A few days ago, the world's richest man, Elon Musk, suddenly declared that the United States, as a nation, is on the verge of bankruptcy. Is this an alarmist statement? Not necessarily. In a certain sense, it also reflects Musk's keen business acumen. As we all know, in this year's U.S. election, Musk fully supported Trump, even stating that he would donate $45 million to Trump's campaign every month.

Moreover, the social media platform controlled by Musk, X, has also praised Trump. Of course, President Trump knows how to reciprocate. He even publicly stated that if he were to be elected as the President of the United States, he might invite Musk to join his cabinet, offering him a very good position to help boost the U.S. economy. It is clear that these two tycoons have reached some kind of consensus. Naturally, Musk would help Trump attack his opponents. However, Musk's sense of smell is indeed very keen, and he has also observed a huge problem in the U.S. economy. What is it? The enormous bubble of U.S. debt. The United States is absolutely a country that lives on borrowing. This is the case from the grassroots to the upper echelons.

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For a long time, we have known that the United States is a country that spends money before it has earned it. The ordinary people at the bottom of the United States are very accustomed to spending tomorrow's money to live today. Every time they get paid, what they need to do is not to save money but to pay off credit card bills and mortgage loan bills. At the national level, the United States is even more heavily in debt. So far, the total U.S. debt has exceeded 35 trillion U.S. dollars, while the U.S. GDP for a year is only more than 20 trillion U.S. dollars. So Musk is not wrong. From the perspective of debt alone, the United States has actually gone bankrupt.

What's more critical is that the U.S. debt is still increasing crazily. As the saying goes, great minds think alike. There are many people in the world who are watching the bubble of U.S. debt. So it's not just Musk who has such concerns. The latest data released by the U.S. Treasury Department shows that many countries around the world are also reducing their holdings of U.S. debt. In July, the three largest holders of U.S. debt, China, Japan, and the United Kingdom, jointly reduced their holdings of U.S. debt, which also sounded the alarm for the U.S. debt bubble. We have said before that the United States is a very unique economic entity. Why? Because as the most economically developed country in the world, the United States also has a powerful weapon, that is, the U.S. dollar.

The United States has the U.S. dollar, the world's universal currency. In the past few years, due to the impact of the Russia-Ukraine war, although more than 60 countries around the world have started the strategy of de-dollarization, the proportion of the U.S. dollar in international settlement is still as high as 59%. De-dollarization is a long road, and it cannot be achieved overnight. However, it is true that due to the decreasing use of the U.S. dollar worldwide in the past two years, many people have lost trust in U.S. debt.

Since the U.S. dollar is issued by the U.S. government, and U.S. debt has always had the highest credit in the world, in fact, for the U.S. government, there is no debt crisis. What if you can't pay off old debt? Just borrow new debt to repay old debt, and that's OK. What if the central government has a fiscal deficit and has no money? No problem, you can also borrow more debt. Let's imagine that if a person has a bank, as long as he is short of money, he can borrow money from this bank. The debt snowball can roll bigger and bigger, but as long as he still has the ability to borrow money, he will not collapse. Because anytime he is short of money, anytime he can't repay old debt, he can borrow money again to repay old debt. Anyway, no matter what state the debt snowball rolls to, as long as a person still has the ability to borrow money, he will not go bankrupt, and the country is the same.Why do some countries experience economic crises? The reason is quite simple: when you can't borrow money, printing more currency internally can lead to inflation, rendering your currency worthless. What about borrowing externally? Others may perceive you as having poor credit and a weak economy, and thus refuse to lend you money. If you can't borrow, naturally, the economy collapses. However, the United States is different because the world's reserve currency, the US dollar, is issued by the US, and US Treasury bonds have the highest global rating. Therefore, theoretically speaking, the US will never experience any economic crisis. Whenever it needs to borrow money, it can just do so, and if it can't borrow, it can just print more dollars. But there is a precondition: all of the US's creditors must believe that the US is safe, the dollar is safe, and US Treasury bonds are safe. As long as everyone is willing to lend money to the US when it needs it, there's no problem. But have we ever considered what would happen if one day everyone believes that the dollar is no longer safe and is unwilling to lend money to it?

Why did China, Japan, and the UK, the three largest holders of US debt, all reduce their holdings in July? It's because, like Musk, everyone foresaw the potential risks that the dollar and US debt might face. Take China as an example: at its peak, we held over 1.3 trillion US dollars in US debt, but with continuous reduction over the past two years, by July, our holdings were only around 700 billion. Many people say that by the end of this year, we might reduce our US debt to around 500 billion US dollars. Countries like Russia, which are hostile to the US, are even more straightforward, eliminating their US debt altogether. Why should we clear our US debt?

