Alden is a great explainer: https://www.lynalden.com/fraying-petrodollar-system/ https://www.lynalden.com/fraying-petrodollar-system/ (Not that I think anything Trump has done has helped the situation even accidentally.)
  - epistasis 21d ago
    Nothing there explains why it's a bad deal for the middle class. The middle class actually benefits the most from this situation! More goods, more government services, etc. How much more? Just add up all the trade deficits, that's all benefit accrued almost entirely to the middle class.
ThatsWrong 21d ago
It’s not other people’s money they just print it out of thin air and say we have a deeper deficit.
EuropeIsPoor 21d ago
The US isn’t taking money from other countries - you clearly don’t understand the scam! We give money to Israel, Ukraine, and everyone else - we print and print and print and a few people close to the action take some off the top. That’s it. Maybe some rich kids get their university debt wiped clean (not community college though). The US and even local governments within have become corrupted to the core - they are like ATMs and havens of various types for the emerging international wealth class. That class may very well want to promote your idea since the best seat at the table right now is China. Now everyone wants to be owed by the US à la China, it’s been great for international business. Mexico is the heir to that throne more than Europe - which doesn’t produce anything the world wants.

_mitterpach 21d ago

Wouldn’t that necessarily mean that if the US keeps making enemies of allies, then the premium required for these countries to give US money would be higher? Sure, I’ll lend you some, but I don’t trust you that much, you’ll have to pay me more.

Wololooo 21d ago
Go further with your reasoning... Why would anyone lend the US more...
- georgeecollins 21d ago
  I am not defending the US government but the reason why you hold treasuries is because if you want to buy something in two years, or ten years, etc. there is a good chance you will want to buy something with dollars. Oil, soy beans, New York real estate..
  - anon84873628 21d ago
    Until you can buy oil without dollars. This was an explicit agreement called the Petrodollar system, which was premised on the US navy securing international trade. If the US navy proves unable to do that (and exhausts its arms and demonstrates unpreparedness for future conflicts) then the whole premise falls apart. You might also stop buying real estate if the government seems unstable and economy is poised to collapse. Good soybeans also depend on fuel prices and the continued flow of fertilizer...
    - disdegeneration 21d ago
      Until you find a more thrustworthy stewart of the international order. Everyone yells loudly about how bad the us is, but then you realize that the whole world voted with there feet that every other alternative is worse. The russians tried for years to write some replacement fiction into reality (BRICS) even though they would be the first to get shanked if the old great game returned. Its a absurd situation where empire cosplayers long for the times of "greatness" while struggling on even small "to real" acts ..
      - anon84873628 21d ago
        China is "trustworthy" in the sense that they have obvious, rational, consistent motivations and very stable government.
        nradov 21d ago
        China's government is "very stable" until it's not. As a society, China has a long history but the central government has essentially collapsed or experienced violent revolution in 1976, 1969, 1949, 1927, 1911, 1850, 1796, 1644, etc. Perhaps we have reached "the end of history" and the Chinese Communist Party will now maintain stable control forever. Or maybe it will all fall apart again in a few decades due to resource shortages or factional power struggles or a foreign war.
        lumost 21d ago
        The loss of a succession strategy with an elderly leader at the helm seems like a major issue.
        disdegeneration 21d ago
        [dead]
        spwa4 21d ago
        ... for everyone, Chinese or not, except the elderly leader in question. Same for Russia.
  - strken 21d ago
    In a way, the bond market tracks international central banks' confidence that this will continue to be true. If they lose some of that confidence, their stock of bonds moves from USD to RMB/EUR/JPY/AUD/CAD/SGD/etc.
    - spwa4 21d ago
      True, except you're being way too easy on those other currencies. Currencies need to be issued by groups able to guarantee international trade, otherwise there's no point. RMB - maybe, but nobody sane trusts China to not immediately change priorities on a dime EUR - imho (much) less chance than RMB, but they're using a hack: of EUR is a massive entity and internally there's no choice. Literally not allowed (due to tax reasons) (exceptions of course made for favored entities) (I feel that those favored entities exist, and how big they are, should be a huge red flag for anyone considering using EUR) JPY - can't project force ... and doesn't even try AUD - no CAD - no SGD - no I don't understand why you're not listing GBP, as they have at least at some point done this. Of course they were a worse steward of international trade than the worst point of the US. Also, you consider AUD, but not CHF? So what choice is there, really? This is really a way to try to push the US to do more, for less "exorbitant privilege" (especially EUR). Of course, a great many people are very interested in doing just that. It strikes me as an extremely dangerous game to play. Yes, the odds of winning are good, but if you lose, you lose everything.
      - c0ndu17 21d ago
        Pretty confident it’s going to be EUR, note how they dealt with Trump tariff’s shenanigans. Took it slowly, and decidedly, sure let the countries say words and what not, but at the end of the day it’s decided by the EU. Just one persons opinion.
        spwa4 20d ago
        And you're not terrified that's the situation? The beef the US has with the EUR is simple: the US is what's defending Europe militarily (nuclear and non-nuclear. The Pentagon is the reason Ukraine hasn't been nuked yet, or more likely, that Kiyv didn't surrender because they didn't have nukes). That was never given freely. It was politically impossible to get governments to actually pay for that, so it was decided to trade in USD (this was before petrodollar), giving the US "exorbitant privilege" (which roughly translates to that the US gets to tax most of global trade at something like 2 to 4% and use that for themselves). That the US got that was not an accident, but a policy decision. The Euro takes that away, but of course, no European country is willing to either now start paying, or to defend itself. To say nothing of France, the Netherlands or Denmark defending remote EU territories like Greenland, ABC islands or Polynesia (which would require, for starters, militarily controlling supply lines to those territories). Given the history of economic sanctions (what the EU is doing) ... of course people don't know that history, but the TLDR is that nearly always economic sanctions are a prelude to war. They don't just not work. In many cases they cause wars. WW1 was caused by economic sanctions (and the scale of EU economic sanctions is 100x bigger than what caused WW1), and often the economic sanctions on Germany after WW1 are generally thought to be the big reason for WW2. It makes sense from a game theory perspective: if a government, whose power is fundamentally based on force, lets economic sanctions convince them, they will be attacked by their own people. So they simply cannot give in, and historically that's what you indeed mostly see: when a country is targeted by economic sanctions, it's government usually decides to attack. The EUR is imposing very large scale sanctions on ... essentially everyone. Russia and China most obviously of course, but sanctions are so widely used by the EU you can literally say it's being used against everyone from Afghanistan to Zimbabwe, or geographically from Paraguay to North Korea. And why is the EU doing this? Exactly the reason Trump is doing it: sanctions are "power without needing parliament to approve the budget for anything". The fear is: the historically most likely outcome of what the EU is doing, what EUR is being used for, is another very large scale war.
- wnc3141 21d ago
  its mostly because the global economy is dollarized so there's a number of benefits store your wealth in dollars as a hedge or point of stability. If the dollar's dominance wanes, so too will be the appetite for US treasuries.
- nradov 21d ago
  There is no alternative.
  - IshKebab 21d ago
    What? There's an almost limitless supply of other entities you can lend money to.
    - nradov 21d ago
      None that can absorb such enormous capital flows.
      - IshKebab 21d ago
        Nonsense. The USA is not bigger than the rest of the world.
        nradov 21d ago
        US capital markets are the largest and most liquid in the world. It's not even close. There are of course a zillion other borrowers worldwide but they're all much smaller and suffer from a variety of other structural problems. If you need to deploy a huge amount of capital with low risk and high liquidity then US treasuries are still the only realistic option.
- repeekad 21d ago
  The real answer to your question is the US bond market is an auction, and rates are going up and up, with some sketchy tactics being employed to try and keep them down. What’s happening to US bonds has been compared to using a credit card to pay off your mortgage...
- lenkite 21d ago
  > Go further with your reasoning... Why would anyone lend the US more... Because if you don't, you are abducted or killed or "regime changed" or sanctioned to famine-level poverty - all for "freedom & democracy". Kindly remember that the Corporate States of America has the world's most powerful military... well I suppose it is nowadays in the top #3.
  - idiotsecant 21d ago
    It's hard to twist the definition of the term in such a way that the US doesn't have the most powerful military.
delfinom 21d ago
That is exactly why the bond yields keep rising.
cyanydeez 21d ago
Sure, but that premium would still be in dollars; until the world realizes that the US is using the primacy of the dollar as a reason to do whatever they want...

