Dedollarizing the world economy has more net losers than the US (though that's the obvious one).
It's not without its benefits -- over the last couple decade, the US has found ways to weaponize access to USD, so if you're not a fan of having a country other than your own able to effectively regulate or sanction you and your business, there's some niceties here.
Being able to trade and invest in a stable, highly liquid, easily converted, low risk currency was a net win for most of the world for about half a century. There isn't an obvious replacement, so we'll just see more friction.
We’re seeing a return to multilateral hegemony. Russia, China, India, a new Persia, Israel and Turkey during it out in Asia. The edges of those conflicts trying to bring war back to Europe. And America getting potentially balanced by China and Europe in the Americas, with the Pacific theatre figuring out its own balancing game plan.
> America getting potentially balanced by China and Europe in the Americas
I can't figure out a way to parse this sentence that makes sense. Are you saying that "Europe" will "balance" the USA in the Americas? As in, European influence will counteract US influence in the Americas?
This is nonsense. The rest of the world holds 9.7 Trillion in Treasuries and this amount increased by $500 billion over the last year.
So the opposite of this article is true. You can get all the data from the Z.1 release.
Please don't take these types of flame bait articles seriously or try to spin up an entire world view based on them as you will end up not only directionally wrong, but believe in the exact opposite of reality.
FYI, that $500B increase in treasury holdings is not the whole picture, there are also the agencies (housing mortage backed securities guaranteed by the govt) and foreign holdings of those also increased by $70 billion over the last year, and are about 1.5 Trillion.
You are using the wrong metric. The supply of t-bills is increasing rapidly because of the massive deficit. That is sufficient to explain the increased number of holdings.
The correct metric is price. If there is decreased demand, it will show up in the yield. And it does.
It's not just about treasure bonds. The mood is shifting in Europe that, maybe, putting all the eggs in the USA basket is perhaps not that great of an idea.
It's the vindication of Gaullism half a century after De Gaulle's death, the concept of strategic autonomy is getting traction in the rest of Europe. It's not that we can't be friends, but that we shouldn't let our future be gambled in the hands of Wisconsin voters every two years.
Institutional investors are very slow to adapt, so I wouldn't take their continued investment as a positive signal. The sentiment shift is real, and a lot of goodwill has been spent.
It's basically divide and conquer on a national scale tearing down the democratic world police and the democratic systems it supported.
The point is that the entire article is wrong, factually.
In terms of institutional investors and sentiment, I think you are fundamentally not understanding why the rest of the world holds US debt, it is to support running trade surpluses. That is a core economic need of much of the world, and as long as there is that need, you will see foreign government accumulation of dollar denominated assets.
For some reason people either refuse to understand simple balance of payment accounting constraints or they are deeply offended by them, and want to live in a world in which moral outrage determines things like global capital flows.
But we do not live in that world. The reason why the rest of the world accumulated a trillion of dollar denominated assets last year, split roughly 50/50 between private and public, is solely because China needed to run a trillion dollar trade surplus. And next year it will also need to run an even bigger surplus. That forces everything else.
Yep. The flow has to balance out somehow. If the US buys more then it sells (all in, including services, which trump ignores for no clear reason) the sellers have to end up owning USD denominated assets.
There are an excess of dollars floating around internationally and only so many ‘risk free’ dollar-denominated assets. US Treasuries will continue to be purchased. There are plenty of buyers who are obligated to buy risk-free assets and US Treasuries are the vehicle of choice.
> America was in practice running an empire that collected tribute from the rest of planet earth in exchange for entries in a database denominated in a currency they controlled and that was accepted everywhere. Really the only way it could go wrong is putting it under the control of someone who doesn't understand the kayfabe...
The U.S. was growing at the same rate or faster as the UK from 1830 to 1930, when the UK had an empire and the U.S. didn’t. Then, in the second half of the 20th century when the U.S. had an empire and the UK didn’t, the growth rates were more or less the same in both places in the long run trend (ignoring the UK’s step change hit from WWII).
There are other backers to that as well. The main ones being oil trades being settled largely in USD and the need to acquire USD to pay for US goods/services. It's not all military might there's a lot of economic might in there too.
