The U.S. Department of the Treasury has auctioned off another batch of U.S. Treasury bonds, with this round having a term of 52 weeks, effectively equivalent to a one-year period. The winning interest rate reached as high as 5.12%, which is an increase compared to the 5.06% rate in early August.

For Yellen, there are no other options. Although the Federal Reserve has not raised interest rates, the yield on Treasury bonds still needs to be continuously increased; otherwise, they will lack appeal, and no funds will be willing to take over.

Both Treasury Secretary Yellen and Federal Reserve Chairman Powell are very worried. What troubles them includes not only the U.S. economy but, more importantly, the current financial situation in the United States. Ultimately, it is a question of the status of the U.S. dollar and the risk of U.S. Treasury bonds being sold off.

U.S. Treasury bonds have long been regarded by investors as a safe investment tool, and the U.S. has thus become the world's largest debtor nation.

However, in recent times, in an effort to alleviate financial crises, the U.S. has disregarded its own economic situation and issued a large amount of Treasury bonds over the long term. Eventually, the U.S. debt level has become the highest in the world, but the credit of U.S. Treasury bonds has also been eroded by the U.S.'s repeated defaults and overdue payments.

Advertisement

Moreover, with the prolonged fluctuations in the exchange rate of the U.S. dollar, there has been a global move towards de-dollarization in foreign trade, and many investors have sold off their U.S. Treasury bonds. The dollar-dominated monetary system has been impacted, leading to a severe blow to the U.S. financial economy.

The U.S. has long relied on issuing Treasury bonds to exchange for currency, and now that the issuance of Treasury bonds is facing difficulties, the federal government is inevitably falling into a financial crisis.

In the first nine months of 2023 alone, the U.S. fiscal deficit reached 1.39 trillion U.S. dollars, with a long road of debt repayment ahead.

Against the backdrop of high inflation and high interest rates in the U.S., the interest that needs to be repaid amounts to 652 billion U.S. dollars, a staggering 25% increase.

Recently, along with the 52-week Treasury bonds, a batch of 42-day cash management bills were also issued, with an interest rate as high as 5.285%. This shows that the interest rate on the debt currently shouldered by the U.S. government is very high.The United States is burdened with a massive debt pressure, which undoubtedly has a significant negative impact on the construction of the U.S. economy. In the face of the U.S. debt crisis, other countries have not been passive, but have reduced their holdings of U.S. debt. From last year to now, U.S. debt has been fluctuating and has fallen sharply, but countries are still resolutely reducing their holdings, recognizing losses and leaving the market. U.S. media have even repeatedly reminded Yellen that some countries are reducing their holdings more and more, and there is a possibility of completely clearing U.S. debt. It is not surprising to clear U.S. debt, at least Russia has done so before. In addition to selling U.S. debt, the global "anti-dollar" pace and "de-dollarization" movement are in full swing. More and more countries have begun to use the renminbi for trade settlement, including Iran, a major oil-producing country in the Middle East. According to Iranian media reports, by August this year, the renminbi has accounted for 23% of Iran's foreign exchange reserves. In August alone, China imported 1.5 million barrels of crude oil from Iran per day. In the first seven months, the average daily import of Iranian crude oil also reached 917,000 barrels. In addition, several developing countries, including China, Russia, and India, are going to cooperate in developing a new trade currency, with the main form of transaction being gold. If a new type of currency is really developed in the future, it will inevitably replace the U.S. dollar, and at that time, it will greatly promote the process of dollar-free in the world. From the counterattack methods of these countries, gold is being used by more and more countries as a monetary backing, which can not only reduce dependence on the U.S. dollar but also ensure the stability of the country's finance and economy.Over the years, China has been continuously buying gold. In the last nine months, the central bank's gold reserves have been steadily increasing, reaching 2,136 tons.

More gold has been purchased through other means, which has not been included in the central bank's gold reserves. According to statistics from foreign media on Swiss customs gold export data, in just the first half of this year, China imported as much as 792 tons of gold, almost doubling compared to the first half of 2022.

If we simply accumulate the data from 2019 to the present, at least 4,200 tons of gold have arrived in China.

Compared to the increasingly discredited US dollar, both oil and gold seem more like hard currency.

And in the future, it is very likely that the digital currency based on gold will replace the US dollar.