US Treasuries Have Become Unappetizing for Foreign Central Banks and Governments
wolfstreet.com
wolfstreet.com
https://en.wikipedia.org/wiki/Exorbitant_privilege
https://news.ycombinator.com/item?id=47635834 covers this succinctly:
> America was in practice running an empire that collected tribute from the rest of planet earth in exchange for entries in a database denominated in a currency they controlled and that was accepted everywhere. Really the only way it could go wrong is putting it under the control of someone who doesn't understand the kayfabe...
from
Gold overtakes U.S. Treasuries as the largest foreign reserve asset - https://news.ycombinator.com/item?id=47635056 - April 2026 (250 comments)
The U.S. was growing at the same rate or faster as the UK from 1830 to 1930, when the UK had an empire and the U.S. didn’t. Then, in the second half of the 20th century when the U.S. had an empire and the UK didn’t, the growth rates were more or less the same in both places in the long run trend (ignoring the UK’s step change hit from WWII).
The the war on Iran (and many years of war on terror) showed we have anything but
The US did well when the Saudis required dollars for oil as part of the US-Saudi security and military arrangement, and that arrangement is declining in value over time as the value of oil to the global economy declines. The US loses investors in US treasuries when folks who sold oil for dollars do not have dollars from oil sales. Shades of theta decay.
China Adds Currencies to Central Clearing in Yuan's Global Push - https://news.ycombinator.com/item?id=49736124 - September 2026
The Iran War Just Broke the Petrodollar - https://www.bloomberg.com/opinion/articles/2026-04-06/the-pe... | https://archive.today/RyJA8 - April 6th, 2026
> "The petrodollar loop requires two moving parts: dollars earned and dollars invested. Both have stopped."
> The standard reassurance is that there is no alternative to Treasuries — no other market offers the depth, liquidity and legal infrastructure that central banks require. This remains true. Foreign central banks will not abandon Treasuries wholesale. But “no realistic alternative” and “unquestioned safe haven” are not the same thing, and the Iran war is clarifying the difference.
https://ember-energy.org/data/china-cleantech-exports-data-e...
> As the world’s largest manufacturer of clean technologies, data on China’s cleantech exports provide an important early insight into the pace and scale of the energy transition. In 2024, China produced around 80% of the world’s solar PV modules and battery cells, and 70% of electric vehicles.
(as of this comment, China is exporting EVs at a 12M unit/year annualized run rate, with the capacity to build 50M EVs/year; they are only constrained by not enough marine vessels to keep up with export demand; every 24 months of EV production destroys ~1M barrels/day of oil demand at current run rates, which continue to increase)
China growth straining global auto shipping capacity - https://news.ycombinator.com/item?id=49553327 - September 2026 (0 comments)
China's Manufacturing Advantage, Explained [video] - https://news.ycombinator.com/item?id=49451076 | https://www.youtube.com/watch?v=OgYKVpOsMJs - August 2026
(think in systems)
It makes no difference in what currency a trade is conducted.
What matters is the jurisdiction in which you store the proceeds.
That selection of jurisdiction drives everything else.
I can declare that all oil must be settled in blue seashells. Who cares? What matters is that I do not keep my profits from selling oil as a pile of blue seashells, I invest those profits in some country. As long as that country remains the US, disproportionately, then oil can be marked in British pounds, seashells, hollywood B-list handjobs, it really makes no difference at all.
But, you object, "Doesn't oil being priced in dollars mean that nations need to have dollars to buy oil?". Nope, there are forex markets. So let's look at a situation in which oil is priced in Euros but Saudi Arabia stores its surpluses in dollars.
Which currency sees an increase in demand?
Japan goes to buy oil, so it sells the Yen and buys Euros. Those Euros are handed over to Saudi Arabia, which immediately sells them to buy dollars.
So the net result is that the euro transactions cancel out and all that matters is the selling of Yen and the buying of dollars. The yen falls against the dollar and the euro goes nowhere. It's a literal null op, in terms of net demand for the currency. It means nothing. The jurisdiction in which the proceeds are stored - that is everything.
