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by roenxi
976 days ago
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> The debt is expected to be repaid, with interest. And yet, realistically, the US is almost at the end of a trajectory where they keep borrowing until they can't repay even the interest then default. What scenarios are there now where it makes sense to even try drawing down the principle? The only question is who is eating the real losses. The ambiguity of that is half the spectacle. Ironically, US taxpayers are in it with the best chance of avoiding that particular burden. > They do it because other parties trust it. Speaking of, the Chinese seem to be losing confidence in the dollar, their treasury securities holdings are going down [0] remarkably quickly. They're at around 60% of peak and dropping. Amazingly, the US is still seeing foreign holdings of treasuries going up! [0] https://ticdata.treasury.gov/resource-center/data-chart-cent... |
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nobody has to lose.
A buyer of a treasury is receiving interest payments, and will receive the entire principle on maturity. At the time of buying, the buyer must have judged that the value is worth buying. In the future, if the value drops, then that's loss, but it's not unexpected. Just like if the value grow.
Debt is something that is used to produce _more_. Now, if the debt was not used properly and with care then, that's a different story...