Comment by toomuchtodo | Hacker News Reader

Comment by toomuchtodo | Hacker News Reader

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They still can of course, all they need to do is collectively start selling off their US treasuries. The US is at a highly vulnerable and precarious point with their potential bond market debt spiral situation, and this is a point of leverage that can be exploited to encourage improved behavior from a bully.

This capital can then be reallocated into domestic investment to continue to decouple from the US. Very similar to how Germany learned the hard way that buying fossil gas from Russia wasn’t going to prevent aggression. Canada has started this with their recently announced energy investment plan, Europe can do this with Eurobonds.

PM Carney announces largest clean energy investment in North American history - https://news.ycombinator.com/item?id=49339577 - August 2026

China and Canada Energy Pact as Canada Aims to Cut Reliance on US - https://news.ycombinator.com/item?id=46640932 - January 2026 (a component of China’s next five year plan includes LNG infra investment to support imports from Canada)

On Eurobonds:

Macron says €300B in EU savings sent to the US every year will be invested in EU - https://news.ycombinator.com/item?id=46722594 - January 2026 (207 comments)

https://news.ycombinator.com/item?id=46708337

(Canada and Europe collective hold ~$9T in US treasury debt, almost 25% of total outstanding debt)

This is a classical problem. In theory it works when majority of the players work together and move in same direction, however everyone being opportunistic here makes in infeasible from long term perspective. Europe itself is in a difficult stage, its dealing with Russia on one end, has trust issues with China and now the its long term partner has gone rouge. The result of all this would be a mandate to be self sufficient aka anti-globalization

That multipolar world mandate you mentioned is already here today. That was the outcome of the actions of this US federal administration. Trust and cooperation is done for a half decade or more. The world can’t trust this administration for the remainder of the administration, and they can’t trust the US electorate to elect adults for the next administration. Countries can either accept it and take action to manage their risk (redirect investment to continue to decouple, trade deals with rational counterparties) to attempt to achieve a favorable outcome, or not and experience the potential natural consequences.

https://news.ycombinator.com/item?id=43284950 - March 2025

> “How can I decouple from the US as fast as possible?” is what this leads to.

> Diplomacy is the art of saying “good dog” until you make it to the rock. The US will apply pressure for short term gain against allies while they move away long term.

I think this is where Carney landed. Trust is gone. Further, the US and the world would have a precedence in dealing with Canada. Accepting a bad deal would maintain an illusion that this was good enough and to continue on in this direction. Once Trump is gone the negotiations could restart but at a much less valuable position to Canada.

Canada has had a long term investment and productivity challenge with too much focused on North and South. I suspect that this is now the catalyst for East and West investment.

I think the calculation was that no deal and the natural consequences are not that much worse than the deal on the table short term. And taking into account the future of the above it was going to be worse.

https://www.youtube.com/shorts/Oj4wIC7a8vI

“We take the world as it is, not as we wish it would be.”

https://www.cbc.ca/news/world/livestory/us-canada-trade-war-...

> In the final hours of negotiations, the U.S. tried to include restrictions on Canada's ability to strike trade deals with other countries, Carney said.

> "Unacceptable," the prime minister said flatly.

> Plus, the U.S. tried to restrict Canada's protections of its languages, its culture and its sovereignty, Carney added. He did not provide details of what those restrictions looked like.

Japan did start selling off US treasuries because the yen is fucked. They stopped when the US agreed to buy yen and sell euros. If China starts selling treasuries, US is fucked. But it’s in China’s interest to have this incompetent in power.

People don't invest in the US from Europe because they love the US, but rather because investments in Europe are shitty.

https://www.reuters.com/world/china/foreign-holdings-us-trea...

https://www.wsj.com/finance/stocks/stock-market-bargains-are...

https://www.youtube.com/watch?v=wTiYaWFP59Q

Alphabet is issuing Euro bonds in big tranches. Euro, not dollar. They diversify away from the dollar: https://www.reuters.com/business/alphabet-taps-euro-bond-mar...

Couldn't the US buy back more bonds through QE than any foreign country could sell?

Debasing the currency is equivalent to a soft default, and would accelerate investment away from the dollar and treasuries. Mechanically, certainly, it can be done, but investors won’t do nothing while the US inflates their asset value away. They’ll take the loss (which they’d take anyway from monetizing the debt) and reallocate elsewhere.

Part of the reason Ray Dalio was on Bloomberg saying to sell bonds and buy gold or Bitcoin. Treasuries used to be where capital would “flee for safety” and that concept is breaking down.

Dalio Says Sell Bonds, Buy Gold, Bitcoin as Debt Crisis Looms - https://www.bloomberg.com/news/articles/2026-08-21/dalio-say... | https://archive.today/jlUBA - August 21st, 2026

Ouch! I'm not a huge fan of Dalio, I think he misses some big picture stuff outside of economics but when it comes to just economics he has a fairly good grip on it. So when he is saying that, interesting times ahead. Not saying he is right but that is a fascinating signal of were things are going.

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