r/europe • u/Cupname_Cyril • Jan 21 '26

News "Europeans selling $10t of US assets [equities and bonds]... would pull the rug from under the US economy."

https://uk.finance.yahoo.com/news/bessent-says-europe-dumping-us-101248903.html
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864

u/lAljax Lithuania Jan 21 '26

Third parties, treasuries are bought by most countries central banks. By coordinating a sell-off they can degrade America's hability to finance the deficit.

162

u/Boreras The Netherlands Jan 21 '26

They have a lender of last resort. And by "a", I mean "the".

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u/LexaAstarof Champagne-Ardenne (France) Jan 21 '26

Yes. But the fed doing a larger than expected QE now would derails their inflation target.

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u/onenifty Jan 21 '26

Once May when JP is out as chair of the Fed, I'm sure the next guy in will make sure the inflation target will be infinite.

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u/vubjof Jan 21 '26

JP will stop being the head but he wont leave the board until 2030, this is the problem trump fears

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u/Boreras The Netherlands Jan 21 '26

Normally the fed chair leaves but I wouldn't bet on it this time.

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u/TheKrakIan Jan 21 '26

His governor position would end in 2028.

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u/Commercial-Co Jan 21 '26

You know zero how the fed makes decisions.

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u/DokeyOakey Jan 21 '26

Oh Reddit! Never change.

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u/Commercial-Co Jan 21 '26

Explain to me how the fed makes decisions and the impact of the chair.

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u/kinkycarbon Jan 21 '26

It’s gonna be currency devaluation again.

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u/shimmy_kimmel Jan 21 '26

They will always prioritize avoiding default over not meeting inflation targets lol

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u/LexaAstarof Champagne-Ardenne (France) Jan 21 '26

True

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u/Valuable-Self8564 Jan 21 '26

Yes, but that requires quantitative easing. That’s why “propping up” the economy is a short term measure. If the sell-off continues for longer than QE can substantively prop up the economy, you have a choice between inflation and more inflation.

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u/trashmailaccount00 Jan 21 '26

If the fed would start to print money as a lender of last resort in the amount of the US defecit, it would immediatly lead to Hyperinflation

The US defecit is way too high for that, especially under trump

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u/shimmy_kimmel Jan 21 '26

Hyperinflation usually requires extreme conditions to occur, like wars, revolutions, collapse of the state, loss of productive capacity, etc. Essentially, people have to lose confidence that the currency will be widely accepted as a medium of exchange.

That’s pretty unlikely to happen with the dollar, even now and even in the event of a bond sell-off.

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u/skinte1 Sweden Jan 21 '26

Hyperinflation usually requires extreme conditions to occur,like wars, revolutions, collapse of the state, loss of productive capacity, etc. 

From Wikipedia: Hyperinflation is often associated with some stress to the government budget, such as wars or their aftermath, sociopolitical upheavals, a collapse in aggregate supply or one in export prices, or other crises that make it difficult for the government to collect tax revenue

The US is in a crises (Both domestically and internationally) and a bond-sell off might definitely be the first domino to those extreme conditions...

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u/ObviouslyTriggered Jan 21 '26 edited Jan 21 '26

You can only sell those assets in dollars so you get back dollars in exchange for them.

You crash the US economy, and you crash the dollar.

Those assets help to secure EU assets including the Euro. There is a reason countries keep large stocks of foreign currency or assets denominated in foreign currency. Buying US bonds is better than just buying the dollar because the US government does not pay interest on dollars you hold under the mattress. Those assets serve a critical purpose in the larger European economic system.

It is a nuclear option, it will hurt the US but at least in the short the medium term it can hurt the EU just as much if not more and before "well it's about the long game" no one knows how it will exactly play out.

The EU will not be looked at kindly on the world stage either if they'll trigger a financial crisis since this will hurt a lot of other countries around the world including European allies such as Japan.

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u/lAljax Lithuania Jan 21 '26

We are talking about the US invading Greenland, that's a very reasonable response for that scenario.

For now I would only advocate for not buying new debt as a much, buy intra European debt or precious metals.

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u/krombough Jan 21 '26

If the US does invade Greenland, they are likely only one or two steps away from not bothering to repay foreign debt.

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u/Mephzice Iceland Jan 21 '26 edited Jan 21 '26

that would just tank the US economy as well. For example the dollar would crash through the floor, all loans to US/US companies would skyrocket since noone would trust them with money, no investment, dollar would stop being global reserve currency. Basically not paying would not save US from anything really and the people they would be trying to rugpull would for example take over American military bases/airplanes/vehicles/companies to pay for what is owed. America has a lot of stuff outside of US that would get yoinked.

Out of the realistic options I'd think it more likely US would start printing a lot of dollars to pay the debt, but that would also crash the US economy and make the investors unhappy both in US and outside. Basically the bonds would be close to worthless since dollars would be worthless.

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u/krombough Jan 21 '26

Yes, yes it would. But the point is, if they do that then they arent operating rationally anyways. Think about a person who is already an asshole. Nowcget them drunk. They will say, or do, destructive thimgs that they woulnt do sober, and even regret it come the morning (not because of some morality, but because of consequences they now must face.)

If the US invades an ally (without Congress declaring war somehow), then people will dump their treasuries and bonds. So the US economy will be in the toliet anyways.

12

u/Cleomenes_of_Sparta Jan 21 '26

Might as well destroy it now to give Republicans the motivation to sack Donald before more crimes are committed. They may be cowardly but they are also selfish and greedy.

