Some people don't get China holds us financial hostage (stocks, bonds, real estate)....because the news doesn't report it. That's a far bigger issue-IMHO.
I used to feel that way but no longer. China would be committing financial destruction to their financial system/exports would plummet.
In reality they only own around one trillion of US debt. It used to be a staggering amount of money to me but no longer, we as a nation have a national debt of 33 times that amount.
China actually owns less US debt than it did a decade ago.
I find this article pretty educational and "balanced" which is tough to find in todays media.
Dont misunderstand my post. I am a hardline line LIVE within a budget person and disgusted at the voters who allow this to go on, however, nothing I can do about it so it is what it is.
Im just saying China has an equal amount a risk if they stop buying. Some excerpts below;
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"Although the U.S. budget deficit has been rising, the risk of the U.S. defaulting on its debt practically remains nil (unless a political decision to do so is made). Effectively, the U.S. may not need China to continuously purchase its debt; rather China needs the U.S. more, to ensure its continued economic prosperity."
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"U.S. Debt to China: Risk Perspective for China
China, on the other hand, needs to be concerned about loaning money to a nation that also has the limitless authority to print it in any amount. High inflation in the U.S. would have adverse effects on China, as the real
repaymentvalue to China would be reduced in the case of high inflation in the U.S.
Willingly or unwillingly, China will have to continue to purchase U.S. debt to ensure price competitiveness for its exports at the international level."
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Here is the source, I think it is a great educational read;
China and many other countries buy U.S. debt through the purchase of Treasury bonds, here are the factors behind those purchases.
www.investopedia.com
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I do apologize ... *LOL* got carried away as this isnt the investing thread!
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