Now I would ask you, in which jurisdictions do you think Saudi Arabia can efficiently store the ten billion or so it earns each day from selling oil? Nepal? Where does it store a couple trillion dollars worth of financial assets each year? Argentina? Which nation allows such vast unrestricted capital inflows and outflows? Go ahead, make a list.
So you see, whereas one can literally invent anything in which oil is priced in, to find a jurisdiction that can accept those capital inflows, that limits you to basically a single choice. Now, given that Saudi Arabia needs (not wants, but needs) to store its proceeds in dollars, it makes sense that it would price the oil in dollars to save on transaction fees. But really it can price the oil in anything it wants, no one cares except people caught in dank youtube caverns where the ominous phrase "petrodollar" is scrawled on the walls by torchlight.
[0] Simplifying to national here; yes it's not just one unit in France and one in SA but on net there's X trade between the major money movers in each country.
In your example, A and B are the same (dollars) and you demonstrate that there is a need for the common currency of A and B, but you are unable to distinguish between the demand caused by A and the demand caused by B, so I don't think you are groking the example. Suppose A and B were different. Oil is priced in dollars but the proceeds are stored in yen. So
1. France sells euros to buy dollars
2. France gives the dollars to KSA for oil
3. KSA sells the exact same number of dollars for Yen.
By the way, this used to be an adage of currency traders - it doesn't matter what currency a thing is priced in, what matters is the currency where you store the proceeds of the sale. This was shorthand for "the seller determines which currency gains from a trade, and the buyer determines which currency loses". So France, in selling euros for dollars, determines that euros will lose value, but does not determine that dollars will increase. It is Saudi Arabia, the seller, in choosing where to store the proceeds that determines which currency, in this case, the yen, will increase.
Bond yields go up (ie government debt)->consumer debt costs and cost of capital for business investment goes up (all consumer debt is priced off of "risk free" gov debt)->consumption slows->growth is reduced
Right, which gets back to my point that US GDP per capita growth has been incredibly stable from 1830 to present, both before it had an empire and cheap borrowing and since it’s had an empire and cheap borrowing.
So the opposite of this article is true. You can get all the data from the Z.1 release.
Please don't take these types of flame bait articles seriously or try to spin up an entire world view based on them as you will end up not only directionally wrong, but believe in the exact opposite of reality.
FYI, that $500B increase in treasury holdings is not the whole picture, there are also the agencies (housing mortage backed securities guaranteed by the govt) and foreign holdings of those also increased by $70 billion over the last year, and are about 1.5 Trillion.
It's basically divide and conquer on a national scale tearing down the democratic world police and the democratic systems it supported.
In terms of institutional investors and sentiment, I think you are fundamentally not understanding why the rest of the world holds US debt, it is to support running trade surpluses. That is a core economic need of much of the world, and as long as there is that need, you will see foreign government accumulation of dollar denominated assets.
For some reason people either refuse to understand simple balance of payment accounting constraints or they are deeply offended by them, and want to live in a world in which moral outrage determines things like global capital flows.
But we do not live in that world. The reason why the rest of the world accumulated a trillion of dollar denominated assets last year, split roughly 50/50 between private and public, is solely because China needed to run a trillion dollar trade surplus. And next year it will also need to run an even bigger surplus. That forces everything else.
As for the landing, perhaps the best advise I read was from Bob Hoover (aerobatics in a twin Aero Commander): If you’re faced with a forced landing, fly the thing as far into the crash as possible.
The key word: fly. You are not flying if you are stalling. And you only have positive control if you're flying. Or also: don't stop too abruptly.
The correct metric is price. If there is decreased demand, it will show up in the yield. And it does.
A yield going up means you pay more for the same thing. So if the US wants to issue more debt, they can. The fact that more debt was bought but the yield went to means the supply grew faster than the demand. So an absolute increase in demand, but a net decrease, thus a higher price as shown by the yield
For example, the US and Euro (average) yield have gone up by almost the same amount in that period, and other currencies like Japan and Australia have experienced an even larger increase.
