We will gently explain the "failure of the US Treasury primary sale" that is a concern on September 30, 2025.
In this page, we will explain the global financial and economic major stress scenario that may occur in the future using the name "Walpurgis" for convenience.
This is not a specific ideology or prophecy, but a conceptual name for the overlapping of multiple phenomena. Specifically, it includes the following elements.
This series of events may mean the end of the way of thinking of "household budget finance," which treats national finances like a household budget, and the beginning of the modern monetary system (fiat system).
Since it is predicted that these phenomena will become apparent "at the latest on September 30, 2025," this date is used as a landmark (it may be moved up depending on the situation). The name itself has no deep meaning and is used for convenience of explanation.
A country, like us, lives by paying and receiving money every day. Taxes come in, and pensions and public works expenses are paid. If this flow of money stops, the functions of the country will be paralyzed.
To put it another way, it is the "breathing" of a country. We can live because the rhythm of breathing in (income) and breathing out (expenditure) does not stop. The flow of money for a country is just as important.
To make this breathing smooth, the country issues "government bonds." In particular, the "Treasury bills" explained next are an important tool for regulating daily breathing.
Both Japan and the United States issue special government bonds called "Treasury bills" to execute the government's budget. This is an indispensable mechanism for the operation of a country.
In other words, taxes are not a "source of revenue" from the beginning, but rather have a strong aspect of "repaying" the money that the country has advanced with short-term securities.
What is important here is that the government bond system, including these short-term securities, is very different in Japan and the United States.
| Item | Japan | United States |
|---|---|---|
| Role of the central bank | Since the Bank of Japan exists as a stable, large-lot customer in the secondary market, private banks can actively buy government bonds in primary auctions. | The FRB cannot directly participate in the initial sale (primary auction) of government bonds. On the other hand, it can influence the overall financial environment through purchases in the secondary market and liquidity facilities such as repos (the design philosophy is different from that of the Bank of Japan). |
| Special rules | In principle, government expenditures are covered by tax revenues under the Public Finance Act, but the issuance of deficit-financing bonds is made possible every year through a law called the "Special Deficit-Financing Bond Act." | There is a law called the "debt ceiling," which sets a ceiling on the total amount of money the government can borrow. It can also be used as a tool for political bargaining. |
| Buyer's motivation | Domestic banks are the main buyers. Since banks earn almost no interest on their current accounts at the Bank of Japan, they buy government bonds as assets and hold them to maturity in principle. | Financial institutions called "primary dealers" are the main buyers. Like wholesalers, their top priority is to make a profit on the spread by buying low and selling high in the market (secondary market). |
You often hear in the news that "Japan's long-term interest rates have risen," but this mainly refers to the interest rates on government bonds traded in the secondary market . This is the market where government bonds that have already been issued are bought and sold among investors.
The initial sale of government bonds is conducted in an auction format, which is the "primary auction." The US government (Treasury Department) asks the market, "We want to borrow this much money, will someone lend it to us?"
A situation where there are not enough buyers for this request is a "primary sale failure (failed auction)."
To put it another way, it is a situation where the country's "oxygen mask" comes off. The oxygen (money) that should be relied on when breathing becomes difficult is not supplied. When this happens, the flow of money in the country is on the verge of stopping, and it has a serious impact on the whole world.
Primary dealers are obligated to participate in auctions, but they cannot underwrite an unlimited amount of government bonds. Depending on profitability and risk assessment, if they raise their required interest rates or reduce their bid amounts, the auction may effectively malfunction.
September 30, 2025 is the last day of the US fiscal year 2025, and it is a singular day when several bad conditions overlap.
At this worst possible timing of "having to repay money but there is no extra money in the market," a primary auction that requires settlement on the same day will be held.
The estimated value of government bonds that need to be sold in the primary auction on this day is...
Approximately $365 billion to $415 billion
(equivalent to over 50 trillion yen).
*This range is an approximate estimate based on redemption, refinancing, short-term bond rolls, and funding demand due to seasonal factors.
There is a concern that "there may not be enough buyers for this huge auction." This is the true nature of the scenario called "Walpurgis."
You may think, "That's an American story, right?" But if a primary sale failure really happens, it will have a big impact on our lives as well.
This problem is not a difficult economic problem in a distant country, but an important theme that could shake the foundations of our lives.