Part 11/16:
US debt is held globally, but the US itself maintains a negative net international investment position, owing to consistent current account deficits.
The sustainability of this system relies on trust and continuous flow of dollar assets.
Risks emerge when:
Global trade slows down.
Countries or corporations with dollar debt face refinancing pressures.
The supply of dollars tightens unexpectedly, creating liquidity crises.
The Debt Dilemma: Why Rising Debt Levels Threaten Stability
With nearly $300 trillion in global private debt (many issued in dollars by non-US entities), the stakes are enormous. When refinancing becomes difficult, especially in dollar-denominated debt, systemic shocks could ensue.