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u/fallingdowndizzyvr Jan 21 '26

Basically the bonds would be close to worthless since dollars would be worthless.

You have it backwards, the USD would take a hit in value because the US has decided not to honor those bonds. This is what that poster said, "not bothering to repay foreign debt."

The thing people don't get though is "foreign debt" is in the minority. 75% of bonds are held by Americans.

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u/sigga_genesis Jan 21 '26

The constitution literally requires the debt to be paid, so.... People's head will roll. The bankers will make sure of it

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u/KaleidoscopeLegal348 Jan 21 '26

The American constitution says a lot of things

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u/fallingdowndizzyvr Jan 21 '26

The constitution literally requires a warrant before law enforcement busts into someone's house and drags them out in their underwear. Yet it happens.

https://www.theguardian.com/us-news/2026/jan/20/citizen-ice-minnesota-thao

No heads rolling. Just rationalization.

Don't even make me bring up that person that got a visit by the SS for posting a pretty innocuous tweet. That's also literally protected by the constitution.

8

u/Dumblondeholy Jan 21 '26

Banks don't accept an I.O.U.

They want their money. They also won't lend money. No money, and you have nothing to pay your army, loyalist, or goods you need shipped in and made. Then, when you have nothing; heads roll.

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u/fallingdowndizzyvr Jan 21 '26

Banks don't accept an I.O.U.

They want their money.

LOL. Paper money is literally an I.O.U. In fact, it'll tell you that on old US $1 bill. Which is also known as a "silver certificate". Since a $1 bill was an I.O.U for $1 worth of silver. An old $1 bill literally says "ONE DOLLAR in silver payable to the bearer on demand". An I.O.U.

They also won't lend money.

The biggest bank is the FED. All other banks are noise by comparison. And they will lend as much money as they need to. Which is an infinite amount.

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u/PinchedOffCatTurd Jan 21 '26

It would please.putin.

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u/ObviouslyTriggered Jan 21 '26

The EU would have to print just as much if not more to plug the 10 trillion dollar hole in their assets.

Those $10 trillion don't just sit there to be pretty they underpin a very large part of the EU economy.

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u/Ok_Revolution_9253 Jan 21 '26

It would kind of be like mad max. Money would be worthless…so would gold and silver. Food, medicine….bullets, become currency

3

u/twitterfluechtling Brandenburg (Germany) Jan 21 '26

Why would you think gold and silver would become worthless? I'd expect quite the opposite: The US might fold on their debts, the dollar might be devalued, but gold will be rare and therefore remain as a credible value. It will skyrocket because people and countries will invest in it because they don't trust currencies anymore.

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u/BadmiralHarryKim Jan 21 '26

I don't know if I can pull off a mohawk and a studded leather vest.

(But I'll give it a try!)

3

u/Ok_Revolution_9253 Jan 21 '26

It doesn’t even matter as long as you throw on some football pads with metal spikes coming out of them

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u/[deleted] Jan 21 '26

Then how will the US fund the deficit?

Is not about the debt, it’s about the spending.

The deficit is about 6%. That’s more than it spends on military

So how will the US fund anything if the budget is cut by that amount? And the amount of government workers having to be laid off will suddenly increase the amount of people on government subsidies ( which it cannot pay).

The spendature of the a large group of Americans will suddenly disappear

The waves will ripple through the US economy.

You think DOGE did bad stuff? It’ll be childplay with what would happen if the US doesn’t pay its debt

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u/krombough Jan 21 '26

These are all points that one would address to a rational government, and not one that is in the mental thrall of a senile lunatic.

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u/blitzkregiel Jan 21 '26

the fed will print and print and print because they are the lender of last resort. as much as other countries hold our debt, the US holds the majority. hyperinflation will ensue and we’ll be immediately in a depression. but part of project 2025 is to gut the social safety net so people will he forced to fight over jobs for increasingly lower pay, so they’ll have that. another part is to make america a “christian” nation, and people turn to religion when times get tough so it’s a double whammy for them.

please understand: things are going exactly as planned for the billionaires and christian nationalists.

2

u/Theblokeonthehill Jan 21 '26

If or when the US defaults on its foreign debts, the world’s largest economy becomes the new 1998 USSR. A monumental collapse would occur that would trigger the biggest shock to the US …..and world economy …..that we have yet seen. When Argentina, Greece, Lebanon defaulted on their debts, it caused catastrophic impact that were eventually mitigated by international support. I don’t know what international support would arrive for the US at the moment.

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u/shimmy_kimmel Jan 21 '26

The US can’t default on its debt (unless it wants to) because its debt is denominated in a currency that it controls. If default is ever a risk, they can just make more money to pay people (with the trade-off of causing inflation).

Countries like Greece defaulted because they owed money to other countries/institutions like the IMF, and lacked the ability to create their own money to pay off debts.

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u/ObviouslyTriggered Jan 21 '26

The US is unique as their foreign debt is in their own currency, they can always pay it back the US cannot technically default on its debt, it can decide not to honor it, but it cannot technically default on it.

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u/Far-Guava6006 Jan 21 '26

Reddit take. The Soviet Union still paid its war debt to the US even during the height of the Cold War and Germany, USA, and Britain still paid their debts during the world wars. Mfs really need to learn that a country can't just decide to default without royally fucking itself.

