By David Stockman
David Stockman's Contra Corner
July 11, 2026
An alert observer from the "World of Statistics" posted this warning shot on X, recently. It seems as if the Chinese have dumped $448 billion of their US Treasury holdings in recent years, and have been buying what J.P. Morgan famously called real money more than a century ago. Said he:
"Gold is money. Everything else is credit."
In fact, China's official gold holdings have risen by 19% over the last five years-even as its holdings of Uncle Sam's "credit" have plunged.
China's U.S. Treasury holdings:
- March 2021: $1.1 trillion.
- March 2022: $1.0 trillion.
- March 2023: $869 billion.
- March 2024: $767b.
- March 2025: $765b.
- March 2026: $652b
China's gold reserves (tonnes)
- March 2021: 1,948.
- March 2022: 1,948.
- March 2023: 2,113.
- March 2024: 2,262.
- March 2025: 2,306.
- March 2026: 2,313.
For want of doubt, here is the value of Morgan's "real money" on China's national balance sheet expressed in aggregate dollars. With the price of gold up by 166% and the physical stock higher by 19% over the past five years, the math works out to a +$230 billion or +217% gain in the dollar value of China's gold holdings.
Of course, being communists, the rulers of Beijing are supposedly quite benighted when it comes to economics. But even they, it seems, have been sensible enough to sell $448 billion of Uncle Sam wasting "credit" paper and replace more than half of that by buying $230 billion worth of real money.
We seriously doubt whether the 18-year-old Mao Zedong was paying much attention when J.P. Morgan mansplained the meaning of "money" to a Congressional committee in 1912. Still, his heirs and assigns of today have apparently come to understand Morgan's wisdom far better than the successor Congressional Committees of 2026.
This brings us to the topic at hand. To wit, the reigning UniParty geniuses on Capitol Hill might be well advised to get into a deep study mode with respect to where they are going to sell the impending eruption of new US Treasuries (USTs). After all, even common observation tells you that the two big time buyers of recent years-the Federal Reserve and China-have been sidelined, as we amplify below.
In the interim, however, the task ahead should not be minimized, to say the least. The current public debt knocking on the door at $40 trillion will rise by the staggering sum of $142 trillion over the next 30 years!
That's right. By mid-century, the US public debt will tower at $182 trillion-and even that elephantine figure is based on a rosy scenario on super-steroids. What we mean is that it is a CBO-based projection which assumes both macro-economic perfection and the most rigid and sustained fiscal discipline in Washington that has ever been imagined by the most vociferous Fiscal Hawk.
That is to say, the public debt can be held to a low of just $182 trillion by 2056 if, and only if, the following transpires during the interim:
- Macroeconomic perfection: During the next 30 years there will be continuous full employment year-in-and-year-out with no recession, no temporary dips, no inflation flareups and interest rates that in real terms are lower than today's levels and remain there.
- Fiscal Discipline: No new spending programs, no entitlement liberalization or benefit improvements, no new wars, no rise in real dollar spending from 2026 levels for any defense or non-defense discretionary program and no new Republican tax cuts ever again!
Of course, anyone stupid enough to even remotely believe these assumptions would deserve to go penniless buying Florida Swampland. Yet the assumption of anything even a tad more realistic with respect to macroeconomic projections and fiscal policy assumptions over the next three decades takes you to a $200 trillion public debt or higher during an interval of time equivalent to what has elapsed since Bill Clinton was sworn in for the second time.
Stated differently, overlay just a modicum of realism on the Rosy Scenario assumptions built into the graphic below, and you have a USA public debt by 2056 that would be nearly double the present GDP of the entire planet!
Reprinted with permission from David Stockman's Contra Corner.