Quote:
Originally Posted by dyna mo
i mean the reason they buy our debt is 2-fold.
1. they have to put their moeny somewhere, u.s t-bills are historically THE place to do that and continue to be, China gets favorable worldwide credit ratings etc from this as well.
2. by buying our t-bills, the added cash adds to the u.s. overall credit pool, allowing americans to buy more chinese made shit on credit.
but if push came to shove, the u.s. could not pay out on those t-bills if china tried to dump them, *cash* them and it will be that way for a long time, prolly forever. they are worthless in that respect, the action of buying them simply perpetuates the credit system.
both sides need both sides, in fact, i'd wager china needs us slightly more but that's besides the point. the real cash money comes from consumer goods bought/sold daily. we are china's biggest customer. would you fuck your best (by far) customer in the ass if the majority of your worth is based on them? of course not.
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Oh I never meant to suggest there wouldn't be rather serious consequences for China. Even if they dumped their US bonds before they matured, they would take a gigantic financial hit and yes their number 1 customer would pretty much be wiped off the financial map and unable to buy anything.
Though Chinese are more capable of living in poverty if circumstance dictated it, and they do have a TON of other customers who would definitely keep buying. The US on the other hand would have a totally worthless dollar, and suffer post war German levels of hyperinflation .. it would pretty much be the end of the US as we know it.. and we all know Americans have never had to deal with true poverty.
America isn't going to attack China, and while China will prod the US from time to time, they aren't gonna attack you guys either. In 10 years they will be the world superpower anyway, and they know to just sit back and wait. America is digging its own grave ... that free trade agreement didn't work out too well for the US unfortunately.