Friendly reminder (June 2025 article): Nearly half of national public pension plan is invested in U.S. — and only 12% in Canada
There has been no official update or scrutiny on this close to trillion dollar investment almost a year later, which is hundreds of billions in the US. This is just one of the Canadian government’s investments that is heavily invested into the US. Hard to say that Canada is doing any actions rather than just talking with a big mouth?
Right, you’d think dumping US bonds and investing in Canada would be the obvious move here.
Friendly reminder (June 2025 article): Nearly half of national public pension plan is invested in U.S. — and only 12% in Canada
There has been no official update or scrutiny on this close to trillion dollar investment almost a year later, which is hundreds of billions in the US. This is just one of the Canadian government’s investments that is heavily invested into the US. Hard to say that Canada is doing any actions rather than just talking with a big mouth?
Let’s not forget that the interest on this debt is all coming back to Canada, making Canada stronger.
Feels like a bad choice.
Does seem weird to keep propping up a country that’s actively fighting a trade war with us, encouraging separatism in Alberta, and openly discussing an invasion.
Why are we buying debt of a country headed into a recession/depression and massive inflation?
Because we know they’ll pay it one way or another, their recession/inflation is irrelevant
That’s not true. Inflation is VERY relevant. If money is losing its value then you want to have as much debt as you can because it’s worth the most right now and will be worth less when you have to repay it.
It also means you don’t want to loan money unless the interest rate is very high or you’ll end up losing money.
A trump never pays his debts.
He hasn’t taken over the Federal reserve, YET. If the fed loses independence and trump takes over (which he clearly wants) all bets are off.
A trump never pays his debts.
What “a trump” does is not important, even the shittiest demagogues out there still rarely default on treasury and public debt like this. What’s way more likely is that they’ll fuck up the entire economy to pay off these debts, and use that as an excuse to cut the tiniest amount of public services and social welfare they accomplished in the last 20 years.
A default on public debt would impact Trump personally. On those matters you can bet that he works hard to cover his ass.
You understand that the value of the bonds goes down and we lose money when US currency gets devalued right?
If USD is devalued over time we’ll make bank in other ways, so not concerned about that. What’s more likely is higher inflation would demand higher bond yields, which means bonds are cheaper and Canada should buy even more of them. It does mean that current bonds lose value but if we hold them to term doesn’t matter much
This logic is dangerously complacent and ignores the actual mechanics of how economies fail. You’re assuming a smooth devaluation of the USD that conveniently boosts other assets, but that is not a guaranteed or even likely outcome at this point. An economic crash can lead to a rapid devaluation triggering a severe loss of confidence in US debt, not just higher yields on new bonds.
If inflation spirals then the Fed would be forced to hike interest rates aggressively to defend the currency, which would crush economic growth and likely trigger a recession. The idea that holding bonds to maturity makes losses irrelevant is a fundamental misunderstanding. Those losses represent destroyed capital and a massive opportunity cost. The government would be locking in negative real returns for decades while its debt servicing costs explode on new issuance. Canada buying more cheaper bonds in that scenario is like catching a falling knife. It’s not exactly a clever investment strategy. We’d be doubling down on a failing asset as the underlying economy and fiscal position deteriorate. It’s a recipe for a stagflationary crisis.
Because we know they’ll pay it one way or another
Unless Trump manages to succeed in completely collapsing their economy. (Whether intentionally or due to incompetence)
We sold our gold in 2018 to buy US bonds. We are idiots.
Sigh
But isn’t this also leverage?
In what way, how could Canada practically threaten the US with this?
It gives us a “nuclear button” where we can threaten with massive sell-offs that could tank the value of US bonds. To counter it they would have to basically raise interest rates and/or print money. Sure it would hurt us too, but not before hurting them more. Now if you also place this in a context of coordination with other debt owners (Europeans, Chinese), we can really hurt them.
First question is, massive sell off to whom? Second, it’s obviously going to have a have a huge impact on our own economy. It’s not going to hurt them more because the US is a much bigger economy than us. Can you show me a historical instance of this sort of threat actually working in practice?
If this gave any actual leverage then China would be keeping their bonds instead of doing a fire sale right now. The only countries buying up US bonds are the ones that are under the US thumb right now.
First question is, massive sell off to whom?
Any bonds that are at their due date are required to be paid out by the US treasury.
Most holders of US bonds have a revolving collection of them, so some are coming due on a regular and continual basis.
Admittedly, that’s not a mass sell-off, but it still puts pressure on the US if everyone starts doing it .
Sure, if everybody started dumping US assets in a coordinated fashion that would hurt the US, we both know is not going to happen though. So, in reality Canada is simply making itself more dependent on the US. There’s no need to do mental gymnastics to pretend that this is some 4D chess.
I don’t pretend to know anything about international finance. I’m repeating what I’ve heard.
It’s also worth thinking about what you hear as well. People say all kinds of things, and a lot of time it’s just nonsense. As I pointed out, if holding US debt gave any actual leverage, then China would be doing that instead of selling it off now.
