As U.S. Debt Hits Record High, Bessent Intervenes in Yen Market to Avert Crisis

Latest fiscal data shows that U.S. national debt has reached an unprecedented historical peak. Treasury Secretary Scott Bessent is attempting to address this crisis—capable of shaking the foundations of the global economy—by intervening in the yen market. Analysts view this action as a strategic 'self-defense' measure aimed at preventing debt interest payments from spiraling out of control.

U.S. Debt Interest Payments Surpass Defense for the First Time

As of July 30, 2026, U.S. Treasury accounting data shows the nation's total debt has reached $39.84 trillion. The debt is currently growing at a rate of approximately $12.6 billion per day, and it is inevitable that it will surpass the $40 trillion mark before the fiscal year ends on September 30, 2026.

Even more concerning is the cost of debt interest. The Congressional Budget Office (CBO) projects that net interest payments for fiscal year 2026 will exceed $1 trillion—nearly triple the 2020 level of $345 billion. In the first three months of the 2026 fiscal year, net interest payments have already reached $270 billion, surpassing defense spending for the same period for the first time.

Currently, publicly held debt exceeds $31.3 trillion. The CBO predicts this ratio will rise from the current 101% of GDP to 120% by 2036, breaking post-World War II records.

Bessent's 'Self-Defense' Strategy

Amid the deepening U.S. debt crisis, Treasury Secretary Bessent has launched an action that appears to be 'saving another country’s currency.' In late July, the yen fell to its lowest level since 1986. Subsequently, the U.S. and Japan conducted their first coordinated intervention in over a decade. During a cabinet meeting at Camp David, Bessent’s laptop was photographed with a to-do item: 'Buy JPY 5–10 billion USD.'

On July 30, the Japanese government spent approximately 8.45 trillion yen (about $52.8 billion) in a single day to intervene—the largest such action in its history. Following this, the New York Federal Reserve Bank, representing the U.S. Treasury, sold euros and bought yen. Bessent explicitly stated that the yen is 'severely undervalued' and that the U.S. 'will not hesitate to participate in further joint interventions.'

Why Is the U.S. Intervening in the Yen?

According to analysis by 247wallst, the logic behind this intervention is closely tied to the U.S. own debt market. Japan is one of the largest foreign holders of U.S. Treasury bonds. Due to the large interest rate differential between the U.S. and Japan (the Federal Reserve rate remains at 3.75%, while the Bank of Japan’s rate is only 1%), the yen faces immense depreciation pressure. If the yen continues to collapse, the Japanese government may be forced to sell large amounts of its U.S. Treasury holdings to raise funds to defend its currency.

Should Japan sell U.S. Treasuries on a large scale, it would directly cause U.S. Treasury yields to spike, pushing up Washington’s borrowing costs. With the 30-year U.S. Treasury yield already hitting a high of 5.27%, the U.S. can no longer afford higher interest burdens. Therefore, Bessent’s purchase of yen is, in essence, 'buying the U.S. Treasury market by other means,' aimed at stabilizing the U.S. bond market.

The Intertwined Fate of the World’s Two Largest Debtors

Japan’s current fiscal situation is even more severe than America’s, with government debt standing at 237% of GDP. As the Federal Reserve remains trapped by persistently high core PCE data and unable to cut rates, the interest rate differential between the U.S. and Japan is unlikely to narrow in the short term, leaving the yen vulnerable and dependent on intervention.

The next key point of financial observation will be the G20 meeting to be held in North Carolina. It is expected that Bessent will meet with Bank of Japan Governor Kazuo Ueda. If an expansion of the 'FIMA repo facility' is announced at that time, it would mean the two most strained balance sheets in the world are becoming more significantly tied together, jointly confronting this unprecedented wave of debt.