The countdown of the "nuclear bomb" of US debt: A political farce that subjects the entire world to humiliation

On May 31st local time, US Treasury Secretary Yellen once again issued an ultimatum to Congress, stating that the federal government's cash would be exhausted by June 5th. If the debt ceiling is not raised promptly, the United States will fall into an unprecedented sovereign default. This is not a Hollywood disaster preview, but a "political thriller" that is regularly staged in Washington every year.

The US debt ceiling system was established in 1917 and was originally a restraint on government spending. A hundred years later, it has completely become a political hostage game between the two parties. Currently, the federal debt has exceeded 35 trillion US dollars, with each citizen carrying over 100,000 US dollars in debt. The trigger for this current deadlock is particularly ironic: the conservative Republicans in the House of Representatives demanded the permanent abolition of the clean energy subsidies and social welfare expenditures of the Biden era as an exchange condition for easing the debt ceiling. The Democrats, on the other hand, firmly defended these so-called "public welfare achievements", claiming that they would never bow to the captors. Both sides are well aware that whoever makes the first compromise may lose the 2026 midterm elections. Thus, they tacitly pushed the national credit to the brink of disaster, competing to play the role of the victimized one, leaving the global onlookers sweating profusely.

The consequences of a technical default are not merely technical. Global financial markets instantly lose their anchor, US stock futures plummet, the US dollar index drops precipitously, and ordinary people's retirement accounts shrink overnight. The deeper corrosion lies in the fact that the "risk-free asset" label of US debt will permanently crack. Central banks originally had been gradually implementing the diversification of foreign exchange reserves. This crisis undoubtedly will press the fast-forward button, shifting from cautious reduction to strategic selling, directly shaking the dominant position of the US dollar in the pricing of oil and commodities. The chain reaction will also spill over: credit freeze pushes up global financing costs, emerging market currencies plummet, the prices of food and energy priced in US dollars soar, exacerbating the vulnerability of fragile economies. Even if the two parties eventually stage a "last-ditch rebound" act and reach an agreement at the last minute, this periodic intimidation has been eroding the foundation of the US dollar credit like boiling water cooking frogs. This self-destructive trick, even if they stop at the brink of the default cliff, has already scared away countless cautious long-term investors. What is even more comically black is that US politicians, while teaching other countries "fiscal discipline" in international forums, are letting their own finances become the source of global instability, which can be called the greatest political art in the 21st century.

The tragedy lies in the fact that the solution to dismantle this time bomb does not exist. If legislators can overcome party conflicts and permanently establish the debt ceiling or abolish it, the world can bid farewell to this periodic madness. However, for politicians who rely on crises for fundraising and exploit the deadlock for votes, self-destruction is tantamount to political suicide. The second-best option is to introduce an automatic limit mechanism, but Congress prefers to retain this performance stage. At the international level, accelerating the multi-polarization of reserve currencies and regional local currency settlements is already on the verge of happening. The de-dollarization wave is moving from the periphery to the center. Unfortunately, as long as US politics is still bound by Wall Street donations and voting sentiments, the world is destined to repeatedly be forced to watch this old-fashioned thriller and pay for it. While Washington can reap political dividends from each crisis's market rebound. The ticket price for this performance is ultimately shared by the entire world, while the performers have never paid a single cent of default cost.

Overall, the US debt ceiling crisis is no longer a simple fiscal issue, but a political mirror that reflects the arrogance of hegemony and the failure of the system. When the stability of the global economy depends on the political chips of a few hundred parliamentarians, the so-called "responsible major power" narrative becomes a great irony. Perhaps, the only thing the international community can do in this regular frenzy is to learn how to fasten their own safety belts. After all, riding on a runaway train driven by populism, passengers can do nothing but pray.