This is the important point. Oil was/is settled in dollars. The world is rapidly moving away from oil. China has already hit peak oil. China is 1/3rd of global manufacturing capacity. If you're leaving oil behind, and buying solar, batteries, and EVs from China, your need for dollars declines, and need for yuan goes up. Also, stocks vs flows. You have to keep buying oil every day from petrostates, while the clean tech you buy is yours for its entire service life.
The US did well when the Saudis required dollars for oil as part of the US-Saudi security and military arrangement, and that arrangement is declining in value over time as the value of oil to the global economy declines. Shades of theta decay.
The article couldn't be less true. Treasuries are the deepest and most liquid market by far. Foreign CBs hold them so that they can liquidate them when it becomes hard to find dollars. Why else do foreign CBs want to constantly open up swap lines to us when they are hurting?
The only real dumping has happened from Japan, which is fighting to defend the yen, and China, which is obviously repositioning though to a way lesser degree than a nation dumping an adversary’s bonds would.
The story is just another way of saying we’re issuing more debt. Central banks aren’t reducing exposure. They just didn’t increase them with our own finances, which makes sense, our finances don’t increase their reserve requirements.
I think the more interesting story is the long-term decline in the quality of virtually all sovereign debt. Many things are anchored to the assumption that high-quality sovereign debt is widely available.
The issue (real issue?) is that it’s unclear whether these governments reduced their holdings or switched them to these opaque structures (tether can be considered one). The idea is, it would be hard for the US to untangle true ownership. I wonder if UBO was getting undone blue or red because it’s a real threat for such a system but the US needs this “second” lifeline.
I was dismissive when I saw the title, but they have real statistics: foreign holdings are at 2012 levels while total treasuries outstanding are 3x larger.
Holdings have increased by $500 billion over the last year. Why cherry pick 2012? Because that was in the aftermath of QE from the great recession and foreign holdings of treasuries were enormous as they rotated out of US private debt and sought the safety of treasuries. Today it is risk on, relatively speaking.
These go up and down based on cash management needs and portfolio allocation choices between public and private debt, and so you can pick one year when cash management needs were high or appetite for riskier were low. And then count on people being dupes, LOL.
The trouble is the US never paid down the debt for those years, they just rolled it over and incurred new debt. If foreign holdings decrease further, it doesn't matter if it is simply for cash management reasons -- the US will be rolling over historic debt at historic interest rates.
By paying down the debt, you mean issuing less debt over time? The US government is not an uncle that pays off his debt so he can retire and move to Florida. An individual does that, but the household sector as a whole does not pay down debt, because for every uncle moving to Florida, there is an Aunt borrowing for a new house. So instead, we talk about things like sectoral debt ratios and do not use language like "when will people in Maine finally pay down debt, I'm sick of seeing people in Maine owing debt".
The government is a sector of the economy. You can argue that we are borrowing too much, and I would agree, but you are not gonna fix that until you address the foreign capital inflows. That means rolling back the investor rights agreements. As long as foreign nations can print money and use it to buy dollars in order to stimulate their exports, the US is going to have a problem with excessive debt loads. The flipside of that is that the US will not have a problem of foreign investors decreasing their holdings. It will increase every single year, in line with foreign export demands. If anyone tells you the opposite, just look for the error or the lie, because I guarantee you there is one. This article has both.
treasuries are the same as cash. All that means is there is still too much USD Money supply from QE and rates will continue to go higher to reduce the supply.
Yes, that's called Quantitative Easing after the Global Financial Crisis. The peak in the graph was 2008 after which the US issues a shit ton of debt which was bought by the Fed. China used to be the biggest holder of US Treasuries but now it's the Federal Reserve and Japan.
But the idea that you look at that graph as say it's "unappetizing" is dumb. Most foreign governments besides China have INCREASED their UST holdings. The only reason why the % is dropping is because of the massive amount bought by the Fed which messed up the %.
