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Cake day: February 5th, 2025

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  • So for those unaware. If followed through this would be the biggest economic crisis worldwide, since the great depression. No hyperbole.

    US treasury bonds are the way the US government borrows money. They are most of the debt. They are also the “safe asset”. Because it was assumed that the US, being the sole superpower and the biggest economy, would always pay back its debts. Because of this whenever organizations needed to park money super safely, they would use US government bonds.

    Around 30 trillion worldwide, that is 1/3 of the world’s GDP, is held in US bonds.

    You know who the biggest borrowers of US debt are? Pension funds. And you know the biggest one of all of them? Social Security. US social security holds around 3 trillion of US debt. Debt that would suddenly be worth nothing anymore.

    In total, around 27 trillion of treasury bonds are held in the US by pension funds, local governments, etc. These would be gone.

    Other countries would suddenly lose 3 trillion, biggest of which are Japan, China and the UK. Belgium Luxembourg and Switzerland hold a huge share compared to their economy, and could collapse completely.

    But hey, at least the national debt is gone, right?

    Well… No one would borrow the US money anymore. Who would trust them anymore? Likely, this would be the end of the USD as the worlds reserve currency. With that, I doubt military spending could be upheld. The US would collapse as a superpower.