Will the $10 trillion in US debt securities mature, causing the U.S. Treasury to go bankrupt?

Ask AI · What are the ripple effects of a U.S. Treasury bond crisis amid the global move away from the U.S. dollar?

Over the next 12 months, about $10 trillion in U.S. Treasury bonds are set to mature—how to keep the debt rolling over will be the biggest challenge facing the Trump administration.

With such a massive amount of debt coming due, can the U.S. get through a debt crisis by printing money in unlimited quantities? Will the U.S. Treasury declare bankruptcy because it can’t repay its Treasury bonds?

$10 trillion in Treasury bonds hanging overhead

According to the latest data, within the next 12 months, $10 trillion of the U.S. government’s debt will mature, setting a record high.

Today, the overall size of U.S. debt has already reached $39 trillion. The amount due is about 33% of the total— the highest record in history.

This figure is also roughly equal to Germany’s total annual GDP.

Over the coming year, every quarter and every month, the U.S. Treasury will have to face a “cash flow” exam.

This means the Treasury must continue to issue new bonds to roll over existing debt, but the market’s ability to absorb new issuance is facing severe tests. As the process of balance sheet reduction by the Federal Reserve accelerates and global central banks’ willingness to increase their holdings of U.S. Treasuries weakens, issuance yields are forced higher, further magnifying pressure on the fiscal deficit. If short-term borrowing costs surge sharply, or if auction results show failed bids, it will directly shake the foundation of dollar credit.

Previously, the Trump administration might have been able to rely on tariffs to expand U.S. fiscal revenue, but this portion of revenue has already been ruled illegal by the U.S. Supreme Court.

Now the U.S. deficit rate is as high as 5.8%, far above the historical average line—showing that the money it brings in never keeps up with what it spends.

To prevent U.S. Treasury bonds from defaulting, the U.S. Treasury can only rely on issuing new debt to pay off old debt. But now, Treasury bond yields are clearly rising, and the cost of issuing new debt will increase dramatically.

This year, the新增赤字 is expected to be close to $2 trillion. On top of the gap that must be plugged to pay off old debt, market forecasts suggest the net issuance of U.S. government debt could swing to a dizzying new high.

This creates a bizarre cycle: the government spends money (the deficit) → issues government bonds to borrow → the market (especially domestic) buys → the government repays old debt and continues spending.

Last year, for the first time, the federal government’s net interest spending surpassed military spending. For the U.S., which relies on military power to maintain the dollar hegemony, this is a deadly signal.

When the U.S. can’t protect the stable operation of the dollar hegemony through military means, then many sovereign countries will come to believe that U.S. Treasuries are unsafe and dangerous.

Right now, U.S. fiscal conditions are in the most severe deficit in history. Compared with the 2008 financial crisis and the 2020 pandemic crisis, it is even worse.

Some predict that in the not-too-distant future, the U.S. government may declare bankruptcy because it is insolvent, delivering yet another heavy blow to the global financial system.

Typically, when an entity becomes insolvent, credit collapses and financing costs skyrocket until its end.

But over the past several years, U.S. government debt— to some extent—has been “betraying” this classic economic principle.

“Big but cannot fail” reaches its ultimate, state-level form here.

Its “failure” would mean an instantaneous zeroing-out of the global financial order—the cost that all participants, including its competitors, can hardly bear.

So the game we’re seeing becomes extremely delicate. While countries criticize the U.S. for fiscal indiscipline, they still have no choice but to hold substantial amounts of U.S. Treasuries; while they push for de-dollarization, they also discover that in the crucial, life-or-death moments, the tool with the widest channel and strongest consensus is still the dollar.

To a certain extent, the U.S. is leveraging this kind of systemic dependence to shift its own fiscal weaknesses—partly—into structural costs for the global economy.

Under such a crisis, many global central banks are, without coordination, reducing the proportion of U.S. Treasuries they hold and increasing their gold reserves as a safe backup. This also indicates that everyone, in a tacit consensus, believes there is a possibility of U.S. fiscal bankruptcy.

After all, before this, even the former “empire on which the sun never set”—the United Kingdom—had just announced a bankruptcy of its national debt. In the end, the myth will always be exposed.

Author statement: personal views, for reference only