Articles and opinion pieces about an imminent crisis of the U.S. dollar and U.S. Treasury market debt are appearing frequently enough in the twin financial mouthpieces, The Economist and Financial Times, that one can conclude such a crisis is British policy right now.
This week’s version, an opinion piece in The Economist dated April 16, is “How a Dollar Crisis Would Unfold.” Next to a cartoon parody of Edvard Munch’s “The Scream” is a sub-headline, “If Investors Keep Selling American Assets, a Grim Fate Awaits the World Economy.”
Passing over the now-familiar City of London narrative about President Donald Trump’s incompetence and ignorance and the dangers in store should he continue in the Presidency, The Economist delivers the threat:
“All this has created a risk premium for American assets. The shocking thing is that a full-blown bond-market crisis is also easy to imagine. Foreigners own $8.5 trillion of government debt, a bit under a third of the total; more than half of that is held by private investors, who cannot be cajoled by diplomacy or threatened with tariffs. America must refinance $9 trillion of debt over the next year. If demand for Treasuries weakens, the impact will quickly feed through to the budget, which, owing to high debts and short maturities, is sensitive to interest rates.
