Mark MossChief Bitcoin Strategist Satsuma | Partner BTCOppFund | ArchLending | BlockwareTeam | 100M+ YouTube

What Happens If Japan Stops Buying US Debt?

27 Aug 2026 · 2 min

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In this commentary, Mark Moss explains that Japan is the single largest foreign holder of U.S. Treasury securities, possessing over $1.1 trillion, ahead of the United Kingdom, China, Belgium and the Cayman Islands. He argues that if Japan were to stop purchasing new U.S. debt—or began selling its existing holdings—the United States would need to attract other investors by offering higher yields. Higher Treasury rates would cascade through the economy, raising borrowing costs for mortgages, auto loans, business credit lines, credit cards and affecting the valuation of investment portfolios. Moss points to a “third facility,” a FEMA‑backed credit line capped at $60 billion that Scott Bessent is trying to expand, as a potential buffer. He advises watching the Federal Reserve’s H.4.1 report each Thursday, which tracks foreign official repurchase‑agreement activity; for eight consecutive weeks the figure has been zero, indicating a lack of foreign‑official liquidity support.

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Now, if Japan forces that, then the US is going to have a problem because the US is going to have to replace the highest bidder. So Japan— so take a look at this chart, and this is why Scott Bassett and the US wants to protect Japan so much, is because this is a chart of the largest foreign holders of US debt, US Treasuries. Japan is right here as the largest holder with over $1.1 trillion. And then we have the United Kingdom, $948 billion. China, $659 billion. Belgium, $472 billion. Cayman Islands, $471 billion. Okay, but look how far Japan is. They're the largest buyer. So what happens if they can no longer buy that US debt, or they can't buy it and they're selling it at the same time? Well, that's a problem. The US is going to have to replace Japan as a buyer and potentially a holder. At the same time. What does that mean? Well, that means that they're going to have to pay higher rates in order to attract that capital. What does that mean? Well, that means your mortgage. That means your credit lines, your business credit lines, your business credit cards, your auto loans, all of that. It's also your portfolio because the price of your portfolio has to do with the real rates. Okay. We have to understand that in order to protect this, we have a third branch. So certainly we have the Treasury and we have the Fed, but we have this third facility, this FEMA facility, as we talked about it. It's the one that's stuck at $60 billion cap. Scott Bessent's trying to get raised right now. It's the credit card I give my kids. And what we want to do is we want to watch one single number, and it comes out every Thursday. The number that we want to watch every Thursday is this. It's on that Fed report I told you we'd come back to at the very beginning. It's called the H.4.1. And what this shows us is the repurchase agreements of foreign officials. And here we can see for the 8th consecutive week, it's at zero.