There are two considerations. On one hand, like Japan and the UK, we are also concerned about the risks associated with US debt. On the other hand, we have another concern: is it possible that the US might act unscrupulously in the future? It's unknown how many US legislators have proposed similar bills, saying that China holds so much US debt, and if one day the US turns its back on us, if one day the US declares that it will no longer repay China's debt, would that be possible? Theoretically, of course, the US would not do this, because if it did, it would be destroying its own credit system. We know that confidence is more important than gold, but we also need to guard against the day when the US might act desperately. What does this mean? We've all seen this year's election, which has never been as fierce as this year, and even assassination attempts have been used more than once.

Trump has repeatedly claimed that if he is not elected this year, then the US might not have elections in the future, and the US might trigger a civil war. This means that as US internal politics become more divided and the US economy declines daily, the US might collapse one day. Once it collapses, two situations will arise: first, since it has already collapsed, it has no credit, and without credit, it will default on your money, what can you do? There are actually many countries in the world in this situation: when a country starts to develop its economy and borrows a lot of money from the outside world, it repays on time every month and year. However, when it encounters a severe economic crisis and cannot cover its domestic expenses, it defaults on its debts, and what can you do if it doesn't pay you back?

On the other hand, after the US debt explodes, 35 trillion US dollars is such a huge amount of money that even if it wants to repay, it might not have the money to do so. As we just mentioned, when a person is used to borrowing money from the bank continuously, his finances are actually bankrupt. The reason he can still survive is because he has the ability to borrow money. As long as he can continue to borrow money, he will be fine. Old debts can be repaid with new debts, and new deficits can also be repaid with new debts. But the fear is that one day his debt bubble will burst, and no bank will lend him money, and then he will collapse completely.

The US is also like this. On one hand, more than 60 countries around the world have started a strategy to de-dollarize. On the other hand, the dollar has almost decoupled from oil, and the Middle East is no longer a stake in US interests. After the Russia-Ukraine war, more and more people have realized that as long as you are using the dollar, you are making clothes for others. Therefore, several levels together predict the future of the dollar is not good, and there is a key factor that everyone has found: the other day, the Federal Reserve announced a rate cut of 50 basis points in the early morning. We have said before that in the past two years, the dollar has been raising interest rates while the yuan has been lowering interest rates. High blood pressure is fighting against low blood sugar, and whoever can't hold on in the end will be harvested by the other party.

Now the US really can't hold on anymore, and it has suddenly announced a rate cut of 50 basis points, and even this year it will cut interest rates by another 50 basis points. Why? Trump said that this must be because the US economy is too bad and it must use interest rate cuts to stimulate. On the other hand, US economists say that after the dollar's interest rate cut this time, there will be trillions of dollars flowing back to China, and even the yuan will rise sharply by more than 10% against the dollar. Under this state, that is to say, the yuan will become more and more strong. In the past two years, all major economies around the world have followed the dollar's interest rate hikes because they are worried that if you don't raise interest rates, the exchange rate of your own currency will be blown up. Japan, due to its own economic difficulties, dared not follow the US to raise interest rates, and as a result, the yen depreciated sharply by more than 30% against the dollar.That is to say, in terms of the Chinese yuan, we not only did not follow the US dollar's interest rate hike, but we also did the opposite; we lowered interest rates. Although the interest rate differential between China and the US is widening, the depreciation of the yuan against the dollar is also very limited. Why is that? As we have said in the past, the anchor of the yuan today is our vast industrial production capacity. So many countries want to do business with us and buy our industrial products, which allows our yuan to remain strong. This makes our yuan very popular internationally. Therefore, every time the yuan strengthens, the dollar weakens. Every time the yuan is used more in the international market, the settlement rate of the dollar decreases. Given time, when more and more countries start to de-dollarize, then the dollar and US debt become even more dangerous.

Many countries will realize that the United States' towering debt is an irreversible path. Your debt will keep increasing and getting higher and higher, and you won't be able to solve it yourself. Then, this bubble will eventually burst one day, and people need to lay out in advance. On the other hand, the reduction of the use of the dollar and the continuous increase of US debt will eventually lead to the US economy being pulled apart one day. Therefore, major countries like China, Japan, and the UK need to actively reduce their holdings of US debt. And billionaires like Musk also foresee whether the United States will really go bankrupt one day in the future?