I’m not sure why the level of discussion in this post is so poor.
Its because bond yields and fixed income in general isn't well understood by the public. Even in finance, its often not correctly understood except by those working in fixed income or the IT teams that support them. Funny thing is, often the devs in those departments understand global finance better than the CEOs running those firms because of how fixed incomes is seen by other departments. Basically, its the lowest department because it doesn't get great yield while ironically requiring the best math and economics knowledge to do.
The actual thing being bid on in the bond market is the yield itself. Higher yield is sort of like a higher price in that it means you have to offer more to the lenders. However, what they are actually betting on isn't the ability of the US government to repay. What they are actually betting on is the future inflation rate. So a higher yield doesn't mean what it means for corp debt (ie we don't think you will be able to pay this back). A higher yield for t-bills actually means lenders think inflation will increase in the future. Hence the FED raising rates to fight inflation.
PS But seriously, the bond market is very weird and most people mess up what changes in yield mean for different kinds of bonds because they don't mean the same things (unlike securities ie stocks).
PPS This is all because of the reduction in the amount of oil available worldwide, which triggers increases in global rates, which triggers increases in US rates.
It's the vindication of Gaullism half a century after De Gaulle's death, the concept of strategic autonomy is getting traction in the rest of Europe. It's not that we can't be friends, but that we shouldn't let our future be gambled in the hands of Wisconsin voters every two years.
I think you may have missed the part where Sweden just joined NATO recently. As long as the EU countries are in NATO which is de facto under American leadership, then there will be no strategic autonomy.
Secondly, even if the mood is sour between the US and the EU currently, Germany, Poland and other small eastern states very much still like to have the US as backers if only just for the fact that there is no EU army.
If the EU countries were leaving NATO to form their own military alliance, then I would agree with you but that hasn't happened and maybe never will.
The whole point is that, in general, global cooperation has worked well in the last 80 years. Europe doesn't want that to change but the US didn't vote for this guy once, but twice. Fool me once, shame on me, fool me twice, shame on you.
So Europe won't leave NATO, but it is pivoting to being more self sufficient. It's another area where the US is quickly spending the political capital it accumulated for decades.
Countries aren't leaving NATO yet, but they are setting up and strengthening alternatives which will make such an option easier. For an example, Canada just joined SAFE.
The US remains the best option among a mixed field of weak, corrupt, divided and authoritarian alternatives.
The wild card being this will be the first time the world has entered this sort of unstable state since the invention of nuclear weapons. I expect to see a total failure of non-proliferation and the first nuclear civil war in my lifetime, if not the first nuclear war of territorial conquest. (I do not expect to see the first nuclear extermination.)
I can't figure out a way to parse this sentence that makes sense. Are you saying that "Europe" will "balance" the USA in the Americas? As in, European influence will counteract US influence in the Americas?
Yes. If you’re Canada or Mexico or frankly anyone else in the Americas, you probably don’t want all your weapons systems to be dependant on American supply chains. And then if you think about it, you probably don’t want all your energy imports dependent on Washington’s noblesse. Et cetera.
American exceptionalism was built on the trust the world put in us getting so unilaterally powerful without being balanced.
The amount of countries with nukes is going to increase dramatically in the medium term. That will mean exponentially more opportunities for a nuclear conflict to break out. I think there is a very good chance we see a nuclear war in the next couple decades, and the odds are dramatically higher than they were pre-trump.
The only spot I sort of disagree is that I think it's an uncomfortably short hop from a moderately sized nuclear war to a global nuclear war, and I think the chances of the latter are uncomfortably high now as well.
But it is badly implemented and in need of drastic improvements. Just see recent comments made by EU President Von der Leyen and head of the ECB Christine Lagarde on how the biggest obstacles to the EU isn't US tarrifs but internal tarrifs.
Counted up they effectively make goods twice as costly as they should be.
