Three minutes to talk about popular science
In the new year, the U.S. business community is in a situation of "more and more debt". More than $34 trillion in national debt, which has made the business community worry that the rolling over of the national debt will trigger a stronger wave of fiscal deficits.
But American politics is not in a hurry, at least Biden, who is in office, and Trump, who is clamoring for a campaign, have not considered how to control debt.
The outside world has prescribed a good prescription for **, as long as social security expenses and medical insurance are reduced, a large part of the pressure can be alleviated. It's a bit like the scene in "House of Cards" where Frank manages to lower Social Security in order to expand his surplus.
In fact, for many years, people from all walks of life in the United States have believed that the reason why the national debt of the United States is borrowing more and more is precisely because of the above two expenditures.
However, it is clear that neither the Democratic Party nor the Republican Party has systematically considered how to reduce the deficit and how to reduce the debt.
On the contrary, the current U.S. ** is starting to think about borrowing the next round of money. According to data in the United States, for public debt, ** is ready for a new round of financing.
In a word, Americans always believe that they can easily borrow money. As for the annual expenses and the increasing amount of interest, at least the United States** believes that as long as measures are taken to control the deficit in advance every year, the problem will not be very big.
Borrowing money through publicly traded and circulating bonds is the essence of government bonds. Such bonds can be held privately or collectively, and can be purchased by Americans and by foreign countries.
Essentially, lending money to the U.S.** is partly a belief that U.S. society is functioning well and will have the ability to repay it sustainably in the future.
From the perspective of foreign bonds, behind the bonds, it is equivalent to the inflow of foreign capital into the borrowing country. Now it's not just the United States that's borrowing, but also the developed countries in the West.
Of course, borrowing money is just one of the most colloquial terms. From the perspective of capital markets, developed countries such as the United States have diversified forms of debt, accounting for a small proportion of GDP, and some of the debt itself is not net external debt.
To put it simply, borrowers don't necessarily have to borrow foreign debts because they don't have the money. Moreover, in economically developed countries, the balance of payments is normal, and the financial system and other aspects are also sound. As a result, even if they have external debt, they have a strong ability to pay their debts.
On the contrary, any country in the world that has a debt crisis is essentially breaking the balance of payments, and even the economic productivity of the entire society is already in a negative number, once it is such a debt, it will induce a debt crisis.
Therefore, although the US national debt is large, it has never been worried about thunderstorms. And judging by the composition of the debtA significant portion of the U.S. Treasury debt comes from domestic.
The Commonwealth Bank and ** hold the largest share of the Treasury bonds, with a proportion of about 40%. The U.S. bonds held by foreign ** have been declining for more than a decade. The current level has been reduced to less than 24%.
So, who is the largest "creditor" among the foreign ** who lend money to the United States?
In the past decade or so, the public has often heard the saying that the United States has borrowed a lot of money from us, and China is the largest creditor of the United States. From the point of view of international credit relations, countries that give this money to other countries are called creditor countries.
China does hold the largest number of U.S. Treasury bonds, but the proportion held by Japan is also very high, and because of the situation between the two sides, who is the largest creditor has actually been changing in turns.
For example, in 2015, the proportion held by China increased by 37.3 billion US dollars, reaching 1$261 trillion. At that time, this amount was higher than the 12269 trillion US dollars is high, so China became the largest "creditor" in that year.
This is just a small link in the blessing and **, because from a proportional point of view, the amount of holdings will fluctuate every month, because in essence, this is not a simple relationship between borrowing money and debts, behind it is the operation and adjustment of the capital market.
As a result, the percentage of U.S. debt holdings fluctuates almost every year or even every month. In this way, either China or Japan will take turns to become the "Huang Shiren" who lent money to Yang Bailao.
For example, from October 2016 to July 2017, Japan surpassed China to become the largest creditor of the United States. Since August 2017, as Japan's shareholding has decreased by $20.5 billion, Japan has become the largest creditor of the United States.
From the public's point of view, because the perception of "debt" stays in the perspective of borrowing money and not having money, there is an illusion that borrowing money is bad. In particular, when I hear that my country has become the largest creditor of the United States, it will feel very fresh.
However, from the perspective of the capital market, the proportion of treasury bonds held is always changing, which has become a way of operation and investment, so who holds a high proportion and who holds a low proportion is about to get tired of hearing it. In other words, the public and the capital market have different perspectives on government bonds.
