Given their track record and interest in other forms of currency, I could see them going too far.
In short, if the US becomes insolvent, the rest of the world will largely ignore what happens in the (at that point) 8th economy in the world, and mostly try to untie their economy from it.
I believe this is wrong? USA is the largest oil producer in the world, and also one of the 5 largest oil exporters.
That is already happening.
The rest of the world is finding the likes of China to be more stable and predictable trading partners than the USA.
/s
Think sht would get very real for everyone fast both inside and outside the US.
Global economy can’t even deal with a ship stuck in the suez without wobbling…
There are so many other issues to worry about at the moment more immediate than solvency.
To your point, I don’t think anyone has to be worried about American solvency, but a looming debt crisis doesn’t seem like a stretch of imagination at all.
It seems to be more of a subjective topic to me. Otherwise we would all have a perfect plan and never any monetary concerns. Highlighting weak links in the system is I believe a perfectly healthy thing to do. A sanity check would go a long way these days.
The U.S. government spends about one-third! (roughly 33% to 39%) of individual income tax revenue strictly to pay the interest on the national debt and that is not even paying off the principal balance itself:
https://budget.house.gov/imo/media/doc/cbo_baseline_february...
A raise in interest rates for treasuries, can bring this into 50% to 60% within days.
Yeah...worry about other things...
* https://www.cato.org/commentary/sadly-fiscal-restraint-no-lo...
When you've lost the Cato Institute…
More recently in 2025, "The petrodollar, not GOP fiscal restraint, is what sustains our unsustainable debt":
* https://thehill.com/opinion/finance/5465671-republican-fisca...
(Not that I believe the folks at the top at the GOP really cared about it.)
Democrats Change In Deficit
----------- --------
Joe Biden -$999B
Barack Obama -$747B
Bill Clinton -$383B
Jimmy Carter +$25.3B
Republicans Change In Deficit
----------- --------
Donald Trump +$2.108T
George W. Bush +$1.541T
George H. W. Bush +$102B
Ronald Reagan +$73.7B
Gerald Ford +$47.5B
Richard Nixon +$9.4B
Dwight Eisenhower -$3.2BThe markets generally respond to US concerns by buying more US treasuries. That’s counter-intuitive but reflects the situation that if things hit the fan they feel loaning the US money is still the safest place for their money.
For better or worse there’s unlikely to be a scenario where the US becomes insolvent but it’s not far worse for those outside the US.
"The Insane US-Japan Currency Bailout" - https://youtu.be/yh18YXKMk3g
Why does the US need to prop Japan? Because they are the biggest holder of US treasuries ...and if they need to prop up their own currency, they will need to sell them. <Insert Pearl Harbor reference...>
The US sold Euros to do the propping of Japanese bonds without telling the EU. Not only did we spend a lot to save our biggest sovereign buyer, but we undermined our relationship with another. And we didn't buy the Japanese much time.
Worth mentioning that lots of buyers is jumping into Chinese bonds over the past week.
It feels like the BRICS are taking over as of this month.
Considering the US has one of the lower overall tax rates of developed economies, I’m not sure we’ve reached any sort of crisis level
Anyone not taking that seriously is in for the most hilarious of surprises.
Also the correct measure is % of GDP
I thought that dynamic broke down with the liberation day tariffs, where both stocks and bonds dropped at the same time?
So no matter how much the US fucks up, they just print more and more dollars and ensure the entire world collectively pays up for their fuck-ups. But if the US doesn't fuck up and does something good, then the benefits of that? Oh, that's a different story. No excessive benefit printing, no sir.
All hail exorbitant privilege.
root-parent•57m ago