A Massive Sell-Off Has Begun…
A Massive Sell-Off Has Begun… by Justin Spittler for Casey Research
Trump has a serious problem on his hands.
Foreign creditors are selling U.S. government debt like never before.
Last year, China alone sold $188 billion worth of U.S. Treasurys. That’s the most it’s ever sold in one year.
Now, China still holds about $1.06 trillion worth of U.S. government debt.
That might sound like a lot. But China hasn’t held this little U.S. debt since 2010.
• Japan’s unwinding its Treasury position, too…
It sold about 2.4 trillion yen ($21 billion) worth of U.S. debt in December.
Japan hasn’t sold that much U.S. government debt in one month since 2013. More importantly, Japan has now cut its position in U.S. Treasurys two years in a row.
• This is a serious matter…
Japan and China are America’s biggest creditors. Together, they own more than $2 trillion worth of U.S. government debt.
Bu they’re not the only ones pulling out of the U.S. Treasury market, either.
Saudi Arabia, Belgium, and Switzerland have recently become net sellers, too. This means they’re selling more Treasurys than they’ve been buying.
• If this continues, the U.S. government could be in big trouble…
You see, the Treasury market is where the U.S. government borrows money.
Today, foreigners own about $6 trillion worth of U.S Treasurys. That’s nearly half of the U.S. government’s outstanding debt.
For years, countries like China, Japan, and Saudi Arabia couldn’t get enough of U.S. debt. Now, they’re selling Treasurys like they’re going out of fashion. Just look at the chart below.
• We can’t blame these countries for lightening up on Treasurys…
The U.S. government is flat broke…
According to its own calculations, the government is $20 trillion in debt. That’s twice as much debt as it had a decade ago.
Unfortunately, the situation is far worse than the government admits.