A true common goods and finance market in the EU would be a force to reckon with.
Is the US included in the set of alternatives/possibilities with these attributes?
The headline specifically refers to central bank and government holdings.
The story is just another way of saying we’re issuing more debt. Central banks aren’t reducing exposure. They just didn’t increase them with our own finances, which makes sense, our finances don’t increase their reserve requirements.
Brazil is on a long term downtrend although they may be bottoming out.
Norway just proposed reducing bond holdings in its sovereign fund.
It’s not as clear cut as you’re making it out to be. I think the headline may be overstated, but the article does a reasonable job of making the point.
This is the correct conclusion. Currently, there is no discernable signal. Given American politics, I'd be shocked if we didn't see folks trying to diversify central-bank holdings.
But as long as America runs a trade imbalance, we'll be dumping dollars abroad, and those dollars will work their ways into their countries' banking systems from which they'll work into their central banks, and unless their governments want to strengthen their currency (unlikely for an exporter), they're going to hold those dollars, and if you're holding dollars as an asset, holding the currency type versus the pays-a-yield type is just giving free money to Washington.
> Norway just proposed reducing bond holdings in its sovereign fund
That was explicitly a portfolio-weighting move. They're reducing buying of Treasuries in favour of higher-yielding agency bonds. Their total exposure to U.S. credit isn't being cut. It was just being re-weighted away from Treasuries at a time when they weren't yielding as much as they are now.
One type (e.g. chart 1 and 4) showing the holdings by governments and central banks, which are clearly falling. The other shows holdings by foreign entities, which is also explained to include many US offshore funds and foreign subsidiaries, so actually still US entities that are holding these treasuries. Here the picture is more amorphous with overall foreign treasury holdings rising in the past years with a dip basically for a number of countries since last year for most countries.
I read it as clearly governments reducing treasuries with investors in some markets still absorbing some.
It's not without its benefits -- over the last couple decade, the US has found ways to weaponize access to USD, so if you're not a fan of having a country other than your own able to effectively regulate or sanction you and your business, there's some niceties here.
Being able to trade and invest in a stable, highly liquid, easily converted, low risk currency was a net win for most of the world for about half a century. There isn't an obvious replacement, so we'll just see more friction.
The problem with replacing the world reserve currency with something else is that nobody can agree on what that something else should be. Expect to see a lot of jockeying for power as people realize the U.S. isn't the world hegemon anymore. Jockeying, on a state level, usually means war.
https://en.wikipedia.org/wiki/Bancor
Recall that America is currently attacking Iran without provocation and is aiding a genocide.
Finally there has to be a certain willingness from other countries to accept this new currency and I just don't see the EU countries conducting all their international trade in yuan anytime soon.
Finally replacing the USD is just one part. The second part is how to stop the next currency from being weaponized just like the USD is/was. Without the answer to that question, then switching to a new reserve currency is just replacing one problem with another.
A stable, simple cryptocurrency is ideal for this. Not only is it not controlled by any nation state, it's not controlled by anyone. It's just there, a tradable asset that has mathematically-defined rules for how many will ever be created. Also gets around the Triffin Dilemma by not being used as a national currency, or for general consumer purchases.
The international settlement use-case also gets around two of the traditional weaknesses of Bitcoin. The fact that it's deflationary is not concerning when used as a unit of international settlement, because national currencies can be made to be inflationary to spur consumer activity, and then just float relative to Bitcoin. And its low TPS limits also don't matter much when it's only used for general international settlement between large financial entities, rather than as a payment coin for ordinary consumer purchases.
Historically this is also where we'd insert something into the conversation about who gets to hold the moral high ground, but as you've noted, that's something the current US administration has abandoned entirely.
The only way for other countries to have the RMB is either China has to start issues massive amounts of bonds (doubt they'll be okay with foreign government owning their debts) or they stop being an export driven economy (this is because all the money goes back to China, and RMB is unable to actually leave the country if you're in a trade deficit with China) . Neither of which seems likely.
