The USA has to refinance thousands of billions of government bonds. But almost no one wants to help the Americans – and for good reasons.
In world history, it has never been a good thing for Americans to have their backs against the wall.
But now such a moment may have come again.
Avoid Guaranteed Losses
The United States of America has accumulated over 40,000 billion dollars in national debt and refinancing the deficit is becoming more and more of a problem.
Almost no one wants to buy new US government bonds at the new interest rate of over 5 percent.
The reason lies in the interest rate decision of the US central bank, the Federal Reserve Bank Fed.
If investors buy US bonds now and key interest rates rise later, old bonds will fall in value.
Investors then have to absorb the losses in their portfolios. Therefore, no one wants to buy US government bonds at the moment because losses are almost inevitable.
Norway is Making The Cut
The opposite sometimes even happens.
Many foreigners are selling US Treasuries because they have already suffered severe losses in their home currencies with the collapse of the US dollar.
If the Fed raises key interest rates due to high inflation, further depreciation would occur.
The best example of this is the Norwegian sovereign wealth fund, which wants to sell 100 billion dollars in US government securities, as was announced at the weekend.
Active interest rate manipulation
The American government finances itself very briefly because short-term interest rates are significantly lower than long-term interest rates.
With a trick, US Treasury Secretary Scott Bessent tried to lower long-term interest rates so that longer-term financing would become cheaper for the US.
But that went terribly wrong.
US Tariffs as Pressure
US President Donald Trump, who had to refinance around 8,000 billion dollars in government bonds in 2025, which the previous government had already financed at very short notice, will have to renew over 9,000 billion dollars in US bonds in 2026.
In 2025, this still worked with the US punitive tariffs, where many countries concluded ‘deals’ with Trump that also included the purchase of US government bonds.
Switzerland also got involved, as muula.ch reported. However, this route via US import tariffs has now been completely exhausted.
Influence Investors
At that time, interest rate cuts were on the table, which the US President wanted to implement by putting pressure on the Fed.
If the Fed lowers key interest rates, bonds increase in value because their interest rate coupon generates more income over the remaining term.
Trump has even tried to cast doubt on the Fed’s interest rate policy these days. The US central bank would cut key interest rates in September, the US president boldly claimed.
Then buying US government bonds would be attractive.
Inflation Far Too High
However, the reality is different. The US-Israeli war of aggression against the Islamic Republic of Iran is fueling inflation worldwide.
In the US, inflation rose to almost 4 percent, which is far from the Fed’s inflation target.
Experts such as those at Deutsche Bank Research therefore expect two more key interest rate increases of 0.25 percent each this year.
The US President looks enviously at the Swiss state, which can take on zero percent debt.
Save Government Spending
But who immediately signalled help to Trump, Bessent & Co.?
It was China – and that’s why Americans are courting Chinese President Xi Jinping. He knows that when the USA has its back against the wall, things are bad for the world.
The Americans cannot continue to indebt their citizens domestically because the savings rate is currently falling.
The US central government is also desperately looking for income and is saving where it can. Even Trump has stopped talking about a 2,000 dollars check for every American or a tax cut for companies.
And the Europeans are now paying for the war in Ukraine.
Air to Buy Up
China, on the other hand, could simply instruct its state banks to subscribe to US government bonds, knowing full well that temporary losses could result if the Fed raises key interest rates.
The Middle Kingdom has already taken good precautions by reducing its portfolio of US Treasury bonds in recent years, thus now having room to invest again.
Only Temporary Losses
The rest of the world should follow China’s lead and help the Trump administration refinance.
Otherwise, the Americans could resort to some completely outlandish measures.
And anyone who holds US government bonds with their currently high coupons until the end of their term won’t really notice much of that loss in value anyway. Investors are not allowed to use the money for anything else until then.
8th September, 2026/kut./ena.
