And the dear leader is incapable of reasoning. Treasoning however…

Japan holds a trillion dollars of US debt in the form of bonds. If they sell the bonds, it increases the supply and lowers demand so to be more attractive the bond interest rates must increase. If the interest rates increase it means that the US must pay more towards paying down the national debt that it currently does. That means US interest rates will increase and the average American will have to pay more in loan and mortgage payments than ever, causing people to abandon homes and cars, and the value of the US dollar will crash. This will lead to a new depression.

When foreign countries buy those US Treasuries, basically they are as if the US borrowed money from those foreign countries (ie foreign country gives the US money and the US promises to pay interest over time on that money, and to give back that money in the end. In this case it is said that foreign country “bought” US debt). This helps keep the value of the US dollar where it is (in other words, highly desirable). If foreign countries stop buying those US Treasuries or — worse — start selling them, it is as if those countries are taking their money back. Because the dollar becomes less desirable in that scenario, then the US has to jack up interest rates to make the dollar attractive to buyers again. For the people on the street, this results in higher interest rates on loans, credit cards, and mortgages. Companies face higher costs to borrow money and some have to fire people and/or reduce/close business.

In short, Trump thinks that he has leverage on foreign nations by affecting how they trade with the USA, but he doesn’t realize that foreign nations have immense ability to wreck the dollar if they are forced to do so by no longer giving their money in exchange of US debt.

The crude idea is that it makes US bonds less desirable, meaning they have to increase the interest rate on them, costing the US a lot of money

The US used its soft power to pump the dollar, part of that was selling bonds to other countries to help secure its place as the reserve currency. Japan is threatening to dump that pump.

What an unfortunate thing to happen on free dozen eggs night.

The interest is the price of the risk.

It’s not about “believing” which way it’s going to go, it’s whether or not you want to be paid to accept that risk.

The problem is that the high interest rate would trigger the debt ceiling and the USA may actually default on its debt

Good luck finding a trillion dollars. This tool is also used by the EU, South Korea, Canada and China. Good luck finding 7 trillion dollars.