But they are the opposites of each other.
So it's fair to say that China is the exact opposite of what it would take issue a reserve currency.
Let China spend a few decades running net trade deficits, let it open its capital market so the CNY fully floats, and allow unfettered foreign capital inflows and outflows for a few decades.
Then we can have a discussion about how it can be a dominant reserve currency.
No, the US ran a goods surplus but a current account deficit.
If we look at US history, we can divide it into a few periods:
revolution to civil war: US is a net debtor, running goods deficits and borrowing from europe.
1870 - Great Depression/start of WW2: US is running goods surpluses (of about 1% of GDP) but continues to heavily borrow from Europe.
Post WW2 - Bretton woods. US is suddenly the world's biggest creditor, and it's good surplus rapidly declines to a deficit, forcing the US off the gold standard.
That middle period puzzled a lot of economists, because the balance of payments identity says that the current account plus capital account must sum to zero, so if the capital account is positive (continues to borrow from Europe) then the current account must be negative. But here we have reports of the US running a goods surplus! Well, the problem is that even though there was a goods surplus, the current account was negative. The US owed so much money in dividend and interest payments that the money earned from the goods surplus wasn't enough and the US kept getting deeper in debt to Europe throughout this period, which meant that Europe was a net accumulator of US liabilities even though the US ran a goods surplus.
And it was the fact that Europe kept accumulating US liabilities that allowed the these liabilities to be traded as an effective reserve currency. If the US was not getting its liabilities into the hands of the europeans, then there is no way US liabilities could possibly be used to settle international trade. This should be a no brainer.
Now a lot of crazy stuff happened during the stock market crash and capital flight during WW1 and WW2 that turned the table on the Europe, so the US ended up in a situation where, very suddenly -- as in, over the course of just a few days -- it became a net creditor to Europe, but that necessitated the Marshall plan, where the US needed to flood Europe with dollar claims -- which were gifts, not investments -- in order to prevent the European economies from grinding to a halt in the immediate aftermath of WW2, and then the US goods trade deteriorated so that we had to go off the gold standard. Thus the period from the end of WW2 to the end of Bretton woods should be viewed as an anomalous disequilibrium period of adjustment, and if you look at US current account data, you see a fairly rapid decline because the US goods surplus during the WW2 period was artificially inflated by counting munitions and war material as exports, but these exports were "paid" for by loans that were forgiven, and this, together with the Marshall plan, is what screws with traditional readings of the balance of payments identity in that WW2-end of Bretton woods period.
Bottom line, if you want to run trade surpluses and be a reserve currency, you need to be giving away more claims than are necessary to buy your goods, because at the end of the day, the rest of the world has to be a net accumulator of claims on you in order for those claims to be a reserve currency.
It's kind of the historical embodiment of "Owe the bank $100, and you have a problem. Owe the bankers $100T, and they have a problem."
Which is what you'd expect if you're exporting more than importing. Perhaps you meant by some other accounting, which is what I was alluding to regarding the distortion caused by gold convertibility. Ceteris paribus, the trade & account balance will zero out over time in the absence of some kind of regulatory or similar distortion. China doesn't need to be a net importer to become a reserve currency, but if they became one (deliberately or otherwise) and allowed their currency to float than in time their exports would tend to fall and they'd likely become a net importer, at least if they became the dominant reserve like the US. (If they didn't float, you'd get a mess like the US had.) The reserve status can drive the balance of trade toward net importing. Which is precisely why China doesn't really want to become a global reserve currency. They'd certainly like the soft power that would bring, but they don't want the domestic employment disruption the US suffers from. That doesn't stop them from wanting their cake and eating it, too; they can try, but nobody really believes they could, so nobody takes it seriously. Though it's not necessarily an all or nothing deal. I'm not sure the world needs a single reserve currency as dominant as the dollar. We have markets to arbitrage and balance currency valuations, including future expected valuations. A singular dominant reserve currency is helpful to reduce friction, but less so when you have huge, global currency and currency derivatives markets constantly trading.
