Are U.S. bonds a financial trap or an economic pillar? Yu Zhe'an analyzes the core differences with Brain哥's viewpoints

Cryptocurrency content creator Brain recently released a video discussing the nature of the US dollar and US debt, sparking heated debate within the community. At the same time, economist Yu Zhe’an provided an in-depth analysis of related arguments, pointing out that using private financial logic to evaluate national debt involves fundamental cognitive biases. The clash of these perspectives offers us different viewpoints for understanding the global financial system.

The True Face and Global Status of National Debt

U.S. Treasury bonds serve as certificates for the government to borrow funds from investors, used to finance infrastructure, social welfare, and national defense. Depending on the maturity, the US distinguishes between short-term Treasury bills, medium-term notes, and long-term bonds. Backed by the US government’s credit, these bonds are long regarded as the safest and most stable assets worldwide, attracting continuous investment from central banks and financial institutions, and occupying a central position in international financial markets.

Brain approaches from another angle, pointing out that the US debt has reached 123% of GDP. In other words, even if all 330 million Americans went a year without eating or drinking, they would still struggle to pay it off. Whenever the debt ceiling is reached, the US government raises it to borrow more. He sees this as a typical “new debt to pay old debt” cycle, which will eventually trigger a debt crisis and cause catastrophic impacts on the global economy.

Yu Zhe’an’s Critique: Private Logic Is Not Suitable for Public Finance

Yu questions this type of analysis. He cites Japan as an example, where debt exceeds 250% of GDP, yet there has been no fiscal collapse. Relying solely on the debt-to-GDP ratio to assess a country’s repayment ability is an incomplete evaluation method.

More importantly, Yu emphasizes that applying private household or corporate financial logic to understand government debt is fundamentally flawed. Private sectors are limited by current income to determine spending, but public sector operations are entirely different—governments first allocate necessary expenditures and then decide how to raise revenue. This fundamental difference leads to completely different debt management strategies.

Three Paths for Debt Repayment Cycles

In response to Brain’s criticism of “borrowing new to pay old,” Yu explains that government debt repayment is not dependent on current income like private sectors. Governments can address debt primarily through three methods:

First, by fostering economic growth that exceeds real interest rates, allowing the economy to expand faster than debt accumulates; second, permitting inflation rates higher than nominal interest rates, which reduces the real debt burden; third, through traditional fiscal balance and surplus measures.

Historical data shows that in the US, only about 30-40% of debt repayment has come from fiscal surpluses, while over 50% has been driven by increased tax revenues and reduced expenditures resulting from economic growth. This indicates that economic momentum is the main engine for government debt repayment, not just tightening belts.

Inflation as an Implicit Resource Allocation Mechanism

Brain emphasizes that inflation directly erodes people’s savings, exacerbating wealth inequality. However, Yu views inflation differently, seeing it as a “resource redistribution” mechanism. Banks create purchasing power through credit, channeling funds toward individuals and enterprises that can most effectively utilize resources, gradually concentrating resources into more productive hands.

Although this implicit transfer of wealth disadvantages some savers, from the perspective of the entire economy, it can optimize resource allocation efficiency. This reflects the eternal trade-off between efficiency and fairness in economic decision-making.

How the US Dollar’s Global Status Supports Bond Stability

Brain criticizes the US debt ceiling being raised 78 times in just five years (from $23 trillion in 2019 to $35 trillion in 2024), viewing it as a “bottomless pit” designed by the US Treasury to facilitate unlimited borrowing.

Yu points out that before 1917, the debt ceiling system required congressional approval for each increase, but this cumbersome process limited the government’s ability to respond to economic fluctuations. Therefore, establishing an adjustable debt ceiling was fundamentally about maintaining stability during economic cycles, not an unlimited free-for-all.

More critically, the US accounts for about 20% of global GDP, yet US dollars make up 50% of international trade settlements and cross-border financing. Under this structure, US debt has become a pillar of global financial stability. The US’s ability to print money and its irreplaceable status as the world’s reserve currency give it structural advantages that garner long-term market support, enabling sustained financial stability.

Evolution of the Monetary System and Risk Perception

Regarding the notion that “the US has a printing press,” Brain worries that central banks and governments form an economic closed loop, with the scale of central bank holdings of US bonds and government issuance growing almost in tandem, posing serious long-term threats to the global economy.

Yu offers a broader perspective: money is fundamentally a resource allocation system with a lifecycle. When a monetary system becomes unsustainable, it can transition to a new version. Transitioning systems involves costs but does not necessarily spell doomsday. The evolution and renewal of monetary systems are normal parts of history, not inevitable catastrophes.

Insights from Two Different Thinking Frameworks

The core of this debate reflects that understanding economic phenomena often depends on the analytical framework adopted. Brain, starting from private household or corporate debt logic, perceives dangerous signals in the scale of US borrowing. Yu, from a macroeconomic perspective, reveals structural stability factors inherent in the system.

Brain’s warning serves as a caution—government debt indeed requires oversight and constraints; but Yu’s analysis shows that many seemingly dangerous phenomena have different logic and solutions at the national level. To truly understand the US debt issue, one must go beyond simple analogies and grasp the unique operation principles of public finance. Only then can we make more accurate judgments about US debt and its impact on the global financial system.