The “債務” observed in Taiwan’s search market cannot be understood simply as meaning that debt has increased.
Recent reports point not to Taiwan, but to U.S. fiscal conditions and the Treasury market.
If a measure to buy back Treasuries is introduced, would that resolve the problem?
3-Line Summary
1. The U.S. debt debate concerns principal and interest payments and refinancing.
2. Buying long-term bonds is a measure to reduce interest-rate risk.
3. Whether the fiscal deficit will improve remains unconfirmed.
What must be repaid is not just interest
When looking at 債務, focusing only on the outstanding balance leaves out one important burden: the interest on money already borrowed, and refinancing—repaying principal when it matures or replacing it with new debt. This is also why the government must continue issuing Treasuries.
Ray Dalio, founder of U.S. hedge fund Bridgewater Associates, estimated U.S. annual revenue at about $5.5 trillion, spending at about $7.5 trillion, and the fiscal deficit at about $2 trillion. Debt excluding amounts held within the government is about $32 trillion, and a Yahoo! News report presenting his view explains that annual interest of about $1 trillion plus maturing principal of about $10 trillion brings the total repayment and refinancing amount to about $11 trillion.
These figures are Dalio’s estimates and interpretation, not a solution plan announced by the U.S. government. His proposal to “reduce the fiscal deficit to 3% of gross domestic product” is also a proposal to pursue spending cuts, increased tax revenue, and lower interest rates together. His asset-allocation recommendations for individuals likewise need to be viewed as his opinion.
What does a move to buy long-term bonds target?
TBS NEWS DIG reported that Scott Bessent, U.S. Treasury Secretary, announced a policy to expand buybacks of long- and ultra-long-term Treasuries—that is, repurchasing Treasuries that have already been issued. The idea is that if the Treasury buys existing Treasuries with more than 10 years remaining and raises funds primarily through short-term Treasury issuance, it could reduce the amount of long-term interest-rate risk remaining in the market.
The key here is not to confuse a measure to eliminate debt with a measure to alter the maturity structure. Buying back long-term bonds may reduce the long-term interest-rate risk borne by the market, but it does not automatically improve the fiscal deficit itself. The same report noted that the scale of buybacks was limited relative to the overall enormous Treasury market and had not fundamentally resolved market unease.
Reports also mentioned the possibility of using the Treasury’s General Account, or TGA, as a source of funds for buybacks. The TGA is the U.S. government’s account deposited at the Federal Reserve—simply put, it is similar to the government’s checking account. However, this is a reported possibility for use and does not mean that actual use has been confirmed.
Why Treasuries and corporate bonds both add to interest rates
Rising Treasury yields reflect not only government Treasury issuance but also private-sector demand for funds. TBS NEWS DIG explained that increased corporate bond issuance by large companies investing in artificial intelligence increases the supply of interest-rate risk in both the Treasury and corporate-bond markets, contributing to a higher term premium demanded by long-term bond investors.
That is why the current issue does not end with the single question of “how much Treasury debt the government buys.” The government’s fiscal deficit, private-sector corporate bond issuance, and investors’ demands for long-term interest rates are interconnected within one market. Buying back Treasuries may be a supply-and-demand response, but it is a different question from reducing the deficit.
Secretary Bessent was reported to be planning to announce measures focused on fiscal soundness in late August. These are plans and policy directions, not yet confirmed policy outcomes. Although Dalio mentioned Japan’s selling of U.S. Treasuries, U.S. Treasury statistics have confirmed only a decline in Japan’s holdings of U.S. Treasuries in June, and the actual seller has not been identified.
A Vietnam.vn report on the G7’s interest burden said these countries’ public-debt interest payments could reach about $2 trillion this year. The point to watch more closely in this material is not the total amount of debt, but the amount that must be newly borrowed and the interest burden. When reviewing an announcement of Treasury purchases, you should look beyond the size of the purchase and also verify whether measures to reduce the fiscal deficit actually follow.
A framework for reading the next announcement
It is difficult to reach a conclusion from a single figure or sentence in news related to 債務. If you distinguish who made the announcement, whether the statement concerns an already implemented fact or a future plan, and whether the target and timing are specified, its meaning becomes clearer.
Even within the same material, an explanation of need, discussion, an implementation plan, and actual execution may be different stages. Even if the announced scale appears large, you need to check both what it targets and what procedures remain in order to avoid overstating or understating the current situation.
In the next update, compare whether the new announcement repeats existing content or whether the target, schedule, or implementation status has actually changed. Reviewing the related reports below can also help identify differences in wording that are easy to miss from headlines alone.
References
Tags #debt #USdebt #USTreasuries #Treasurybuybacks #fiscaldeficit #fiscalsoundness #longterminterestrates #Treasuryyields #refinancing #Treasuryinterest #TGA #G7debt #RayDalio #ScottBessent