July 26, 2025 | Debt & War

Many have been writing in about the FT’s article on the UK surpassing China as the 2nd largest holder of US debt. While they understand I have laid out that ever since the Biden Administration that was in the hands of the Neocons began threatening China with war over Taiwan, and in the aftermath of the stupid sanction of Russia that NEVER work in history, that led to the creation of BRICS. Many realized that the US had converted the dollar into a geopolitical weapon. That caused the start of the dumping US debt. As I have said many times, you DO NOT OWN THE DEBT of an adversary. What has confused many is the dramatic rise in the purchasing of US debt by Britain.

Our model has projected that the decline in the British pound will most likely accelerate in 2026 and perhaps even break the parity level going into 2027. The Starmer government has sentenced the pound to its demise with a double-edged sword, cutting everything right down to the last vestiges of its former glory with insane Marxism combined with its publicly declared Proxy War with Russia that it is destined to lose.

The stages of how a government commits suicide is (1) fiscal mismanagement that allows them to inflate their way out of debt, (2) when they can no longer sell the new debt to pay-off the old, they turn to tyranny against their own people and typically see war blaming an external enemy, this time Putin, and finally (3) door #3 – the default with the fall of the government and the new government disavowing the debts of the old.

The Japanese holdings of US debt are misleading. I reviewed the actual debt crisis in our Institutional Report, which shows who holds what. It is NOT the government that holds the US debt. It is private corporations that hold US debt as a hedge against their own government.

Based upon our sources, a significant portion of U.K. holdings of U.S. debt is private, likely in the range of 60-70%, as private institutions dominate foreign investment in U.S. Treasurys globally. The Bank of England holds U.S. debt as part of its foreign exchange reserves or for monetary policy purposes. However, the Bank of England holdings of foreign-owned U.S. debt are around 30-40%. Here too, we see that the rise in the U.K.’s private sector’s holding of US debt is again playing a significant role in global investment as a hedge against the Starmer government. The private holdings of US debt began to increase with the election of Donald Trump in 2016.

Martin Armstrong July 26th, 2025

Posted In: Armstrong Economics

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