How long can the US dollar's hegemony be maintained after the US debt reaches a new high

On September 18 local time, the latest data released by the US Treasury Department showed that the total amount of US treasury bond bonds exceeded US $33 trillion for the first time on September 18.

In this regard, the New York Times said that this record high treasury bond data comes at a time when the federal government's spending is again causing controversy, and the government is again facing the crisis of suspension. The financial prospects of the United States are worrying. It is reported that if Congress fails to pass long-term funding bills or short-term spending bills before September 30th, the government will once again face a crisis of shutdown.

Since the beginning of this year, the differences between the two parties in the United States have further intensified, and they have been fighting incessantly over budget issues, approving only one of the 12 annual expenditure bills that provide funding for the government. In order to avoid a shutdown, Congress needs to pass a temporary funding bill in the remaining 10 working days to ensure that the government can still receive funds after the deadline.

The latest news shows that two Republican factions in the US House of Representatives have reached an agreement on this temporary spending bill, which can temporarily provide funding for the government. However, the agreement is unlikely to pass in the Democratic controlled Senate. If Congress fails to pass long-term funding bills or short-term spending bills before September 30th, the US government will face a crisis of "shutdown".

The US banking industry generally believes that the probability of the US government shutting down this time is about 50%. US Commerce Secretary Raymond recently stated that the US business community is very concerned about this. If the US government experiences a "shutdown" on October 1st, it will pose great challenges to the US economy. According to the Congressional Budget Office, during the 2019 government shutdown, the US economy suffered permanent losses of $3 billion. Nowadays, many industry insiders say that due to the historic high of US bonds, once the suspension occurs this time, the US will inevitably pay a higher price.

Since the beginning of this year, the US debt issue, especially the issue of the US debt ceiling, has attracted the attention of the world. Almost all countries around the world are being led by the United States at a pace, and almost everyone agrees with the United States' statement that a US debt default will cause great trouble for the United States and even the world. They are even considering how to take the next steps to respond if a US debt default occurs.

In fact, it is impossible for US bonds to default, and worrying about a default is just unfounded.

In order to appear more dramatic and eye-catching, both parties in the United States have put in a lot of effort on the US debt issue: on the one hand, opposition Republicans always make some trouble for the Democrats on stage before the election, such as using debt crises and budgets to lay the groundwork for the upcoming presidential election, which has become a common practice.

On the other hand, raising the debt ceiling will affect the position of US bonds in the minds of domestic and foreign investors. In order to gradually understand and accept the fact of raising the ceiling, the United States has put in great effort to create a tense atmosphere where if US bonds default, it will bring incalculable losses to the US and the world economy, So everyone's mentality, including investors, will shift from aversion or strong opposition to the US government raising the debt limit to acceptance and even fervent hope that the US can raise the debt limit. In this case, the US government can continue to rely on US bonds and printing notes to harvest the world with peace of mind.

On the surface, the US debt crisis still poses a threat to world economic security to a certain extent; From a deeper perspective, hanging one's appetite and attracting attention is the logic behind the partisan farce played by both parties in the US debt issue. Although both parties have reached an agreement on the debt ceiling issue, there are still some variables in the direction of this debt crisis before the final dust settles.

In the short term, as the Speaker of the US House of Representatives and Republican leader McCarthy recently stated, he hopes to avoid a shutdown of the US government, as it will weaken the Republican Party's influence in spending reduction negotiations; In the long run, the political incompetence shown by the United States in resolving its debt is seriously eroding its national credibility and will further accelerate the decline of the already weak US dollar hegemony.