The ideal would be something like the International clearing currency proposed by Keynes durin Bretton Woods (he was overruled in favor of the dollar as reserve currency since America had all the power at the time).
Here's an Op Ed from Greece's past finance minister in favor of this scheme: https://www.weforum.org/stories/economic-growth/yanis-varouf...
Before the industrial revolution, there was almost no sustained economic growth and business was essentially a zero-sum game. Wars of conquest were high-risk business ventures that promised higher returns than actual business.
Then the industrial revolution happened. Economic growth made business more lucrative, while wars got deeper into the negative-sum territory. Leaders were slow to understand that, which is why the 19th and 20th centuries saw a series of increasingly destructive wars that left almost everyone worse off.
But there have been no wars between major powers in the last 80 years. Maybe people in power have realized that all-out wars are no longer productive. But there have been plenty of lesser wars: civil wars, proxy wars, and wars against much weaker states. As well as regional wars, where at least one of the parties is so dysfunctional that it does not benefit from positive-sum business.
People talked like that before WW I. There hasn't been a major war in Europe since 1870 almost half a century and trade is such a large war would bankrupt all the major powers and so would never happen. The Great Illusion was published in 1909 and was positively received at the time:
> In The Great Illusion, Angell's primary thesis was, in the words of historian James Joll, that "the economic cost of war was so great that no one could possibly hope to gain by starting a war the consequences of which would be so disastrous."[4][5] For that reason, a general European war was very unlikely to start, and if it did, it would not last long.[6] He argued that war was economically and socially irrational[7] and that war between industrial countries was futile because conquest did not pay.
Smaller than the one in Ukraine today.
Those are figures for the total size of those national armies at the time. It'd be like saying the Iran war involved 3M people because the U.S. has about 2.1M in uniform and Iran has just under 1M counting reservists. Meanwhile there've been precisely zero boots on the ground in Iran, and the total number of military personnel directly affected is on the order of tens of thousands.
The text of the article has the Russian far east strength at about 95,000 at the start of the war, with another 410,000 trained in over the course of the war. The best proxy for Japanese (and Russian) combat strength might be the Battle of Mukden [1], which had about 250K Japanese and 292K Russian troops. These numbers are smaller by a factor of about 5x.
The present-day Russo-Ukrainian war is significantly larger. Estimated Russian deaths are 500K+, higher than the total number of Russian soldiers involved in the Russo-Japanese war.
Industrial armies were massive. By the standards of that era, current US military strength exceeds 60 million. But they mostly relied on reserves, which were slow to mobilize. Japan's quick decisive victories ended the Russo–Japanese war before it had a chance to escalate further, potentially reaching the scale of the Eastern Front in WW1. But even then, the Battle of Mukden was one of the largest land battles in history until that point
You're right that there have been no great-power wars in the last 80 years. That's about the timescale at which major hegemonic realignments occur: WW1/WW2 from 1914-1945 (England -> US), Napoleonic Wars from 1803-1815 (England -> France -> England), Nine Years War + Glorious Revolution + War of Spanish Succession from 1688-1715 (France -> England), European Wars of Religion from 1618-1648 which created the nation-state system.
But that just means that this is the first major hegemonic realignment after the development of nuclear weapons and drone swarms, which makes me fear for the survival of civilization a bit.
I don't know I have some hopes that maybe it'll play out more with economic tools.
Oh, and I don't think western alliances and trade relationships necessarily need to collapse. But Trump certainly tries :(
But since the industrial revolution 80 years is something.
I hope it's a trend: but living in Europe right now, I do feel like our strongest ally are giving our enemies reason doubt the deterrence we've collectively built over the past 77 years.
We had to deploy armed troops to Greenland to deter an ally from invasion.
The deterrence to war we've spilled blood building for 77 years.
Economics is part of why we haven't had wars, collective deterrence probably had something to do with it too. Without NATO who is to say how many smaller nations Russia/USSR would have invaded for the fun of it.