Basically the article linked above is dumb, and they either are stupid and don't understand what they're talking about or trying to cast a false narrative
China also has not gone down, they are merely shifting their ownership structures. China accumulated over a trillion in dollar denominated assets last year, but rumors are the big players have been Chinese regional banks. It's a byzantine mess of hidden ownership structures over there.
If true, this would change the narrative. But I wouldn’t base anything on rumors. China is also rapidly building its supply of bullion and is attempting to shift trade away from the USD, so it would make sense for it to be drawing down on USD reserves. (Not that it will ever eliminate those reserves completely.)
It doesn't matter whether it is Chinese regional banks, or SAFE, or any other instrument. Brad Setzer tries to do a heroic job decoding this stuff at his CFR blog (https://www.cfr.org/blogs/follow-the-money) but at the end of the day, all that matters is total foreign holdings of dollar denominated assets - that measures their exposure to the dollar.
Everything else is portfolio allocation choices between treasuries or agencies or BAA corporates or AAA corporates, there are so many different instruments to invest in, you can shift your holdings back and forth however you like, all while keeping your dollar exposure exactly the same. And you can set up a fund in the Caymans and hold your assets there. And China does all of that. So really it is all fungible once you are in the "foreign ownership" bucket.
Your point about dollar exposure is true, we just have limited insight into foreign private ownership, as the article points out. If nations are using these vehicles to conceal their dollar exposure (or for some other purpose that results in the same effect), then we will have trouble understanding the functioning of the global economy and the risks present in the system. That seems important.
Also, equities and treasuries are not equivalent. If foreign holdings are moving to equities over treasuries, the added risk will be a serious problem in a crisis. It could also be a sign that some nations are being “encouraged” to prop up equity markets, either by the US or large domestic holders of US equities, which is a rumor that I’ve come across.
Exactly. Same as when Bessent wanted to buy 6B in long bonds but only bought 5.XB, people said that it failed but anyone who understands knows that it's the opposite. The oversubscription rate is normally 3X or more but this time it was 2X which means that people would rather keep their long bonds, which shows confidence in them.
I've been hesitant to talk about this too much, because it's such a bad joke, but personally I'm waging a War On Acronyms (WOA). They really don't save much time or effort, but make communication much more opaque. They can be a way of in-group signaling, which just makes it harder for newcomers / outsiders to come up to speed. And so many collisions.
RoW is not opaque. It’s widely used especially in academia. Acronyms exists for a good reason. If you like everything spelled out please stop using apostrophes while you’re at it.
Dedollarizing the world economy has more net losers than the US (though that's the obvious one).
It's not without its benefits -- over the last couple decade, the US has found ways to weaponize access to USD, so if you're not a fan of having a country other than your own able to effectively regulate or sanction you and your business, there's some niceties here.
Being able to trade and invest in a stable, highly liquid, easily converted, low risk currency was a net win for most of the world for about half a century. There isn't an obvious replacement, so we'll just see more friction.
Nothing this article claims or shows de-dollarisation other than the editorialized headline.
US everything has become unappetizing for everyone outside the US.
And many of us inside the US as well, tbf.
There must always be a hegemon. Will it be Europe? No, too weak and divided..will it be China? No, too authoritarian..
The US remains the best option among a mixed field of weak, corrupt, divided and authoritarian alternatives.
We’re seeing a return to multilateral hegemony. Russia, China, India, a new Persia, Israel and Turkey during it out in Asia. The edges of those conflicts trying to bring war back to Europe. And America getting potentially balanced by China and Europe in the Americas, with the Pacific theatre figuring out its own balancing game plan.
> America getting potentially balanced by China and Europe in the Americas
I can't figure out a way to parse this sentence that makes sense. Are you saying that "Europe" will "balance" the USA in the Americas? As in, European influence will counteract US influence in the Americas?
This is nonsense. The rest of the world holds 9.7 Trillion in Treasuries and this amount increased by $500 billion over the last year.
So the opposite of this article is true. You can get all the data from the Z.1 release.
Please don't take these types of flame bait articles seriously or try to spin up an entire world view based on them as you will end up not only directionally wrong, but believe in the exact opposite of reality.
