Foreign governments buy U.S. debt because of the dollar's status as the world's reserve currency – the American economy has long been viewed as a safe place to invest. That's why the amount of U.S. debt held by foreign nations has increased more than six-fold since 2001.
But that's all changing now – events that could spark a U.S. economic collapse are already underway…
The Wall Street Journal revealed this week that China – the largest holder of U.S. investments – is ridding itself of its U.S. government bonds at the fastest rate in history.
In fact, a global sell-off of epic proportion is taking place.
Central banks in China, Russia, Brazil, and Taiwan are selling U.S. government bonds at such a pace that it's caused the most dramatic shift in the $12.8 trillion Treasury market since the 2008-2009 financial crisis.
Foreign official net sales of U.S. Treasury debt maturing in at least one year hit $123 billion in the 12 months ended in July, according to Deutsche Bank Securities Chief International Economist Torsten Slok, reported WSJ. That's the biggest decline since data started to be collected in 1978.
By contrast, foreign central banks purchased $27 billion of U.S. notes and bonds in the prior 12-month period.
Foreign central bankers' massive offloading of U.S. debt sends this dangerous signal…
How Foreign Investors Can Spark a U.S. Economic Collapse
The latest Treasury data (from December 2014) shows that more than one-third of U.S. debt is owned by foreign investors.
China is the biggest foreign U.S. debtholder at 7.2%.
This gives China, along with other major foreign holders of U.S. debt, the power to drastically affect U.S. interest rates.