Global Community Dumping U.S. Debt: What Does It Mean?

( – The American economy under President Joe Biden is being flooded with dollars as foreign holders of U.S. Treasury bonds unload their holdings at frightening levels. America’s allies are among those dumping U.S. debt in anticipation of an unstable greenback, and the latest data from the Treasury Department appears to confirm this.

Numbers released on July 18th show that Japan dumped over $30 billion in bonds in the month of May. The Asian country holds more than any other nation.

In the same month, China unloaded $22.2 billion worth of bonds in its second successive month of trimming. The CCP’s holdings are now near their historic low of just over $801 billion. The country has been in a reduction pattern since August 2022.

In addition to the Asian duo, at least 19 other nations dumped U.S. bonds in the month of April. Among those countries are the United Kingdom, Saudi Arabia, and India. The “offshore account” havens of the Caymans and Bermuda have also begun dumping American debt.

The U.K. unloaded just under $45 billion of bond assets in combined numbers for April and May. Saudi Arabia’s cumulative holdings have decreased by 40% from a peak of about $185 billion to a little more than $111 billion.

Once debt in the form of bonds is dumped, it returns to American shores and leads to an oversupply of unused dollars and a theorized devaluing of the currency. It appears that foreign nations anticipate this eventuality because they are simultaneously buying gold in record amounts.

While bonds are being dumped on the international stage, the Federal Reserve has continued to hike interest rates, which has led to increased borrowing costs. The higher cost of lending has coincided with talk of a new global reserve currency and gold-backed rival to the American dollar.

BRICS nations are expected to discuss this possibility at a Johannesburg summit later this month.

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