FYI, that $500B increase in treasury holdings is not the whole picture, there are also the agencies (housing mortage backed securities guaranteed by the govt) and foreign holdings of those also increased by $70 billion over the last year, and are about 1.5 Trillion.
You are using the wrong metric. The supply of t-bills is increasing rapidly because of the massive deficit. That is sufficient to explain the increased number of holdings.
The correct metric is price. If there is decreased demand, it will show up in the yield. And it does.
Sure, the engines may have died, but not only is the plane still airborne, it's even accelerating!
gravity... is working against me... dream of ways... to throw it all away...
https://www.youtube.com/watch?v=7VBex8zbDRs
View looks great from up here. Any peanuts?
It's not just about treasure bonds. The mood is shifting in Europe that, maybe, putting all the eggs in the USA basket is perhaps not that great of an idea.
It's the vindication of Gaullism half a century after De Gaulle's death, the concept of strategic autonomy is getting traction in the rest of Europe. It's not that we can't be friends, but that we shouldn't let our future be gambled in the hands of Wisconsin voters every two years.
Institutional investors are very slow to adapt, so I wouldn't take their continued investment as a positive signal. The sentiment shift is real, and a lot of goodwill has been spent.
It's basically divide and conquer on a national scale tearing down the democratic world police and the democratic systems it supported.
The point is that the entire article is wrong, factually.
In terms of institutional investors and sentiment, I think you are fundamentally not understanding why the rest of the world holds US debt, it is to support running trade surpluses. That is a core economic need of much of the world, and as long as there is that need, you will see foreign government accumulation of dollar denominated assets.
For some reason people either refuse to understand simple balance of payment accounting constraints or they are deeply offended by them, and want to live in a world in which moral outrage determines things like global capital flows.
But we do not live in that world. The reason why the rest of the world accumulated a trillion of dollar denominated assets last year, split roughly 50/50 between private and public, is solely because China needed to run a trillion dollar trade surplus. And next year it will also need to run an even bigger surplus. That forces everything else.
Yep. The flow has to balance out somehow. If the US buys more then it sells (all in, including services, which trump ignores for no clear reason) the sellers have to end up owning USD denominated assets.
There are an excess of dollars floating around internationally and only so many ‘risk free’ dollar-denominated assets. US Treasuries will continue to be purchased. There are plenty of buyers who are obligated to buy risk-free assets and US Treasuries are the vehicle of choice.
What bond or stock market would you suggest instead?
I thought so.
No single alternative has to be better in all cases. Any diversification will end up reducing demand for treasuries.
It's not a black and white issue.
Exorbitant privilege is a gift that lasts only as long as the trust does.
https://en.wikipedia.org/wiki/Exorbitant_privilege
https://news.ycombinator.com/item?id=47635834 covers this succinctly:
> America was in practice running an empire that collected tribute from the rest of planet earth in exchange for entries in a database denominated in a currency they controlled and that was accepted everywhere. Really the only way it could go wrong is putting it under the control of someone who doesn't understand the kayfabe...
from
Gold overtakes U.S. Treasuries as the largest foreign reserve asset - https://news.ycombinator.com/item?id=47635056 - April 2026 (250 comments)
This argument fundamentally does not make sense. Look at a chart of U.S. GDP per capita growth: https://substackcdn.com/image/fetch/$s_!zSCw!,f_auto,q_auto:...
The U.S. was growing at the same rate or faster as the UK from 1830 to 1930, when the UK had an empire and the U.S. didn’t. Then, in the second half of the 20th century when the U.S. had an empire and the UK didn’t, the growth rates were more or less the same in both places in the long run trend (ignoring the UK’s step change hit from WWII).
The £ was backed by UK's (perceived) military might just as $ is by the States'.
The the war on Iran (and many years of war on terror) showed we have anything but
There are other backers to that as well. The main ones being oil trades being settled largely in USD and the need to acquire USD to pay for US goods/services. It's not all military might there's a lot of economic might in there too.
This is the important point. Oil was/is settled in dollars. The world is rapidly moving away from oil. China has already hit peak oil. China is 1/3rd of global manufacturing capacity. If you're leaving oil behind, and buying solar, batteries, and EVs from China, your need for dollars declines, and need for yuan goes up. Also, stocks vs flows. You have to keep buying oil every day from petrostates, while the clean tech you buy is yours for its entire service life.
