What happens when foreigners decide buying U.S. debt with still microscopic interest rates, with the prospect of being paid back in rapidly depreciating dollars, isn’t such a good deal? From David P. Goldman at americanmind.org:
America’s increasing reliance on foreigners to lend us money could crater the dollar.
The United States has borrowed $18 trillion from foreigners since the Great Financial Crisis of 2008, a staggering sum that is nearly equal to America’s annual Gross Domestic Product. The notion that the dollar’s dominance in world finance might come to an end was a fringe view only five years ago, when America’s net foreign investment position was a mere negative $8 trillion. Notably, the net international investment position fell by $6 trillion between 2019 and 2022, roughly the amount of federal stimulus spent in response to the COVID-19 pandemic.