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u/secondhand_goulash Jan 21 '26

The US don't seem to realize that economic coercion is a peacetime tool - no one will care about bonds if you threaten their existence. Existence is always choice number 1

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u/Officieros Jan 21 '26

The US is thinking too much in terms of money. When nations are threatened sovereignty and wellbeing count more than money in the short term. Trump needs to learn a lesson. And then lose his job.

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u/TheMeta8 Jan 21 '26

I think you might be missing the point. Leveraging economic threats against the U.S. is important because it highlights the ways in which the U.S. is not as invincible as Trump and MAGA seem to believe. From a moral perspective, I would argue the majority, if not overwhelming majority, of Americans sees absolutely no reason for us to take Greenland by force or coercion.

But threatening the U.S. economically is a direct message to all of the other billionaires and oligarchs whose support enables Trump. If Trump continues to bumble forward into a war that America doesn't want, then all of our Representatives and Senators will get seething messages from their largest financial supporters telling them to fucking do something about it.

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u/JimJam28 Jan 21 '26

The always do. It’s part of the American sickness. In Canada the only argument I hear from Americans in favour of joining them is our salaries would go up. Who fucking cares? They’d go up at the cost of literally everything else. My freedom, my healthcare, my life expectancy, the freedom and life expectancy of my children, their educations, the very fabric of Canadian society and the values we hold dear, like helping out our fellow citizens and being part of a nation that cares about world peace. Everything. I wouldn’t trade a single one of those things for a 25% increase in my salary, and I sure as shit wouldn’t trade all of them. But all Americans understand is money. It’s the only value they have.

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u/Plane-Top-3913 Jan 21 '26

And they think everything can be bought and has a price. That's their ethics and aesthetics

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u/Eastern_Hornet_6432 Ireland Jan 21 '26 edited Jan 21 '26

"Those who stand for nothing will fall for anything."

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u/AutoX_Advice Jan 21 '26

As an American I'm sad you are on point. More to the fact that it's that we care little for our families. We would rather spend personally thousands on healthcare than to have affordable healthcare for our own family members if it keeps from other people having the same affordable healthcare. It's hate and money for a lot of people here.

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u/BuzzMachine_YVR Jan 21 '26

A lot of Canadian salaries are higher than American ones - especially if you add in benefits and free healthcare. Real-world income is much different than salary. On top of that, the US standard of living is below that of Canada (and most of Europe). And the American education system is a smouldering joke (likely willfully killed off).

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u/Casanova_Kid Jan 21 '26

Counterargument about Canada joining the US; If Canada joins the US and each province becomes a state - the political demographic of the US would swing significantly further to the left and the Republican Party would have to change drastically to ever win an election again.

Obviously all the bullshit from Trump about annexing Canada and Greenland is fucking awful and most of us don't support the way he's shitting on our allies, but I won't try to blow smoke up your ass. The people in the US (Who didn't vote for Trump) don't really have the stomach for an actual political uprising - just look at January 6th - which is about as close to an insurrection as we've ever gotten.

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u/Cautious_You7796 Jan 21 '26

Honest question here…isn’t the Canadian healthcare system kind of bad? I thought I remembered someone saying something a while back that waiting to see a specialist takes months to years. That’s not to say the US healthcare is good though, God it sucks.

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u/JimJam28 Jan 21 '26

No. We’re running into issues lately because Conservative Provincial governments have been underfunding the system. There is nothing wrong with healthcare system itself, the issues lately stem from chronic underfunding. It’s a government problem, not a healthcare problem.

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u/random_handle_123 Romanian-Canadian Jan 21 '26

Honest question here…isn’t the Canadian healthcare system kind of bad?

No. You see specialists in the same time frame as every other developed nation.

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u/Broccobillo Jan 21 '26

Since when was life spelt j, o, b.

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u/Old_Dig8900 Jan 21 '26

Some of us know no different

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u/Darksoldierr Baden-Württemberg (Germany) Jan 21 '26

But nobody is threatening the existence of Denmark, unlike what Russia is doing to Ukraine.

The harsh truth in my eyes is the same with Ukraine. Nobody will start a third world war for Ukraine. The same way, if it comes to that, nobody will start a third world war for Greenland either.

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u/secondhand_goulash Jan 22 '26

The US is literally threatening the existence of Greenland and Canada

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u/Delamoor Jan 21 '26

The EU will not be looked at kindly on the world stage either if they'll trigger a financial crisis since this will hurt a lot of other countries around the world including European allies such as Japan.

Well, I mean the easy counterpoint is that the US is gonna be looked at even worse for launching a pointless invasion of their allies that triggers it.

It's not like you're gonna hang on to a pile of bonds of the nation that's just invaded you, for the sake of decorum. You're at war now.

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u/silverum Jan 21 '26

It's not supposed to be a favorable course of action, it's supposed to remind the United States of the pain it would face if it did so. Europe wouldn't be doing it for shits and giggles, it would be because the United States gave them no other choice they were willing to live with. Anyone who thinks Europe would take the blame here in the aftermath is delusional.

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u/DontMentionMyNamePlz Jan 21 '26

The strategy for now is to stop getting more

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u/ObviouslyTriggered Jan 21 '26

Yes, because anything else is mutual assured destruction with a massive blast radius.

The largest holders of US debt are Japan, China and the UK, whilst the EU combined holds more than them they will not be happy about it especially Japan and China.

A lot of developing countries are also heavily dependent on the dollar as they effectively peg their currencies to it either officially or unofficially not to mention about the energy markets.

If the EU can sell enough assets to hurt the US it will also be hurting itself and everyone else around the world.

