Trump and US Treasury bonds

The U.S. election is over, and Trump got his way. Musk not only made a fortune in market cap, but also added a new position as the director of the U.S. Treasury's Deficit Committee, temporarily using this title. This is also a lot for Trump, of course, it still has to be realized in the end, but he boldly claims that he can help reduce Trump's fiscal spending by $20 trillion.

Reality is backbone, in fiscal year 2023-24, US fiscal expenditure is 6.75 trillion US dollars, the most spent is on social security, health, and net Interest, excluding the "accounting factors" of education, employment, and social service expenditures, the largest increase in expenditure in the past fiscal year is the net Interest expenditure, which means that controlling the scale of US debt is an urgent matter.

Of course, this is also a key part of Musk's commitment.

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The debt of the United States recently exceeded 35.88 trillion dollars, a number so large that it is almost incomprehensible. This is a stack of hundred-dollar bills, about the same size as the circumference of the Earth - over 24,000 miles high.

According to calculations by the Russian news agency, the speed of the rise in U.S. national debt has doubled. It just exceeded $30 trillion at the end of January 2022, and then increased by trillions of dollars in 8 months. The pace of the national debt reaching $33 trillion and $34 trillion is the fastest ever, each taking only three months. However, the pace of accumulating to $35 trillion has sharply slowed down - it took 7 months for the U.S. national debt to cross this major milestone.

Currently, the rise of US Treasury bonds has accelerated again: if the 35th trillion USD was formed at an average daily rate of 0.014% within 211 days, then the 36th trillion USD has risen at a daily rate of 0.025%. In other words, the US debt is now increasing by 8.7 billion every 24 hours, rather than 4.8 billion per day.

If the current Intrerest Rate of the U.S. economy remains unchanged and there is no new large-scale allocation, the $36 trillion mark will be crossed in mid-November.

So the question is, how to repay the debt? Trump once mentioned two ideas:

One is American oil, the premise of which is that creditor countries buy a large amount of American crude oil. Even so, it's not enough. Take China for example, it imported 560 million tons of crude oil in 2023, spending 337.5 billion US dollars. Based on the current scale of US debt, it can buy more than two years, but the United States only produced 830 million tons last year, so other countries cannot pay back the United States.

So the United States can only divide the problem. As the world gradually reduces the consumption of petrochemical energy, the countries and quantities that buy will only decrease. However, the US dollars continue to be printed and the scale of debt continues to increase.

Furthermore, one of the major creditors of the United States is the Gulf countries, holding over $500 billion in US Treasury bonds. They do not need oil, but rather weapons. Therefore, the US sells weapons to repay the debt.

Another idea of Trump is Cryptocurrency, this money is definitely enough, plus Trump's support in this election, people who play these say that BTC can soar to $170,000 in the year after next, and it is even more vicious to fly to $1 million in 2030.

In this way, it seems easy for the United States to repay its debts, but the key is that it may not be recognized by any country, unless Trump plays tricks.

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Therefore, on the issue of U.S. bonds, the fundamental solution still lies in how the United States can reduce its expenditures and increase its income. Elon Musk said there might be a way, but the probability of success is low. After all, the major payment projects are interrelated. Of course, it also depends on how determined Trump is.

The latter wants to increase, and Trump's approach is to impose tariffs, but given the scale of US imports, it's just a drop in the bucket.

The future of US bonds under the leadership of Trump's America remains to be seen.