RE: USA DEBT24 Dec 2025 09:19
Should alternatives to settlement of oil trades become more generally acceptable in alternative payment systems, then the capacity of the US to use sanctions is greatly diminished (no bad thing really) and most importantly, if US treasury bills to refinance debt that comes to maturity proves difficult (bear in mind that Japan is itself, up to the eyeballs) then there are a diminishing number of cards that can be played :-
1. increase the coupon rate on new bonds, which infers a higher base rate. Although that may curb inflation, tariffs are the immediate cause of inflation in the US coupled with world wide historic money printing. This may cause a sharp recession in the US, though the headline blame would probably be the retraction of a few rather overpriced mega stocks , particularly AI centred.
2. kick the debt can down the road ... by buying their own treasury bills with freshly printed cash, thus increasing the USD in circulation without attendant growth.