China remains insensitive to threats and continues to get rid of American debt at the risk of provoking the ire of the White House. Bitcoin in ambush.
In short
- The United Kingdom now has more American public debt than China.
- Foreign investors only hold only 31 % of American debt, compared to almost 60 % in 2008.
- Bitcoin is cut to become an international replacement currency.
The dollar twilight
The United Kingdom has surpassed China as a second world holder in American public debt.
The English ally now has $ 779 billion, part of the BRICS place in part. China is back in third place, with $ 765 billion. Japan remains the first holder, with $ 1,113 billion.
Note that the increase in British assets is not due to commercial surpluses, as is the case for Japan and China. London is a global financial center serving as an intermediary for many multinationals, some of which are actually American …
We observe the same thing in the Cayman Islands, Luxembourg, Belgium or even Ireland. The dollar reserves in these countries are in total decorrelation with their GDP.
China makes the opposite path. After having culminated at more than $ 1,300 billion in 2013, his dollars reserves are constantly decreasing.
The Empire of the environment notably pivoted gold and European obligations. And although China bought 23 billion dollars in treasury bills in February, it was not enough to compensate for its assets arriving at maturity.
Here is a graph summarizing the situation (here the full table of dollars reserves per country):
Geopolitical tensions
The gradual withdrawal of China reflects increasing geopolitical tensions and concerns about the American budgetary situation.
Tax revenues should reach $ 5,200 billion in 2025 for expenses exceeding 7,000 billion. At the same time, pressures are accentuated on the president of the Fed, suggesting that the Republicans have chosen the facility solution. Donald Trump is certainly eyeing a new quantitative EASING (ticket board).
In addition, China has taken a good note from the freezing of 300 billion euros in Russian reserves by the European Union. How long before the United States does the same with China?
This is why the United States is setting up customs taxes and stirring the flames of war in Ukraine. Ultimately, it is a question of dissuading the BRICS from dedollarizing too quickly.
The following graph shows that foreign investors only hold only 31 % of the American debt, against almost 60 % in 2008, at the dawn of the subprime crisis and the beginning of the “quantitative eating” …
Brazilian president Lula da Silva recently attacked Donald Trump about customs duties by declaring that “no Gringo will give orders to this president”.
We are tired of being subordinate to the north. […] We discuss the possibility of creating our own currency, or perhaps using our national currencies to trade between us, without depending on the dollar. […] I do not have to buy dollars to trade with countries like Venezuela, Bolivia, Chile, Sweden, the European Union or China. We can use our own currencies. Why should I be linked to the dollar, a currency that I do not control? It is the United States that print dollars, not us, “said Lula.
Atmosphere…
And why not Bitcoin?
The BRICS often talk about a new currency, but nothing concrete exists at the moment. It is also likely that such a currency will never exist. Reproducing the European model would be extremely hazardous for such diverse economies and cultures.
And that's a problem. Russia, for example, ceased at the beginning of last year to accept Indian Roupie in exchange for its oil. The reason being that India does not produce enough things that Russia needs, unlike China (high-tech, vehicles, machinery).
It is partly because of this problem that central banks have accumulated a lot of gold in recent years. Gold remains a universal currency to store long -term value.
But the yellow metal does not allow you to trade in a fluid way, far from it. Conversely, Bitcoin could relatively easily integrate into financial markets such as the Saint Petersburg Mercantile International Exchange (SPIMEX).
Volumes are now large enough for transaction costs to have melted over the years. Admittedly, Bitcoin is volatile, but the Lightning Network and the Stablecoins make it possible to neutralize this exchange risk in the short term.
Updraid, impossible to “freeze” and existing in absolutely limited quantity, Bitcoin is cut to become a first choice international currency.
This is why the United States wants to accumulate as much as possible before the rest of the world. It is a question of covering yourself in front of a currency that would allow the world to trade on equal arms.
Donald Trump knows that the United States will sooner or later have to abandon the exorbitant privilege to absorb the trade deficit. But rather late than immediately, because we do not reindustrialize with decrees.
Perhaps the United States will put the sword in the scabbard if the rest of the world lets them accumulate enough bitcoins to amortize dedollarization, let's be optimistic.
Don't miss our article: Trump: Bitcoin relieves the dollar in addition.
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