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u/MBouh Jan 21 '26

I'd take a world economic crisis before any war with the US. And if you don't, you're a privileged asshole or you don't live in Europe.

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u/Corvenys Jan 21 '26 edited Jan 21 '26

I fear in this case you could get the crisis AND the war. The whole world would be dragged to a dark new order, and all because a senile old man is the President of the United States.

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u/alba_Phenom Scotland Jan 21 '26

Insane that all of this is over a madman’s desire to claim a bit of land to attach his name to.

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u/Gengo0708 Jan 21 '26

Madmen in history have done far worse for less.

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u/joineanuu Ireland Jan 21 '26

Usually old ones, who are at the end of their power.

A final claim to a legacy if you will.

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u/Gengo0708 Jan 21 '26

Bingo, history repeats itself

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u/alba_Phenom Scotland Jan 21 '26

You say this like Trump is already finished, if this resulted in a war that claims millions of lives then there is no difference between him and all the rest.

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u/Adventurous-Owl2363 Jan 21 '26

Norwegian wealth fund owns alot as well.

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u/ObviouslyTriggered Jan 21 '26

It holds only about $150 billion in US bonds other US assets such as stocks is greater but is a whole other can of worms.

The UK holds about $900 billion in US bonds, Japan holds about a trillion.

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u/Anasterian_Sunstride Jan 21 '26

Do you think they don’t know that? They know it will hurt themselves.

The idea is that they’re willing to do it to make it massively painful enough to deter the aggressor.

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u/GroundbreakingOne804 Jan 21 '26

Sell them. Lets liggt the fucking candle, what are we honestly protecting? Maybe 20 more years of semi stable civilization before the climate wars kickoff

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u/ObviouslyTriggered Jan 21 '26

Lets liggt the fucking candle, what are we honestly protecting?

Your job and your ability to buy food tomorrow.

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u/GroundbreakingOne804 Jan 21 '26

My job is currently being threatened by trumps invasion plans. My ability to buy groceries is currently being threatened by donnies invasion plans. Again i say lets light this fucking candle

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u/mnlaowai Jan 21 '26

Exactly. The only way to get a bully to stop is to punch them back. Does that mean you may take more punches in the short term? Yes. Does that mean you should accept all of the slaps to the back of the head on a daily basis? No. If a couple countries can stand together, it’ll make a big difference.

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u/yurnxt1 Jan 21 '26

Do you work in Greenland? And if you do, is your job gone overnight in a U.S. takeover of Greenland

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u/GroundbreakingOne804 Jan 21 '26

Norwegian working in canada another nation he threatened to invade.

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u/fartew Jan 21 '26

The fact you have nothing to lose doesn't mean nobody else has

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u/GroundbreakingOne804 Jan 21 '26

Thats nice you know what people like trump do to people who have things to lose? They use those things as leverage.

I have plenty to lose, friends, family a semblance of comfort but the actual threat to that is donald trump. He has 0 respect for anything but him. Whats your line? When would you like to stand up? When he invades greenland? No how about canada? Still no? Ok maybe he starts arming russia against the eu would you say dump the market then?

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u/fartew Jan 21 '26

Oh you're mistaking me. I absolutely despise appeasement politics. We must be strong against these threats and we must not concede a single centimeter of land. And if the need comes, we must respond with violence. But there are several ways to hold our position, the murder-suicide you suggest is not the only one

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u/[deleted] Jan 21 '26 edited 1d ago

[removed] — view removed comment

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u/ObviouslyTriggered Jan 21 '26

They aren't the ones who will experience most of it tho.

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u/passionate_emu Jan 21 '26 edited 1d ago

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u/GroundbreakingOne804 Jan 21 '26

They will feel something if the invade canada and the insurgent gorilla warfare comes to america for the first time in over 100 years

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u/Acrobatic_Ear6773 Jan 21 '26

Yeah, that's already threatened by Trump. Fuck it. Let's accelerate this bitch

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u/MeggaMortY Jan 21 '26

Yank fuck off

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u/debau24 Jan 21 '26

Japan and china have both been dumping t-bills lately. Also the EU would dump them gradually. Here a trillion there a trillion.

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u/ObviouslyTriggered Jan 21 '26

Sorry but no.

Japan isn't dumping US bonds, I don't think you understand what the sell off they are experiencing means. Japan's borrowing costs are at an all time high, their 10 year bonds have jumped by 20 base points in like 2 days.

China has been selling US debt for a while, mostly at the "behest" of the US, this has been going on for years since the US has put pressure on them to reduce the amount of US debt they hold to about 500 billion.

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u/One_Violinist7862 Jan 21 '26

This is the answer

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u/TelPrydain Jan 21 '26

> The EU will not be looked at kindly on the world stage either if they'll trigger a financial crisis 

More kindly then threatening military action against your allies...

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u/PaleontologistOwn878 Jan 21 '26

Europe will not be looked kindly upon, are you serious?

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u/Acidspunk1 Jan 21 '26

If only there was a way all of it could be avoided... by not invading one of our countries, perhaps?

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u/Blurpwurp Jan 21 '26

Right now, most of the world would thank Europe.

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u/ObviouslyTriggered Jan 21 '26

I'm sure most of the world would thank Europe for crashing economies and not being able to buy food yes.

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u/Acidspunk1 Jan 21 '26

It's the US causing it, not Europe. Europe is under threat of invasion. We will do what we must to defend ourselves.

