Foreign Holdings of US Federal Debt

congress.gov

4 pointstin7in2 comments

The One Big Beautiful Bill and all the new proposed spending will add trillions to the national debt. At some point don’t these foreign holders get worried about whether they will ever get paid back? How do they decide where that line lies for this kind of risk?

I imagine there's two forces at work here.

The first is that the US can always pay back the debt, just by printing more currency. It would be inflationary, but there will be some repayment regardless of how bad it gets.

Also, stability. As long as no one panics and liquidates their bonds, the market stays high and everyone realizes a decent profit. I would imagine that they're all looking on how to divest slowly over time.

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