For example, in recent years, the proportion of US bonds held by China has been declining. By the end of 2023, they have fallen below $1 trillion, less than $800 billion.
This ** has been going on since the end of 2021. In the first seven months, the amount of domestic investors** exceeded $120 billion.
Then, from August 2022 to February 2023, it will continue to raise at least $90 billion. By November 2023, another 90 billion will be raised, so the whole process has gone all the way, and the proportion of U.S. bonds currently held by my country should be the least in recent years.
It should be pointed out that some of these U.S. bond holders are individual investors, and some are other investors, and as for the specific proportion and share, the detailed data are in the investors.
This can convey a common sense to the public from the sideThat is, holding U.S. bonds is not simply lending money to Americans, but there are various intertwined capital operations and investment behaviors behind it. And in essence, bonds themselves are a type of investment.
In recent months, while China has been in the United States, Japan, another major creditor, is also in the United States. Japan made a one-time ** $28.5 billion in September 2023, leaving $1 as of November 202309 trillion US dollars, which is more than China, so it has once again become the largest creditor of the United States.
Behind China and Japan is the United Kingdom, but its holdings are not high, and after removing $29.2 billion, the British still have $668.9 billion in US debt.
As a result of the above three countries, other countries have followed suit. The scale of foreign holdings of U.S. bonds has also increased from 7 beforeAround 7 trillion dollars, down to 76 trillion dollars.
Interestingly, the Japanese have been lending money not only to the United States, but also to the world for many years.
As of 2022, the amount of external debt held by Japan has reached 4186 trillion yen, which translates to nearly 300 billion dollars. Since 1991, Japan's external debt holdings have been increasing, and the growth is higher than that of other countries, making it the world's largest creditor.
One of the effects was the continued depreciation of the yen, which increased by 108 when the overseas assets of **, companies and individuals were converted into yen2 trillion yen, and denominated liabilities increased by 279 trillion yen. In 2022, the yen depreciated by 14 percent against the dollar8%, which is 8 percent lower than the euro1%。
In addition to the depreciation of the domestic currency, the domestic market has been limited for many years, and the economic vitality has not been enough to support the expansion and development of various industries, which has made Japanese capital continue to expand overseas for many years.
In terms of investment forms, Japan's largest type of overseas investment is ** (government bonds are also among them), accounting for 39% of this investment. In addition, there is the direct investment model in various industries, accounting for 20%. Among the countries in which Japanese capital has been investing for many years, the United States, Germany, and Japan have been the most enthusiastic about Japanese capital.
In the view of Japanese economists, although Japan has been the world's largest creditor for more than 30 years, this just shows that Japan's domestic market is not large enough, which has led to the flow of domestic funds overseas.
Japan is the world's number one creditor, while Germany is in second place. From China's point of view, over the years, Japanese and German companies have accounted for a large proportion of their various investments in China.
So from the perspective of the creditors themselves, what other information is behind this?
All countries that can become creditors have a rapid economic growth behind them. To put it simply, you have to have money to lend money to others, and a country also needs to have plenty of money to flow to all walks of life overseas.
Although the United States is a debtor country now, it was a proper creditor country 100 years ago, and that was when its development was just beginning.
After the United States, Japan and Germany took over as two large creditors. In the eyes of economists, in order to become a debtor with a strong waist, the country's currency must have an absolute position and influence in the world's monetary system.
Conversely, if the national currency does not have such influence, the position and influence of its creditors will also be precarious.
Although the proportion of foreign debt held by China has been increasing in recent years, because the influence of its own currency in the world was limited more than ten years ago, many economists have long believed that China's status as a creditor country is still in an asymmetrical mature and advanced stage.
After more than ten years of development, with the continuous consolidation of the position of China's currency in the world monetary system, the status and influence of creditor countries have been the same as before.
Returning to the perspective of the increase or decrease of U.S. bonds, China's recent ** behavior is an investment behavior. Because of the changes in the international macro market, China has made adjustments in foreign exchange reserves.
In addition, the factors of inflation in the United States and the increase in U.S. Treasury yields also make ** an option for investors, because this can avoid the risk of impairment caused by rising interest rates.
It is worth mentioning that whether it is an increase or a decrease, the essence of investment behavior has made many people abroad regard US Treasury bonds as non-risky investment assets.
It is also in this context thatNo matter what the countries of the world say about the United States, the flow and direction of money will always be the closest to the essence.