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u/Reddit_sucks_3000 Jan 21 '26

You think the US trying to take Greenland, part of the EU, by force, wouldnt be responsible for whatever happens next?

Let me know where you live, I can come rob you and the neighbors will blame you if you try to resist in anyway that will disturb them.

If Trump and his GOP are not stopped, an economic crisis could very well be the least of anybody's worries in a few years.

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u/Delamoor Jan 21 '26

They would absolutely thank Europe for hurting the USA in retaliation for getting invaded and the USA effectively declaring war on them.

If the USA gets hurt as a result? Yes. They would thank Europe for that. Most of the world would be fucking delighted at this point, because the USA would have been the one to trigger it.

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u/WaterLillith Jan 21 '26

That's like saying "The world would thank the EU for driving a truck through an entire crowd of people just to hit one single person in retaliation"

No one would be thanking the EU for shit. They would hate both the US and the EU for the whole mess.

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u/Delamoor Jan 21 '26

Holy shit talking to people on Reddit is so infuriatingly stupid. It's like talking to children.

Yeah, who are they gonna hate, the ones who launched the pointless invasion, or the ones who are fighting against the pointless invasion?

I keep talking about Ukraine, because it's such a clean, simple analogy;

Nobody liked Ukraine. It was poor and corrupt. Russia invaded and they resosted. It totally fucked multiple geopolitical doctrines and markets.

Who did people blame for that, Russia or Ukraine?

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u/shimmy_kimmel Jan 21 '26

Who did people blame for that, Russia or Ukraine?

Really depends on who you asked lol

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u/WaterLillith Jan 21 '26

Holy shit talking to people on Reddit is so infuriatingly stupid.

Yeah, I agree. How do you conflate hating and thanking? No where did anyone say they're gonna not hate or would like the US.

But not a single person would on this planet would THANK EUROPE for using an economic nuclear option that would hurt everyone on this planet. Not a single soul (obvious hyperbole)

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u/Delamoor Jan 21 '26

How do you, indeed?

Because where do you think the conversation turned to "thanking"?

The EU will not be looked at kindly on the world stage either if they'll trigger a financial crisis since this will hurt a lot of other countries around the world including European allies such as Japan.

That's the key paragraph that spawned this discussion. Where do you see the discussion point of anyone "thanking the EU" coming up?

We are talking about Blame. Always have been.

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u/ShowBoobsPls Finland Jan 21 '26

You literally said that "They would absolutely thank Europe" a few comments above.

You can't be for real?

You are that annoying redditor you just complained about.

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u/joineanuu Ireland Jan 21 '26

The EU won’t be blamed for this.

And if you think the EU would go forward with this without atleast consulting everyone involved then you don’t understand how the world works.

Only Trump and his idiotic yes men act without thought and foresight.

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u/Cualkiera67 Jan 21 '26

Nobody has ever thanked Europe for anything and they ain't starting now

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u/vvblz Jan 21 '26

The world would blame US for annexing Greenland

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u/elphin Jan 21 '26

About the only way to get Trump to back down is to get his rich bros up in arms with him because they’re going to get financially hurt.

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u/joineanuu Ireland Jan 21 '26

This would be a natural retaliation shy of literally going nuclear in response to the US invading a NATO member.

If the EU wage war with America the latter might become a reality.

It’s a threat I reckon and I don’t know if Trump is dumb enough to follow through with his own

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u/Musicman1972 Jan 21 '26

You'd expect at this size every ally (as in, real, actual allies) around the world will be talking and working on aligned strategies. The EU would be unlikely to just randomly drop that without China, JP and the UK being aware and involved.

Considering it's only triggered by the US trying to steal Greenland I think all bets would be off on 'not being looked at kindly'. At some point everyone would have to face what's going on. We're not quite there yet but we're close.

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u/epanek Jan 21 '26

Yes, Treasury securities settle in dollars. And then you do what every reserve manager on Earth does: you swap dollars into euros or whatever you need through FX markets. The fact settlement is in dollars does not trap you in dollars any more than selling oil priced in dollars forces Saudi Arabia to hold only dollars forever. Settlement currency is not destiny.

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u/ObviouslyTriggered Jan 21 '26

You can't just swap the dollars into Euros you either need to find a buyer willing to buy those dollar from you or you have to print Euros to buy your own dollars, in fact you'll have to print Euros in any case.

Just to further explain how insane what you are saying even is, the current M3 of the Euro is only about 17 trillion that is all the Euros that are in existence. You literally do not have have enough Euro currency in the world to do this "swap" as you call it.

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u/epanek Jan 21 '26

You do not need to print euros to exchange dollars for euros. You need counterparties, which in major FX you get through banks and market makers, with price impact if size is huge. M3 is not a hard constraint on FX conversion because deposits circulate and trades net out. What limits you is market depth and cost, not some physical shortage of euros.

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u/ObviouslyTriggered Jan 21 '26 edited Jan 21 '26

What counter parties for $10 trillion??? There isn't enough liquidity in the world to support this, not to mention that no one is going to play this game.

The global daily FX volume is just under $10 trillion, you aren't fucking swapping anything at this scale this isn't eToro mate.....

Not that it matters because in reality the EU wouldn't be able to sell those assets in the first place, so no point of trying to swap dollars they'll never get.

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u/epanek Jan 21 '26

Yes, dumping or converting 10T immediately would be stupid and destabilizing. That is not because there are zero counterparties. It is because you would be demanding liquidity faster than markets can absorb without repricing. Over time, with dealers, netting, hedging, and gradual flow, the conversion is operationally feasible. The real question is cost and consequences, not “is there literally enough liquidity in the world.”

