In the 1980s, when Japan was in its bubble era, Japan was the country that held the most US Treasury bonds.
As of the 2000s, with China's rapid growth, China traded goods for dollars and converted them into US Treasury bonds. (Japan entered a recession at this time.)
Starting in 2018, with the start of the US-China trade war, China began to actively sell US Treasury bonds.
Prime Minister Abe of Japan began to print yen from 2012 to 2020. (This could only be done with the approval of the US.) Japan also bought Japanese government bonds, but the country that bought US Treasury bonds the most recently was Japan. However, Japan is now also selling US Treasury bonds because it has reached its limit.
Japan and China's Treasury bond holdings in May 19, 2022 to November 2022:
Japan: 1.23 trillion US dollars, decreased by 74 billion US dollars in one month (the largest creditor of the US) 1.23 trillion => 1.082 trillion (in billion U.S. dollars)
China: 1.04 trillion US dollars 1.04 trillion => 870 billion (in billion U.S. dollars)
The Fed: 17 trillion US dollars, according to the balance sheet data of the Federal Reserve, which is an increase of 400 billion US dollars from the previous quarter (based on the end of March 2022) and an increase of 4.1 trillion US dollars from the same period last year. Banks filled with cash are holding US Treasury bonds as if they were crazy, as they pay noticeable interest rates. They now hold 5.6% of the rapidly increasing US national debt.
The Fed printed astronomical dollars during the pandemic. Where did that money go? It was used by the local banks to take in and buy US Treasury bonds.
US Treasury bonds used to be the safest asset in the world, but not anymore. They can only repay debt with long-term US Treasury bonds. US Treasury bonds are dangerous. The Fed has shown its limit. If interest rates are raised, banks will go bankrupt, and if interest rates are lowered, inflation will occur. This is the limit of traditional finance. Hegemonic countries have maintained power for about 100 years and then passed to other countries. At this time, the hegemonic country lost its currency function.
Portugal, Spain, Netherlands, France, Britain, US => ?
It has been 79 years since the dollar became the Bretton Woods agreement in 1944. The dollar has already reached its limit. A new currency is needed. The introduction of a new currency usually leads to war or a radicalization of new currency issuance. Even if the dollar is reissued, the countries that can afford it are all in Europe, Japan, and Korea.
Europe is busy with their own lives and Japan is the same, and Korea does not seem to be doing well either.
The mutual trust of countries has already been shattered, even the single currency has been shattered. A politically free and consolidated currency that can be integrated worldwide is needed. That is 'Bitcoin.'
The decline of the US Treasury bonds is a decline in credit and the alternative is Bitcoin. - DooriDoori -
