Exploding U.S. indebtedness makes a fiscal crisis almost inevitable

Jamie Dimon, the CEO of JPMorgan Chase, was more tantalizing than illuminating when he recently said, regarding the nation’s fiscal trajectory, “You are going to see a crack in the bond market.” Details, even if hypotheticals, would be helpful concerning the market where U.S. debt is sold.

Twenty-five percent of Treasury bonds, about $9 trillion worth, are held by foreigners, who surely have noticed a provision in the One Big Beautiful Bill (1,018 pages). Unless and until it is eliminated, the provision empowers presidents to impose a 20 percent tax on interest payments to foreigners. The potential applicability of this to particular countries and kinds of income is unclear. It could be merely America First flag-waving.