The US did well when the Saudis required dollars for oil as part of the US-Saudi security and military arrangement, and that arrangement is declining in value over time as the value of oil to the global economy declines. Shades of theta decay.
China Adds Currencies to Central Clearing in Yuan's Global Push - https://news.ycombinator.com/item?id=49736124 - September 2026
The Iran War Just Broke the Petrodollar - https://www.bloomberg.com/opinion/articles/2026-04-06/the-pe... - April 6th, 2026
https://ember-energy.org/data/china-cleantech-exports-data-e...
Imagine, even Apple is moving itself to the shitlist.
The article couldn't be less true. Treasuries are the deepest and most liquid market by far. Foreign CBs hold them so that they can liquidate them when it becomes hard to find dollars. Why else do foreign CBs want to constantly open up swap lines to us when they are hurting?
Looking at the graphs in the article, I don't think the overall picture supports the headline...
Yeah. The headline is utterly divorced from the reality of the charts?
How so? Foreign official holdings are flat since 2012.
The headline specifically refers to central bank and government holdings.
The only real dumping has happened from Japan, which is fighting to defend the yen, and China, which is obviously repositioning though to a way lesser degree than a nation dumping an adversary’s bonds would.
The story is just another way of saying we’re issuing more debt. Central banks aren’t reducing exposure. They just didn’t increase them with our own finances, which makes sense, our finances don’t increase their reserve requirements.
I think the more interesting story is the long-term decline in the quality of virtually all sovereign debt. Many things are anchored to the assumption that high-quality sovereign debt is widely available.
The issue (real issue?) is that it’s unclear whether these governments reduced their holdings or switched them to these opaque structures (tether can be considered one). The idea is, it would be hard for the US to untangle true ownership. I wonder if UBO was getting undone blue or red because it’s a real threat for such a system but the US needs this “second” lifeline.
Are their sovereign states dumb enough to invest in Tether?
We’re headed for war.
They are bracing us for Taiwan situation where a standoff will probably lead to China making an aggressive financial move.
Cheers :)
I was dismissive when I saw the title, but they have real statistics: foreign holdings are at 2012 levels while total treasuries outstanding are 3x larger.
Holdings have increased by $500 billion over the last year. Why cherry pick 2012? Because that was in the aftermath of QE from the great recession and foreign holdings of treasuries were enormous as they rotated out of US private debt and sought the safety of treasuries. Today it is risk on, relatively speaking.
These go up and down based on cash management needs and portfolio allocation choices between public and private debt, and so you can pick one year when cash management needs were high or appetite for riskier were low. And then count on people being dupes, LOL.
The trouble is the US never paid down the debt for those years, they just rolled it over and incurred new debt. If foreign holdings decrease further, it doesn't matter if it is simply for cash management reasons -- the US will be rolling over historic debt at historic interest rates.
By paying down the debt, you mean issuing less debt over time? The US government is not an uncle that pays off his debt so he can retire and move to Florida. An individual does that, but the household sector as a whole does not pay down debt, because for every uncle moving to Florida, there is an Aunt borrowing for a new house. So instead, we talk about things like sectoral debt ratios and do not use language like "when will people in Maine finally pay down debt, I'm sick of seeing people in Maine owing debt".
The government is a sector of the economy. You can argue that we are borrowing too much, and I would agree, but you are not gonna fix that until you address the foreign capital inflows. That means rolling back the investor rights agreements. As long as foreign nations can print money and use it to buy dollars in order to stimulate their exports, the US is going to have a problem with excessive debt loads. The flipside of that is that the US will not have a problem of foreign investors decreasing their holdings. It will increase every single year, in line with foreign export demands. If anyone tells you the opposite, just look for the error or the lie, because I guarantee you there is one. This article has both.
treasuries are the same as cash. All that means is there is still too much USD Money supply from QE and rates will continue to go higher to reduce the supply.
