US everything has become unappetizing for everyone outside the US.
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.
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.
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 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.
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.
The US remains the best option among a mixed field of weak, corrupt, divided and authoritarian alternatives.
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.
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.)
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.
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.
Is the US included in the set of alternatives/possibilities with these attributes?