2023-01-31 00:08:01

The US debt is already overwhelmed! Once the colla

US debt exceeds the legal limit! The time bomb may endanger the world, and China has begun to deal with

The US debt is already overwhelmed! Once the collapse is unimaginable, China has reduced its holdings for three consecutive months

Recently, under the high attention of all parties, the US government debt has finally exceeded the statutory limit of US $31.4 trillion. Although this breakthrough was expected, its impact should not be underestimated. Because when the debt exceeds the legal limit, the operation of the United States government will face great obstacles, even into a standstill. The US Treasury Secretary Yellen is even more pessimistic. He estimates that the current US treasury funds can only last until the beginning of June. If there is no solution at that time, it is likely to lead to an unprecedented debt default. If there is a debt default in US Treasuries, the countries and investors willing to buy US Treasuries will inevitably fall sharply, which will lead to the overall collapse of US Treasuries and the chaos of the financial market. A large amount of wealth will be evaporated, the unemployment rate will increase from the current 5% to 9%, and the US dollar will also depreciate.

The US debt is already overwhelmed! Once the collapse is unimaginable, China has reduced its holdings for three consecutive months

It is interesting to note that although it is well known that the US debt default would cause great harm, the two parties of the US are still at loggerheads over the solution. The ruling Democratic Party Biden government naturally hopes to directly raise the debt ceiling of the US debt. After all, this operation has been carried out more than 100 times in the past few decades. If it is short of money, it will raise the ceiling and continue to borrow. However, the Republican Party in charge of the House of Representatives disagrees on this issue. The Speaker of the House of Representatives, McCarthy, publicly promised to include in any legislation to raise the debt ceiling a provision that would significantly reduce the spending of the United States government, which the Democrats would certainly not agree to. That is why there has been a stalemate on the issue of the US debt ceiling.

The US debt is already overwhelmed! Once the collapse is unimaginable, China has reduced its holdings for three consecutive months

Personally, in the face of the time bomb of US debt default, the Democrats and Republicans are still fighting frantically, which is not a wise move. But behind this phenomenon, we can find many problems. First, the internal struggle of the United States has reached an irreconcilable point. In the past few years, the internal struggle between the two parties in the United States has intensified, and the contradiction between the Republican Party and the Democratic Party has even risen to the point of personal attack. The arrest of Trump's private estate is the most typical example. In the past year, the two parties have repeatedly pulled together on the issue of assistance to Ukraine. This year, the two parties fought openly and secretly over the US debt issue. If this struggle continues like this, the United States may go downhill faster and faster.

Second, the risk of being affected by other countries is huge. Although US Treasuries are the debt of the US government, due to the existence of US dollar hegemony, many countries have to reserve a large amount of US dollar assets, and US Treasuries are just the important safe-haven assets of all countries. Today, however, the risk of default on US Treasuries is unimaginable for other countries. Against this background, China has begun to deal with it, reducing its holdings of US debt for three consecutive months, hitting a new low since 2010, and minimizing the impact of the US debt bomb on China.

The US debt is already overwhelmed! Once the collapse is unimaginable, China has reduced its holdings for three consecutive months

Personally, although the thunderstorm risk of the US debt does exist, the consequences of collapse are unimaginable. However, the probability of real thunderstorm is not large, and the impact can be controlled. However, in any case, with the increasingly hegemonic thinking of the United States and the increasingly obvious trend of the United States decoupling from China, it is imperative for China to reduce its holdings of US debt.