epistasis 21d ago

What you point out here is a major weakness in the typical US citizen's understanding of where US wealth and power comes from. The US prints two kinds of dollars, the regular kind, then the T-bills. T-bills get exchanged like dollars, investors/governments buy them because they are thought to be as stable as dollars, but also bear a bit of yield. The US benefits by printing T-bills over dollars because merely by changing the current interest rate, they change the dollar supply. Increasing interest rates lower the value of T-bills, decreasing the supply of dollars (as Silicon Valkey Bank found out...). This allows the US currency to remain very stable. Referring to the $40T of T-bills merely as "debt" is quite deceptive. It's the global currency. You need enough currency out there to represent the actual amount of wealth, otherwise the values of dollars increases, and deflation is the only thing worse than inflation. The US' $2T budget deficit is basically the rest of the world paying the US for the privilege of using US currency. The US is printing money, and getting the benefits of spending, because the rest of the world needs dollars to transact. They send us goods, we send them printed dollars. And then we get a president who calls this situation bad, because he doesn't understand what a "trade deficit" is. Utter insanity to have such a position and then just throw it all away.

anon84873628 21d ago
That said, it's not necessarily a great deal for the US middle class anymore, due to the Triffin Dilemma: https://en.wikipedia.org/wiki/Triffin_dilemma https://en.wikipedia.org/wiki/Triffin_dilemma This 2020 piece by Lyn Alden is a great explainer: https://www.lynalden.com/fraying-petrodollar-system/ https://www.lynalden.com/fraying-petrodollar-system/ (Not that I think anything Trump has done has helped the situation even accidentally.)
- epistasis 21d ago
  Nothing there explains why it's a bad deal for the middle class. The middle class actually benefits the most from this situation! More goods, more government services, etc. How much more? Just add up all the trade deficits, that's all benefit accrued almost entirely to the middle class.

ThatsWrong 21d ago

It’s not other people’s money they just print it out of thin air and say we have a deeper deficit.

EuropeIsPoor 21d ago

The US isn’t taking money from other countries - you clearly don’t understand the scam! We give money to Israel, Ukraine, and everyone else - we print and print and print and a few people close to the action take some off the top. That’s it. Maybe some rich kids get their university debt wiped clean (not community college though). The US and even local governments within have become corrupted to the core - they are like ATMs and havens of various types for the emerging international wealth class. That class may very well want to promote your idea since the best seat at the table right now is China. Now everyone wants to be owed by the US à la China, it’s been great for international business. Mexico is the heir to that throne more than Europe - which doesn’t produce anything the world wants.