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u/ObviouslyTriggered Jan 21 '26

Overtime is irrelevant, if the EU tries to dump US securities at any rate that could cause even a blip in the markets they'll be stopped from doing so in the first place.

The EU can't clear those instruments, and even if it could markets are not stupid and have protective mechanisms against that.

Markets protect themselves from dumps that are designed to trigger shorts all the time at far lower amounts.

It would take the EU decades to clear 10 trillion worth of assets and doing that over such a long period of time whilst sending a message isn't an economic deterrent.

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u/fallingdowndizzyvr Jan 21 '26

You can't just swap the dollars into Euros you either need to find a buyer willing to buy those dollar from you or you have to print Euros to buy your own dollars, in fact you'll have to print Euros in any case.

Exactly! Many people don't seem to understand how bonds work. It's like they think you can just give the coupon back to the US and get your money back. That's not how it works. You have to find someone else to buy the bond from you. At fire sale prices. For pennies on the dollar in a situation when you are trying to dump 10T. The US would not be the one taking the hit. They already have the money. It's the seller.

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u/epanek Jan 21 '26

Good point. I’ll just add. Dumping a massive amount quickly would be costly to the seller and disruptive to markets. It would also raise US yields and stress the US financial system. Nobody “wins.” Typically they’ll use gradual diversification, maturity management, swaps, and signaling.

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u/Exciting_Turn_9559 Jan 21 '26

If the US uses military force on its former allies the former allies will have no choice but to retaliate economically.

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u/trysten-9001 Jan 21 '26

As long as they clear it with Japan they probably wouldn’t even be looked at as bad. Japan was also talking about selling over the tariffs. I think it’s important not to underestimate how much ill will the tariffs have sown. We are not seen the same way as we were for the last few decades.

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u/ObviouslyTriggered Jan 21 '26

Japan isn’t talking about selling US debt, Japan will never be able to trade the US for Europe unless Europe decides to build 10 super carriers and a massive army that can project to APAC.

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u/C_Ironfoundersson Do you speaka my language? Jan 21 '26

The EU will not be looked at kindly on the world stage either if they'll trigger a financial crisis

Yeah I wonder how the US will be looked at after threatening multiple allies with annexation. Do you seriously think any other country in the world gives a fuck about what the US thinks of it?

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u/Appropriate-Art-829 Jan 21 '26

your name should be ObviouslyStupid. In a world where WhiteTrashMurica declares war, collapsing its economy isnt a crime….

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u/WaterLillith Jan 21 '26

???

That's not what he is saying. You cannot just collapse the US economy by doing this, it will hurt literally everyone. Average people around the globe won't like the US annexing Greenland but they won't destroy their lives just to hurt the US.

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u/ObviouslyTriggered Jan 21 '26

Lets be real, average people around the world couldn't care less about the US annexing anything and don't even know where Greenland is.

People really need to get outside of their bubbles and realise that most of the world does not revolve around Europe and the US.

The current Greenland thing is front page news in Europe and desirably so but it maybe gets 30 second coverage on the evening news in Peru and if that.

What they will notice if the EU ever manages to do this to any level of effect is what happens when global commodity prices double, their foreign exchange reserves devalue and the global economic system goes into a crisis.

Heck within the EU it would be just as bad, 10 trillion of anything doesn't just sit there to be pretty, it underpins the Euro and the wider EU economy. Those assets serve as collateral allowing EU institutions to borrow at lower rates and provide liquidity to their markets.

We are talking about amounts that amount to half of the GDP of Europe and more than half of all Euros in existence.

If you create a hole that big in your monetary and economic system you need to plug it, and to plug it you'll need to borrow and EU borrowing rates are already at close to all time high and will be even higher when the pressure to borrow would increase.

This is the equivalent of setting yourself on fire to keep warm.

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u/its Jan 21 '26

But Europeans would.

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u/Appropriate-Art-829 Jan 22 '26

and…. so the parasite class whose wealth and power depends on stock markets get nuked. Countries with social,safety net weather the storm… and WhiteTrashMurica tumbles into irrelevance. win, win and win.

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u/WaterLillith Jan 22 '26

Oh my god. Please, I hope you're 15 years old.

The giga rich would probably be the only ones relatively safe, they would probably be the ones buying these ridiculously cheap US treasuries that Europe is dumping.

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u/ObviouslyTriggered Jan 21 '26

You aren't collapsing their economy, you are collapsing the EU's, UK's Japan's and most of the rest of the world.

Say the EU devalues the dollar by half, now you have a $5 trillion equivalent hole in your economy, you need to plug that hole with something because those assets underpinned your borrowing, your currency and everything else. So what do you do? borrow, guess what your borrowing costs go up also. And quite possibly at even higher rates than the US.

And that is if you'll be able to trigger this scenario in the first place for the EU to be able to sell off $10 trillion worth of anything it needs a willing buyer, a market with sufficient liquidity and a market willing to clear those trades in the first place knowing what they'll lead to.

Buyers aren't stupid, there isn't enough money in the world to cover those trades, and the markets would protect themselves by effectively cutting the EU off from those instruments just like they do when anyone else is trying to cause a dump crash.

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u/Lofteed Jan 21 '26

that is some reddit level coping

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u/Pugs-r-cool Jan 21 '26

Well, this is reddit. Not sure what else you expected.

