How U.S. Treasuries Finance Wars — And Why Your Pension May Be at Risk

How U.S. Treasuries Finance Wars — And Why Your Pension May Be at Risk

The Debt-War Connection

Throughout modern U.S. history, wars have been financed predominantly through borrowing. From World War II to Vietnam, from Iraq to Afghanistan, the U.S. government has rarely paid for war through higher taxes. Instead, it issues Treasury securities, selling them to domestic and foreign investors to raise the necessary capital.

According to the Congressional Budget Office (CBO), the U.S. borrowed over $2 trillion to fund the post-9/11 wars — Iraq, Afghanistan, and related operations — almost entirely through debt issuance.

Who Buys This Debt? Your Pension and Insurance Fund

U.S. Treasuries are held by:- Public and private pension funds- Insurance companies- Mutual funds- Central banks- Sovereign wealth funds.

In 2023, U.S. pension funds held nearly $900 billion in Treasuries, while insurance companies held over $500 billion. These institutions invest your retirement contributions or insurance premiums in what they view as safe assets. In doing so, they provide liquidity to the U.S. government, enabling it to continue funding operations — including military campaigns — without direct fiscal pressure.

The Global Dimension: A War Bond for the World

Japan, China, and the UK each hold hundreds of billions in Treasuries. Global pensions and insurers — from Canada to Germany to Singapore — routinely allocate to U.S. government bonds.

These institutions are channeling the savings of billions of people into debt that enables U.S. military action. Unlike the war bonds of WWII — explicitly marketed as patriotic — today’s Treasury securities are marketed as apolitical financial instruments. But they are not.

The Growing Default Risk

As of June 2025, the U.S. national debt has crossed $36.5 trillion, with interest costs alone exceeding $1 trillion annually — now the single largest budget item, surpassing defense and Medicare.

The U.S. government spends over $2 billion per day on interest payments.

In August 2025, Congress will again debate raising the debt ceiling — the legal limit on federal borrowing. In past episodes, brinkmanship over the ceiling has led to downgrades of U.S. creditworthiness.

A technical default — even if temporary — could lead to massive volatility in global markets, losses for bondholders, and rising yields.

So What Can Be Done?

If Treasuries are no longer 'risk-free,' what are the alternatives?- Pension and insurance boards should reconsider assumptions around U.S. government bonds.

Ethical investing frameworks should start including sovereign use-of-proceeds criteria.

Public awareness must grow: where is your money going?

Conclusion: The Hidden Cost of “Safe” Investments

U.S. Treasuries may not carry the moral stigma of investing in weapons manufacturers or fossil fuels — but they are the vehicle through which wars are financed.

And with U.S. debt spiraling and political dysfunction deepening, the financial risk to investors — especially passive ones like pensioners and policyholders — is growing.

What will you do?