This is false.
1. Japan is a net creditor nation, meaning it owns more foreign assets than it owes in debt. The U.S., on the other hand, is a net debtor nation, meaning it relies heavily on foreign investors to finance its deficits.
Japan also has a high domestic savings rate, and a large portion of its debt is held by its own citizens and institutions. This reduces capital flight risks compared to the U.S., which depends more on foreign investors (e.g., China, Japan, and others buying U.S. Treasuries).
The U.S. dollar is the world’s reserve currency, which gives the U.S. unique advantages, but also means its debt is held globally. A loss of confidence in U.S. debt could have larger consequences compared to Japan.
2. U.S. benefits from strong global demand for the dollar, but this is not guaranteed forever. If the Federal Reserve were to absorb all bond issuance ( basically monetizing the debt), inflation expectations would rise sharply, leading to a currency crisis or higher interest rates. Zimbabwe and Weimar Germany are extreme examples of this.
U.S. essentially "exports" its debt due to its persistent trade deficits.
U.S. runs large trade deficits, meaning it imports more goods than it exports. Other countries (like China and Japan) accept U.S. dollars in exchange for their goods, and then reinvest those dollars into U.S. assets, primarily Treasury bonds. This has helped finance U.S. debt at low interest rates for decades.
If global confidence in U.S. debt declines, foreign demand for Treasuries could drop, leading to a weaker dollar, higher interest rates, and inflationary pressures.
All of your comments in this thread are misleading.
