Three countries reduce their holdings of U.S. debt

Introduction

When the Federal Reserve announced a rate cut, the global financial market held its breath in anticipation! Behind this decision, it is not only a pessimistic expectation for the future of the U.S. economy but also a profound shock to the global economic landscape. Countries such as China, Japan, the United Kingdom, and France have all reduced their holdings of U.S. Treasury bonds, seemingly foreshadowing an unprecedented financial upheaval.

Is the United States, once an economic behemoth, now on the brink of decline? And how should we respond to this financial cold front sweeping in?

The Retreat of Allies: The Wave of Selling U.S. Treasury Bonds

The global financial market is always full of drama, and this time, the focus of the plot is U.S. Treasury bonds. Amidst the clamor surrounding the Federal Reserve's announcement of a rate cut, the U.S. Treasury bond market has staged a "great retreat of allies."

Numbers do not lie. The latest data shows that China, Japan, the United Kingdom, and other countries reduced their holdings of U.S. Treasury bonds by a total of $42.5 billion in July.

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This wave of reduction is not only astonishing in numbers but also thought-provoking in its intentions.

The effectiveness of U.S. Treasury bond auctions is declining, and large investors, fearing the state of the U.S. economy, have chosen to take a wait-and-see attitude, leading to all indicators of the auctions breaking the lowest records since February of this year.As key allies of the United States, the actions of the United Kingdom and France are particularly eye-catching.

The UK sold $16.3 billion worth of US Treasury bonds, while France sold $13.2 billion, becoming the two largest foreign sellers. This series of selling actions undoubtedly casts a shadow over the prospects of the US economy.

Japan, the most steadfast ally of the United States in Asia, its central bank suddenly announced an interest rate hike at the end of July, dealing a heavy blow to the United States.

Japan has benefited from the US Treasury market, a move that not only surprised the market but also reflected Japan's independence in economic policy and a reassessment of the prospects of the US economy.

Looking for a new lifeline: The plight of the US economy

The United States, once an economic behemoth, now seems to be facing an unprecedented challenge.

The fiscal deficit is as high as $1.7 trillion, the total national debt has soared to $35.35 trillion, and the trade deficit is $68.2 billion higher than in 2007. Behind these numbers is the heavy burden of the US economy and the uncertainty of the future.

The issue of the US fiscal deficit is like a race without an end, with the snowball of debt growing larger and larger.The surge in the total national debt raises questions about how long the United States can sustain itself. Moreover, the increase in the trade deficit poses a severe challenge to American exports.

For the United States to repay its debts, it must seek new sources of productivity and growth. However, at present, these new growth points seem to be far from reach.

The U.S. needs a new industrial revolution and new technological innovations, but these are not things that can be achieved overnight. The American economy appears to be at a crossroads.

The role of the Federal Reserve is akin to that of a helmsman for the U.S. economy.

But is this helmsman truly serving the interests of the American people?

The interests of the financial consortiums behind the Federal Reserve, especially the influence of Jewish people in the financial sector, inevitably lead to doubts about whose interests the economic policies of the United States are really serving.

The Future of the Dollar: Devaluation and Inflation

Faced with fiscal difficulties, the United States may adopt a strategy of printing money, which could lead to the devaluation of the dollar and inflation. The Federal Reserve's interest rate cuts seem to suggest concerns about the slowdown in economic growth.

According to reports from The Paper, this is the first time the Federal Reserve has cut interest rates since March 2020, and it started with an unconventionally large cut, demonstrating worries about the slowdown in economic growth.The potential global economic ripple effects of the US dollar's depreciation include changes in trade patterns and an increase in inflation. According to analysis from Shanghai University of Finance and Economics, every fluctuation of the US dollar affects the world's nerves.

If the US dollar depreciates, it may lead to an increase in global trade costs, exerting pressure on importing countries.

The recession of the US economy may impact the global hegemony pattern, and cooperation for mutual benefit has become a new trend in international relations.

As Xinhua News Agency has pointed out, China has always adhered to the concept of promoting reform through openness, enhancing its ability to open up in the process of expanding international cooperation, and sharing development opportunities and dividends with other countries.

Conclusion

The Federal Reserve's interest rate cut decisions, the retreat of allies, and the future of the US dollar all constitute the complex picture of the current global economy. Is the recession of the US economy really inevitable? And how should we navigate steadily in this financial tide?