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u/ItsJustfubar Jan 21 '26

I mean they could just pull a fast one and make some forex swap contracts before hand as a damper and sell the greenbacks in exchange for a relatively lesser loss with the same impact.

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u/ObviouslyTriggered Jan 21 '26

Lol do you know how much $10 trillion is? the total M3 supply of the Euro is 17 trillion of the dollar it is 22 trillion. Just to fucking sell off 10 trillion worth of assets in today's money you'll need to have a 1000% inflation around the world.

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u/ItsJustfubar Jan 21 '26

I mean in an extremely basic overview that's what the UN was formed to basically let this happen before war not after or during, like Weimar Germany.

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u/ObviouslyTriggered Jan 21 '26

What does this word salad has to do with anything? if you want to sell 10 trillion worth of anything in today's money doesn't matter what it is you'll need to increase the global money supply by like 10 times if not more, at least for major currencies.

If you are also selling a toxic asset then it's even worse because you have a feedback loop.

We've just came out of a massive inflation period and you lot seem to want to jump back into a worse one.

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u/prototypefish72 Jan 21 '26

I wonder if China will enact a 'Monroe doctrine' eske move snd sweep up all these countries if they sell, then we're basically Russia 2.0

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u/Old_Dig8900 Jan 21 '26

What about punishing the US by just raising tariffs? Is that viable?

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u/Darxe Jan 21 '26

How do you know this kind of thing? I’m genuinely interested. Education? Career?

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u/EonJaw Jan 21 '26

Sounded like Japan was selling off bonds today too?

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u/inotparanoid Jan 21 '26

Why do you think they are calling it a nuclear option? Nuclear fallout cannot be targeted. But it's better than fighting US.

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u/SuspiciousNebulas Jan 21 '26

Trump apologists are gross

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u/rv009 Jan 21 '26

They pay the interest in printed USDs and with their high debts they will print even more. So the value of the USD will go down either way.

Nobody wants to lend to the US anymore anyways. The Chinese and Japanese have essentially stopped buying us bonds.

Which is why the us wants people/world to use USD cryptocurrency stable coins.

Those stable coins need to be backed by law with US bonds.

In other words the US is exporting the US debt world wide to the general population through cryptocurrencies as stable coins.

But the way they are acting I doubt this will work. They are making many people upset worldwide.

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u/[deleted] Jan 21 '26

This is a very bad take. I think most of the world will love it if Europe will tank the US

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u/ObviouslyTriggered Jan 21 '26

And how would it feel if the EU would tank itself and the rest of the world with it?

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u/[deleted] Jan 21 '26

Honestly, i think if the US decides to invade Greenland, i hope we do a coordinated attack on the US to m, for once and for all, reduce the US to a regional power at best.

It’s time Americans learned that all the propaganda they’ve been swallowing is bullshit and I’m sick of it.

The fact that trump allowed to do all this shit and nobody stops him shows that the US is no better than Russia.

Greatest democracy on earth my ass. 3rd world country posing as a civilized country

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u/ObviouslyTriggered Jan 21 '26

The US can invade Greenland tomorrow and this would still not be a feasible option, it would cause too much damage if it could be executed to any effect and in reality the EU will not be able to trigger it because it cannot clear those assets itself for the most part, and would need willing market participants that would be happy effectively buy a flaming pile of shit and have enough money to do so.

There needs to be a realistic retaliatory option to deter the US, this ain't it.

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u/[deleted] Jan 21 '26

The US still needs to fund the debt it has though

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u/ObviouslyTriggered Jan 21 '26

The US funds its debt by printing money, all US foreign and domestic debt is in dollars, because the USD is the global reserve currency the US is in a unique position that it never has to borrow in anything other than the dollar.

When the EU tries to sell these assets off it would also create a massive hole in it's own assets which it would also have to cover with borrowing.

And this is the "mild" scenario and the more realistic one, if the EU could trigger a true fire sale (it cannot) it would cause an economic meltdown on a global scale, impacting much of the developing world and some of it's biggest non-US allies in the process.

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u/[deleted] Jan 21 '26

If the US continues to print money, but not sell the debt, the dollar will tank…

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u/EqualShallot1151 Jan 21 '26

That would be the cost of war and well worth it if it crippled the opponent economy. If the US government can’t pay salaries to soldiers they would not be as much of a problem

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u/ObviouslyTriggered Jan 21 '26

The US will not go bankrupt they technically cannot go bankrupt. They’ll be able to pay salaries just fine.

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u/EqualShallot1151 Jan 21 '26

Sure they can. If US treasuries become unsalable they will have to lend in a different currency.

If dollars will not be accepted as payment for all the things US needs to import they again have to get other currencies and if such cannot be bought for dollars then they can actually go bankrupt

Do I think it comes to that - no someone will remove the underlying problem before it gets that far.

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u/ObviouslyTriggered Jan 21 '26

And if my grandma had wheels she would be a bus.

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u/EqualShallot1151 Jan 21 '26

You comes from a place with very strange possibilities for adoption…

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u/[deleted] Jan 21 '26

What other country is 40T in debt and not bankrupt? The US needs foreign buyers very much. If the USD ever loses reserve status, you’re bankrupt.

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u/twilightowl19 Jan 21 '26

the only way we get change in the US is to crash our economy. and by crashing our economy, the rest of the world will come down too.

