Thread

US Treasuries Have Become Unappetizing for Foreign Central Banks and Governments

152 points · 132 comments · iamnothere

1over137 · 1789747701 · focus · HN ↗
US everything has become unappetizing for everyone outside the US.
1. toomuchtodo · 1789748222 · focus · HN ↗
  Exorbitant privilege is a gift that lasts only as long as the trust does.
  <a href="https://en.wikipedia.org/wiki/Exorbitant_privilege" rel="nofollow">https://en.wikipedia.org/wiki/Exorbitant_privilege
  <a href="https://news.ycombinator.com/item?id=47635834">https://news.ycombinator.com/item?id=47635834 covers this succinctly:
  > America was in practice running an empire that collected tribute from the rest of planet earth in exchange for entries in a database denominated in a currency they controlled and that was accepted everywhere. Really the only way it could go wrong is putting it under the control of someone who doesn't understand the kayfabe...
  from
  Gold overtakes U.S. Treasuries as the largest foreign reserve asset - <a href="https://news.ycombinator.com/item?id=47635056">https://news.ycombinator.com/item?id=47635056 - April 2026 (250 comments)
  1. rayiner · 1789750137 · focus · HN ↗
    This argument fundamentally does not make sense. Look at a chart of U.S. GDP per capita growth: <a href="https://substackcdn.com/image/fetch/$s_!zSCw!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fafa99d7e-749e-4e36-bf66-b4a7a043613e_2048x1249.png" rel="nofollow">https://substackcdn.com/image/fetch/$s_!zSCw!,f_auto,q_auto:...
    The U.S. was growing at the same rate or faster as the UK from 1830 to 1930, when the UK had an empire and the U.S. didn’t. Then, in the second half of the 20th century when the U.S. had an empire and the UK didn’t, the growth rates were more or less the same in both places in the long run trend (ignoring the UK’s step change hit from WWII).
    stbede · 1789753595 · focus · HN ↗
    Wouldn't the more relevant point of comparison be the difference between long-term government bonds. The exorbitant privilege is that it's easier to fund US government debt because trade in USD means that large institutions around the world need USD and store those dollars in the form of US treasuries, which in turn lead to lower bond rates and cheaper debt.
    rayiner · 1789758517 · focus · HN ↗
    What we care about at the end of the day is bottom line economic growth, specifically GDP per capita growth. Whether government debt is more or less expensive is a collateral matter. It just means you need to make different choices in taxation versus borrowing—as long as the end result is the same how does it matter?
    toomuchtodo · 1789762975 · focus · HN ↗
    Cost of capital is a direct input to growth (from both investment and consumption). The more expensive it is to borrow, the lower future growth is, and the cost to borrow is increasing. This means taxation must go up if you want higher potential future growth through reduced cost of capital.
    Bond yields go up (ie government debt)->consumer debt costs and cost of capital for business investment goes up (all consumer debt is priced off of "risk free" gov debt)->consumption slows->growth is reduced
    rayiner · 1789780169 · focus · HN ↗
    > Cost of capital is a direct input to growth (from both investment and consumption). The more expensive it is to borrow, the lower future growth is, and the cost to borrow is increasing
    Right, which gets back to my point that US GDP per capita growth has been incredibly stable from 1830 to present, both before it had an empire and cheap borrowing and since it’s had an empire and cheap borrowing.
    stbede · 1789768219 · focus · HN ↗
    What we care about and what the exorbitant privilege is referring to can be different things.

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