this post was submitted on 21 Jan 2026
477 points (98.8% liked)
Political Memes
2104 readers
1140 users here now
Non political memes: !memes@sopuli.xyz
founded 3 years ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
Maybe it's pedantic, but the Treasury doesn't really buy them back. A Treasury bond is basically "the Treasury will give the holder of this bond X dollars at Y date".
Nothing forces the Treasury to buy bonds from the market, but they are bound to pay the specified amount on the specified date.
The problem is, in a bond market collapse, inflation is going to skyrocket, and the bond holder has no option other than to take that hit because the payout is fixed.
And since most institutional holders of US bonds will have a portfolio with bonds coming due on a regular and ongoing basis, it's not that hard for them to gradually divest while forcing the US treasury to cash out.
That's what I meant by IOU. The treasury gives them the money, they return the bond, and it goes in the shredder. Of course it happens electronically these days, but before the internet there was a physical sheet of paper that was exchanged.
So instead of renewing/rolling over the bonds, countries can decide to collect the money owed and the US treasury can't say no.
If they're selling on the secondary market before the time is up, yes that's different. But if everyone decides to sell then supply outpaces demand and the value drops. Then nobody buys new bonds from the US and they still can't borrow, and have to default on their loans.