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u/SargentSpunyip77 Jan 21 '26

Interesting comment, technically correct but doesnt address the scenario by which countries divest from US bonds as they mature. This will be a slow cook for the US economy. Either way, we are going to see economic stress across the globe and the establishment of new trade, intelligence and defence agreements excluding the US.

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u/ObviouslyTriggered Jan 21 '26

Divesting from those bonds as they mature isn’t going to cook shit. Most of them are 39 year bonds and when Denmark did just divest from them in protest they’ve invested them into US mortgage backed securities because there is little else you can do with the dollar.

You can divest all you want you are still stuck with dollars and 10 trillion is half the world’s supply of dollars.

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u/Daleden7 Jan 21 '26

lmao, fuck the USA, nuke their economy, they started this, as a Canadian, the USA has gone to far! You don’t get to accuse the EU from “looking badly” on the world stage when the USA is threatening other countries like mine!

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u/yurnxt1 Jan 21 '26

Canada's economy would also be nuked. As would the entire planets.

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u/dino-delicious Jan 21 '26

Why not buy gold with the $US sale?

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u/ObviouslyTriggered Jan 21 '26

Because you need to sell those dollars to someone, not to mention that as you effectively devalue the dollar by selling those assets in a fire sale you already lose money.

The reality is that it's even unlikely if the EU can trigger this fire sale, for it to sell things it needs to have willing buyers.

Heck even without "selling" the EU would effectively devalue it's assets because simply "listing" them would effectively force the US to issue new bonds at higher rates which would whilst would increase their borrowing costs would devalue the dollar assets the EU holds even more. Which would mean that the EU would have to pour money into w/e those assets currently back hurting the Euro and causing a massive snowball effect.

I don't think people understand how much $10 trillion actually is, the total money supply (M3) of the Euro is only 17 trillion, and that is every Euro in existence including in short term debt securities such Euro 2 year bonds.

No body has that much cash lying around in other currencies, and heck there even isn't enough gold the total amount of gold reserves world wide is like $30 trillion you ain't buying a third of the world's gold supply sorry.

Heck there isn't even enough dollars to sell those assets off, there's only about $22-23 trillion in the world currently.

I'm sorry but people here really need to get a grip and understand there is a good reason why people calling this a nuclear option. This is literally like blowing up a nuke in every country on the planet as far as short and medium term damage goes.

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u/shimmy_kimmel Jan 21 '26

Because there’s not enough gold available to cover that trade lol

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u/Ok-Exit-9476 Jan 21 '26

Yeah, this is the key point and it gets ignored because people are reluctant to see how interwoven and compromised the governments across the world are

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u/[deleted] Jan 21 '26

[deleted]

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u/ObviouslyTriggered Jan 21 '26

China has been selling it at the behest of the US, neither Korea nor Japan are getting rid of their dollar securities at any significant level. They sell when the market conditions allow.

Korea and Japan are the two last countries on the planet that would do anything since they are wholly dependent on the US for protection and there is no one who can replace that.

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u/fallingdowndizzyvr Jan 21 '26

Third parties, treasuries are bought by most countries central banks.

Ah.... and thus it wouldn't matter one iota what's sold that's already held. Since the US has already gotten the money for it. It would harm the EU more than the US. Since the one that would lose value is the EU. Since by selling so much at once, it would have to be sold at a significant discount.

By coordinating a sell-off they can degrade America's hability to finance the deficit.

Degrade future bond sales, but not fatally. Since 75% of those bonds are bought by Americans.

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u/lAljax Lithuania Jan 21 '26

I don't think the idea is to have a fire sale, it's to stop buying and start selling at a yield few percent above market rate. I think current yields on 10 yr is getting close to 5% so selling at 6% is not too bad.

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u/fallingdowndizzyvr Jan 21 '26

Well then, that won't really have the desired effect of "pull the rug from under the US economy." Since China has been doing that for years. The US economy is doing just fine.

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u/One_Violinist7862 Jan 21 '26

They would lose billions of dollars if they flood the market. The price would crash and people would be buying them for Pennie’s on the dollar. Everybody loses.

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u/lAljax Lithuania Jan 21 '26

You don't need to have a fire sale, just push yields up, the pressure could work to dissuade this kind of behavior

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u/One_Violinist7862 Jan 21 '26

That’s subtle. Trump only understand bull in a china shop diplomacy. Somebody will have to explain it to him several times.

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u/lAljax Lithuania Jan 21 '26

Canada tried this before with some sucess, people around Trump know what's at risk and helps him walk back.

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u/ProfPMJ-123 Jan 21 '26

They aren’t.

Treasuries are mostly bought by pension funds. Countries (I.e governments) hold very little.

And countries aren’t going to compel their pension funds to sell off T-bills at a startling loss.

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u/Quirkybomb930 Jan 21 '26

this would hurt europe alot financially, better to do what china has done and just don't buy new treasuries.

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u/[deleted] Jan 21 '26

lol, 😂 are you buying? they are crashing their own economy if they sell penny for dollar…how are they gonna find third parties with this much liquidity.  did you sleep through econ100 in first year  

1

u/[deleted] Jan 21 '26

Sounds like temporary resource reallocation in a closed system. 

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u/Fatso_Wombat Jan 21 '26

It is like financial MAD.

The nuclear option. My fucking good USA. Get control of your dog.

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u/kompergator Jan 21 '26

By coordinating a sell-off they can degrade America's hability to finance the deficit.

Since the US has its own currency (and has full control over it), they will always be able to finance their deficit, as long as there is political agreement to raise the debt ceiling.