US policy:
1. print money
2. suppress wages by shipping in cheap labor
3. reassure the population you arent doing the above
Step 3 is profit. As in, "we are robbing you blind but that's not my hand in your pocket".
unreal that they are still doing it too
Thanks, Trump.
Yes, that's called Quantitative Easing after the Global Financial Crisis. The peak in the graph was 2008 after which the US issues a shit ton of debt which was bought by the Fed. China used to be the biggest holder of US Treasuries but now it's the Federal Reserve and Japan.
But the idea that you look at that graph as say it's "unappetizing" is dumb. Most foreign governments besides China have INCREASED their UST holdings. The only reason why the % is dropping is because of the massive amount bought by the Fed which messed up the %.
Every graph of foreign ownership is up and to the left over the last 10 years
https://tradingeconomics.com/united-states/foreign-treasury-...
https://tradingeconomics.com/united-states/foreign-treasury-...
https://tradingeconomics.com/united-states/foreign-treasury-...
Only China has gone down:
https://tradingeconomics.com/united-states/foreign-treasury-...
I stand corrected about Japan it looks like they've been flat over the last 10+ YEARS
https://tradingeconomics.com/united-states/foreign-treasury-...
Basically the article linked above is dumb, and they either are stupid and don't understand what they're talking about or trying to cast a false narrative
China also has not gone down, they are merely shifting their ownership structures. China accumulated over a trillion in dollar denominated assets last year, but rumors are the big players have been Chinese regional banks. It's a byzantine mess of hidden ownership structures over there.
If true, this would change the narrative. But I wouldn’t base anything on rumors. China is also rapidly building its supply of bullion and is attempting to shift trade away from the USD, so it would make sense for it to be drawing down on USD reserves. (Not that it will ever eliminate those reserves completely.)
It doesn't matter whether it is Chinese regional banks, or SAFE, or any other instrument. Brad Setzer tries to do a heroic job decoding this stuff at his CFR blog (https://www.cfr.org/blogs/follow-the-money) but at the end of the day, all that matters is total foreign holdings of dollar denominated assets - that measures their exposure to the dollar.
Everything else is portfolio allocation choices between treasuries or agencies or BAA corporates or AAA corporates, there are so many different instruments to invest in, you can shift your holdings back and forth however you like, all while keeping your dollar exposure exactly the same. And you can set up a fund in the Caymans and hold your assets there. And China does all of that. So really it is all fungible once you are in the "foreign ownership" bucket.
Your point about dollar exposure is true, we just have limited insight into foreign private ownership, as the article points out. If nations are using these vehicles to conceal their dollar exposure (or for some other purpose that results in the same effect), then we will have trouble understanding the functioning of the global economy and the risks present in the system. That seems important.
Also, equities and treasuries are not equivalent. If foreign holdings are moving to equities over treasuries, the added risk will be a serious problem in a crisis. It could also be a sign that some nations are being “encouraged” to prop up equity markets, either by the US or large domestic holders of US equities, which is a rumor that I’ve come across.
Yeah ... and exactly how many of our treasury auctions have failed? Zero. Overbid by foreign parties, all of them.
Exactly. Same as when Bessent wanted to buy 6B in long bonds but only bought 5.XB, people said that it failed but anyone who understands knows that it's the opposite. The oversubscription rate is normally 3X or more but this time it was 2X which means that people would rather keep their long bonds, which shows confidence in them.
I think RoW is trying to send a message to certain US constituents.
Edit: so much hate for something so benign.
Please don't make us decode your acronym https://www.acronymfinder.com/ROW.html
I've been hesitant to talk about this too much, because it's such a bad joke, but personally I'm waging a War On Acronyms (WOA). They really don't save much time or effort, but make communication much more opaque. They can be a way of in-group signaling, which just makes it harder for newcomers / outsiders to come up to speed. And so many collisions.
RoW is not opaque. It’s widely used especially in academia. Acronyms exists for a good reason. If you like everything spelled out please stop using apostrophes while you’re at it.
Most people don't live in your bubble.
RoW = Rest of World?
If so, those constituencies are immune to facts and common sense.
Good guess. I'm usually pretty good with acronyms, but this one's got me stumped.