They don't even have to sell what they've got. They just have to stop buying more and invest elsewhere instead.

The US runs on a perpetually increasing deficit. If that line were to stop going up, we'd instantly fall into a recession.

This might have been a factor for him backing of his invasion fantasies the first time.

Joke is on them, he is so vapidly stupid he forgot and is again threatening Canada.

To add context, part of getting Great Britain and France to back off in the Suez Crisis was Eisenhower threatening to sell off American owned debt in these two countries.

TIL
US is a Ponzi scheme and US used this fraud money to make weapons in order to steal more money (oil) and prevent creditors from getting their money back 🤔

Full disclaimer, I'm not a finance professional.

Thats the theory, but I'm guessing in real world applications it won't quite shake out like that.

As I understand it, existing bonds paid for past deficit spending by the US Government. New bonds are issued at regular intervals by the US for two reasons:

• to replace those bonds that have matured, but the debt still exists
• to generate new cash to pay for even more deficit spending.

Buyers for US bonds have two place to buy US bonds from:

• the US Government
• existing bond holders on the secondary market

Existing bonds that Europe holds have a fixed rate of return from when they were bought. So if Europe collectively started dumping US bonds in quantity, the value of the bonds would start to decline rapidly, but that wouldn't dry up the market for new bonds issued by the US Gov.

This would mean, that selling more bonds would become expensive for the US.

True!

The US Gov would have to raise the rate of return on newly issued bonds so that non-European investors interested in holding bonds would find the new US bonds more attractive because of the higher rate of return.

Potentially they won’t find enough buyers to fund their government.

Unlikely.

This will cost the US Government more to service the debt, but unless the entire world decided to stop buying US bonds, the US would not run out of money. As dystopian as the US government is right now, its still one of the best investments in this category. The USA has never once defaulted on its debt. The worst that has happened has been Quantitative Easing (aka "printing money") for a short time during the 2008 financial crisis, and once again in March 2020 during the worst (for financial markets) of COVID. Even then the US government reversed that with Quantitative Tightening (aka "shredding printed money") to raise the value of each remaining dollar in the system. Even with these historical actions, US government debt has been one of the worlds safest investments. Time will tell if that holds up or if trump blows that up too like all of our historically hard won alliances and soft power investments.

So existing bond holders worldwide would be hit hard. I'm guessing there wouldn't even be enough buyers for Europe to sell all their bonds at once, and they'd only be able to sell a fraction of them before the value of them plummeted. Europe could continue to sell what bonds they had, but they'd be losing significant amounts of money because they'd have to discount them to the point that the lower rate of return for those existing bonds was still a compelling investment for a bond buyer.

Potentially they won't find enough buyers to fund their government.

Nah. They only need to fund the interest. Domestic investors can do that for a decade or so. The rest is eaten by inflation.

A US bond embargo is a long term strategy, not short term.

They need to sell more bonds though. Europe can flood the market, leading to a collapse of the bonds value.

That would mean, more debt would become increasingly expensive for the US, potentially to the point where they won't find more lenders.

I think you're missing the part where the US goes effectively bankrupt because it can't sell debt. Everybody loses.

it would be the bank's problem if burgerland stopped borrowing money. Instead they keep going because they can't fund themselves. I wonder what could happen if nobody lent them any more money.

That, and the US is a fiat currency system. Treasuries are a relic of the gold standard. If no one wants to loan the US the money it itself creates out of thin air, it can simply loan itself the money. Really, just will it into existence.

Europeans can exchange their dollar holdings for other currencies or spend their dollars on US goods or dollar-denominated oil. This would weaken the dollar and make imports into the US more expensive. But it’d make US exports more competitive.

I’m always baffled how people, particularly Europeans, don’t understand fiat currency. They have ceded their sovereignty to bond market vigilantes so thoroughly they can’t even conceive of a fiat system.

This particular threat seems like a way to wishfully think their way out of a poor defensive posture. Europe, you’re being squeezed by Russia on one side, the US on the other, and China is hollowing out your manufacturing. Time to hit the gym.

Defaulting on a loan would have disastrous consequences.

I'm dreaming with this. Burgerland stops paying a loan and not only they stop getting any more loans, they simply could close the binders and say there is no country anymore.

The internal chaos that would ensue would force us to invent a new term: fourth world, for a country that fell so low that even third-world sounds too good for them.

Nah, these balls can be lightly squeezed, not just cut off. They can be squeezed lightly for a longer time, making Americans uncomfortable for months, or once in a not so gentle way.

The central banks can do that by selling bonds at a slughtly cheaper price than the US offers for their new bonds, forcing them to offer higher rates, making their debt more expensive.

It's the perfect instrument, if you're willing to pay the price.

So let’s continue with the appeasement policy. Worked great last time…

how long can an army obbey orders if they are not paid?

The US population that would burrow further, will burrow further no matter what Europe does. They're in a self-destructive cycle that requires no outside catalysts at this point.

The other half of the population would invariably be hurt alongside them, but I don't think they'd suddenly turn and see Europe as the bad guy. Some of them would probably consider exercising jus sanguinis claims to European nationality, no matter how flimsy, in an attempt to leave their crumbling economy and fascistic government.

If Europe thinks this will merely be another American Civil War, localized to some far away hemisphere, I ask that they consider whether the situation more closely parallels World War II. There may come a day where the US attacks a NATO ally like Canada, triggering an Article 5 response. A Barbarossa in 2 years time, a D-Day in 4.