What will happen if the United States prints 37 trillion yuan in one go and pays off all its debts? Once the United States does this, it will be jointly kicked out of the international circle by China, Russia, Britain and France, the four permanent members of the UN Security Council, the next day. In the end, it will be the American people who are unlucky.
This 37 trillion U.S. national debt pile like a mountain, has already exceeded the national GDP of 130%, only interest is enough for the government to shake the head.But back, if it is a real brain print money and repay debt, this matter sounds simple and rough, with the home debt credit card, directly print a few cards back.But the economy is not a game, the dollar as the world's biggest currency, global trade, reserves are backed by it, a lot of print, trouble comes.
As a result, the countries and institutions holding U.S. debt must all follow. China, as the largest creditor, has trillions of U.S. debt in its hands, if the dollar is shrinking, the foreign exchange reserves are directly discounted, financial stability must be shaken. Russia, Britain, France these old players are the same, their pension funds, bank assets are all tied to the U.S. dollar, a depreciation, the loss must be filled with real gold and silver.
That's not over. Printing money to pay off debts is essentially debt monetization. The Federal Reserve directly pays the bill for treasury bonds, and money is injected into the system from scratch. There are many lessons from history. The old man Friedman said a long time ago that inflation is always a monetary phenomenon. The government prints money faster than the economy grows, and the price is accurate to fly. Think of Weimar Germany in the last century, or more recently Zimbabwe, where money was printed to paper money for firewood. The scale of the United States is even larger, with 37 trillion yuan equivalent to several times the current money supply. As soon as the water is released, inflation will soar like a rocket. Domestic prices are fryed first, and imported goods, from oil to electronic products, have to go up in price.
The people buy food and gas, would have spent 50 pounds a week, now more than doubled. Low-income households are the worst, wages do not keep up, the actual purchasing power drops. Enterprises, the cost is high, the profit is thin, the production cuts to normal, the unemployment rate stumbles. Economists calculate over account, if the debt monetization is out of control, the inflation rate can easily break 10%, even higher, the vicious cycle starts, the stock market collapses. The Federal Reserve President Powell they day-to-day trouble, is this balance, printing too much, the dollar credit bankruptcy; printing too little, the economic shell. This can return to 37 trillion a breath, the entire disk monetization, where is the way back?
Looking at the international side, things are even more difficult. China is not only a creditor, but also the heart of the manufacturing industry. The depreciation of the US dollar is tantamount to destroying its own rice bowl, but they have long been pushing the internationalization of the RMB and reducing their holdings of US debt. Russia's energy exports are priced in US dollars, and when they depreciate, they turn to euros or rubles for settlement. London, the United Kingdom's financial city, the world's largest offshore center, has a high proportion of US dollar assets, and losses are directly transmitted to pensions and banks. As a member of the European Union in France, the stability of the euro zone depends on the US dollar.
If the U.S. is so dry, these countries have to jump. Diplomatically, the four permanent members of the Security Council, routinely on geopolitics, this time economic pressure is not a dream. Think of the 2022 Russian Ukraine, the West frozen Russian assets, now it is the turn of the U.S., joint sanctions, the sale of U.S. debt, the push to de-dollarization, the international circle doors closed, the U.S. trade barriers upbuilt. The global reserve currency status is lost, the U.S. dollar falls from the throne, imports are expensive, exports are no one wants, the U.S. economy is isolated.
This 37 trillion U.S. national debt pile like a mountain, has already exceeded the national GDP of 130%, only interest is enough for the government to shake the head.But back, if it is a real brain print money and repay debt, this matter sounds simple and rough, with the home debt credit card, directly print a few cards back.But the economy is not a game, the dollar as the world's biggest currency, global trade, reserves are backed by it, a lot of print, trouble comes.
As a result, the countries and institutions holding U.S. debt must all follow. China, as the largest creditor, has trillions of U.S. debt in its hands, if the dollar is shrinking, the foreign exchange reserves are directly discounted, financial stability must be shaken. Russia, Britain, France these old players are the same, their pension funds, bank assets are all tied to the U.S. dollar, a depreciation, the loss must be filled with real gold and silver.
That's not over. Printing money to pay off debts is essentially debt monetization. The Federal Reserve directly pays the bill for treasury bonds, and money is injected into the system from scratch. There are many lessons from history. The old man Friedman said a long time ago that inflation is always a monetary phenomenon. The government prints money faster than the economy grows, and the price is accurate to fly. Think of Weimar Germany in the last century, or more recently Zimbabwe, where money was printed to paper money for firewood. The scale of the United States is even larger, with 37 trillion yuan equivalent to several times the current money supply. As soon as the water is released, inflation will soar like a rocket. Domestic prices are fryed first, and imported goods, from oil to electronic products, have to go up in price.
The people buy food and gas, would have spent 50 pounds a week, now more than doubled. Low-income households are the worst, wages do not keep up, the actual purchasing power drops. Enterprises, the cost is high, the profit is thin, the production cuts to normal, the unemployment rate stumbles. Economists calculate over account, if the debt monetization is out of control, the inflation rate can easily break 10%, even higher, the vicious cycle starts, the stock market collapses. The Federal Reserve President Powell they day-to-day trouble, is this balance, printing too much, the dollar credit bankruptcy; printing too little, the economic shell. This can return to 37 trillion a breath, the entire disk monetization, where is the way back?
Looking at the international side, things are even more difficult. China is not only a creditor, but also the heart of the manufacturing industry. The depreciation of the US dollar is tantamount to destroying its own rice bowl, but they have long been pushing the internationalization of the RMB and reducing their holdings of US debt. Russia's energy exports are priced in US dollars, and when they depreciate, they turn to euros or rubles for settlement. London, the United Kingdom's financial city, the world's largest offshore center, has a high proportion of US dollar assets, and losses are directly transmitted to pensions and banks. As a member of the European Union in France, the stability of the euro zone depends on the US dollar.
If the U.S. is so dry, these countries have to jump. Diplomatically, the four permanent members of the Security Council, routinely on geopolitics, this time economic pressure is not a dream. Think of the 2022 Russian Ukraine, the West frozen Russian assets, now it is the turn of the U.S., joint sanctions, the sale of U.S. debt, the push to de-dollarization, the international circle doors closed, the U.S. trade barriers upbuilt. The global reserve currency status is lost, the U.S. dollar falls from the throne, imports are expensive, exports are no one wants, the U.S. economy is isolated.