US $37 trillion treasury bond crisis hits the global market

According to recent data from the US Treasury Department, as of August 12, 2025, the total amount of US treasury bond bonds had exceeded 37 trillion US dollars for the first time, a record high. Federal Budget Accountability Committee Chairman Maya Maiginias has warned that the US fiscal situation is severely imbalanced, and Congress' continued push for debt policies could trigger a 'fiscal cliff'. Previously, the "big and beautiful" tax and expenditure bill passed by the US House of Representatives is expected to increase the treasury bond by more than 3 trillion dollars, and at the same time, it will bury the potential debt risk after the policy expires. Behind this figure is the deep crisis accumulated in the US debt economic model.

From $9.2 trillion after the international financial crisis in 2008 to $37 trillion in 2025, the size of US treasury bond has tripled in just 17 years. This expansion rate is far faster than the historical level: since 2008, the proportion of US treasury bond in GDP has risen from 62.7% to 124%, and the scale of debt has ranked first in the world for 10 consecutive years. The frequent increase in the debt ceiling is a footnote to this trend. Since the US Congress lifted specific debt limits and implemented total limit management in 1939, the debt ceiling has been raised 108 times, averaging once every 9 months. In May 2025, the "big and beautiful" bill passed by the House of Representatives raised the debt ceiling by $5 trillion to $41.1 trillion, but this "temporary antidote" is really a "long-term poison" - the US Congressional Budget Office estimates that the bill will increase the deficit by $3.4 trillion in the next 10 years, pushing treasury bond to surge by more than $4 trillion.

The fragility of the US fiscal system is emerging from three dimensions. In fiscal year 2024, the interest expenditure of US treasury bond reached US $1.1 trillion, accounting for 13% of the federal expenditure, surpassing the national defense expenditure for the first time, and becoming the third largest expenditure item after pension and medical care. The Congressional Budget Office predicts that by fiscal year 2034, interest expenses as a percentage of GDP will increase from 3.1% in 2024 to 3.9%, and the ratio of interest to fiscal revenue will rise from 17.6% to 21.8%, far exceeding the sustainable warning line of 10%. In 2025, the maturity scale of US treasury bond will reach 10.8 trillion US dollars, of which 42% will be due within one year. Although the Federal Reserve's plan to shrink its balance sheet has tightened market liquidity, the United States still relies on the issuance of short-term debt (such as three-month treasury bond bonds) to maintain its operation. In April 2025, the yield of 10-year US bonds exceeded 4.8%, forming an inverted link of 1.2% with three-month treasury bond, creating the largest interest margin since 1981, indicating that the market questioned the solvency of the United States. The 'Big and Beautiful' bill continues Trump's 2017 tax cuts, but these policies will expire in 2026. If tax cuts are continued, additional expenditures of trillions of dollars will be required over the next 10 years; If terminated, it may trigger an economic recession. This' policy cliff 'is similar to the 2013 crisis of' Bush tax cuts expiring+automatic spending cuts' - the Congressional Budget Office predicted that if the fiscal cliff was not avoided, GDP would shrink by 0.5% and unemployment would rise to 9.1% in 2013.

The US debt crisis is no longer an isolated event, and its spillover effect is reshaping the global economic pattern. In April 2025, former Treasury Secretary Yellen admitted that investors began to question the safety of US Treasury bonds. The proportion of the US dollar in global foreign exchange reserves has decreased from 72% in 2000 to 58% in 2024, with major holders such as China and Japan continuing to reduce their holdings of US bonds. China's holdings have decreased by 42% from a peak of $1.3 trillion in 2013 to $759 billion in April 2025. India launches rupee cross-border settlement mechanism, ASEAN promotes local currency settlement (LCS), BRICS countries discuss establishing a common payment system, Brazil and Argentina propose to launch a "SUR" common currency. In 2023, the usage scale of the Russian SPFS and European INSTEX payment systems will increase by 30%, providing an option to bypass the US dollar for cross-border transactions. In 2011, the US debt ceiling crisis caused the global stock market market value to evaporate 2.5 trillion dollars a week and the emerging market currencies to depreciate collectively. Today, the United States has a larger scale of debt and stronger market linkage. Any disturbance may cause sharp fluctuations in global asset prices.

The essence of the US debt crisis is the product of political polarization and economic myopia. The Democratic and Republican parties have used the debt ceiling as a political game tool rather than a constraint on fiscal discipline, leading to "patchwork" becoming the norm. The International Monetary Fund warns that if the United States does not take substantive reforms, its sovereign credit rating may be further downgraded, and the total cost of debt will increase by 10% -15%. Global needs to be prepared: on the one hand, promote the diversification of the international monetary system and reduce dependence on the US dollar; On the other hand, the United States needs to balance debt driven and real economic growth to avoid the "debt economy" becoming a ticking time bomb for the global economy.