It isn’t a decision made by some sort of vote, or done overnight. It’s an emergent phenomenon. Sterling had already lost the role de facto by the time Bretton Woods blessed the role of the dollar de jure.
Whatever replaces the dollar will be messy because it won’t have the set of systems the dollar had at its peak (large, highly liquid markets; complete convertibility; bonds backed by huge government spending coupled with huge GDP).
There is really only one alternative and it’s not a great one. It’s not China, as the government is afraid of letting go of control (thus no complete convertibility) and markets lack credibility which impairs liquidity.
The only other opening is unfortunately the Euro. Large, liquid markets yes in aggregate but national markets (e.g. France, Germany) are not unified. They weren’t in the US when the dollar became the reserve currency either, but times have changed. The bond markets are likewise not unified, so risk is higher. But they do have complete liquidity, which is the most important of all after GDP size.
So there will be chipping away at the dollar for years.
The different blocs could already start experimenting with this: the Euro could be used for currency exchange within partner nations while bringing back national currencies, BRICS could setup their own currency for trade between themselves, etc.
These problems are not new, they were the same questions we had post WW2, and some good ideas from that era may have been squashed by the ruling power of the time (namely the US), but their merit remains.
http://www.sofer.com/blog/keynes-on-the-balance-of-trade.htm...
https://www.weforum.org/stories/economic-growth/yanis-varouf...
"Badly" is used to modify participial adjectives ("written", "organized"), not plain property adjectives like "unappetizing".
But seeing Wolf Street on HN brightened my day.
The question as always is what to replace it with, and hopefully not something worse.
These go up and down based on cash management needs and portfolio allocation choices between public and private debt, and so you can pick one year when cash management needs were high or appetite for riskier were low. And then count on people being dupes, LOL.
The government is a sector of the economy. You can argue that we are borrowing too much, and I would agree, but you are not gonna fix that until you address the foreign capital inflows. That means rolling back the investor rights agreements. As long as foreign nations can print money and use it to buy dollars in order to stimulate their exports, the US is going to have a problem with excessive debt loads. The flipside of that is that the US will not have a problem of foreign investors decreasing their holdings. It will increase every single year, in line with foreign export demands. If anyone tells you the opposite, just look for the error or the lie, because I guarantee you there is one. This article has both.
1. print money
2. suppress wages by shipping in cheap labor
3. reassure the population you arent doing the above
But the idea that you look at that graph as say it's "unappetizing" is dumb. Most foreign governments besides China have INCREASED their UST holdings. The only reason why the % is dropping is because of the massive amount bought by the Fed which messed up the %.
https://tradingeconomics.com/united-states/foreign-treasury-...
https://tradingeconomics.com/united-states/foreign-treasury-...
https://tradingeconomics.com/united-states/foreign-treasury-...
Only China has gone down:
https://tradingeconomics.com/united-states/foreign-treasury-...
I stand corrected about Japan it looks like they've been flat over the last 10+ YEARS
https://tradingeconomics.com/united-states/foreign-treasury-...
Basically the article linked above is dumb, and they either are stupid and don't understand what they're talking about or trying to cast a false narrative
Everything else is portfolio allocation choices between treasuries or agencies or BAA corporates or AAA corporates, there are so many different instruments to invest in, you can shift your holdings back and forth however you like, all while keeping your dollar exposure exactly the same. And you can set up a fund in the Caymans and hold your assets there. And China does all of that. So really it is all fungible once you are in the "foreign ownership" bucket.
Also, equities and treasuries are not equivalent. If foreign holdings are moving to equities over treasuries, the added risk will be a serious problem in a crisis. It could also be a sign that some nations are being “encouraged” to prop up equity markets, either by the US or large domestic holders of US equities, which is a rumor that I’ve come across.
(If they are just shifting from treasuries to other types of bonds, that’s less risky but still moreso than treasuries. And it may affect yields.)
Edit: so much hate for something so benign.
If so, those constituencies are immune to facts and common sense.