Page 2 of 3 FirstFirst 123 LastLast
Results 11 to 20 of 25

Thread: China now #1 holder of U.S. debt

  1. #11
    Banned
    Join Date
    Jul 2005
    Location
    Los Angeles, CA
    Last Seen
    02-16-11 @ 08:57 PM
    Gender
    Lean
    Centrist
    Posts
    36,915
    Blog Entries
    2

    Re: China now #1 holder of U.S. debt

    Quote Originally Posted by conquer View Post
    No wonder why my last pay check was paid in yuans...
    haha...you got suckered.

  2. #12
    Guru

    Join Date
    Jun 2006
    Last Seen
    05-13-11 @ 09:01 PM
    Gender
    Lean
    Independent
    Posts
    4,075
    Blog Entries
    3

    Re: China now #1 holder of U.S. debt

    Ikari supposes that China cannot possibly win, that the US merely has to print more money.
    Well first of all, printing money merely brings inflation and a much higher rate than that which we currently enjoy.
    It also means that the value of the US $ decreases lower than which it already is, which means that imports will be that much more costlier.
    Now I suppose that under normal circumstances this would not matter as if one is unwilling to purchase imported products one would perforce be compelled to purchase US manufactured products.
    Something wrong with that argument?, Shucks the US no longer manufactures those products, we exported a lot of our manufacturing jobs.
    China will in all probability continue to purchase US Company's, this is already happening, doubtless it will increase as the US becomes poorer and poorer.
    Eventually there will come a tipping point whereby China will own outright more US Company's in the US than those which are owned by Americans.
    Someone said that Reagan suggested that the Capitalist system will win out in the end, IMO he was correct, however what he failed to say was that that Capitalist system will be governed under a Communist regime.
    The US is already a Socialist State, has been for more than 60 plus years, the distance from Socialism to Communism is oh so short courtesy of the likes of Kennedy/ Obama/Clinton.

  3. #13
    Banned
    Join Date
    Jun 2008
    Location
    Canada
    Last Seen
    12-26-10 @ 06:57 PM
    Gender
    Lean
    Independent
    Posts
    8,083

    Re: China now #1 holder of U.S. debt

    Quote Originally Posted by Ikari View Post
    haha...suckers. This doesn't give them any "clout" over us. Our debt is written in our dollars; and we have a printing press. It will eventually be taken up by the People, but through inflation. But that means that China is more in our pocket than we are in theirs. We own them tons of money, what happens if we don't pay out? I mean, there's nothing that really makes us pay out; China can't take us out, or military is too good (while I don't think we could ever occupy China, I think our military far outclasses China's; so any war not on Chinese soil stands greater chance of being won by America). I can't believe the keep lending us money.
    China has no need for war. Economically, the U.S. is already outmatched. If China dumped its currency holdings onto the open market tomorrow, the U.S. economy would crash in an instant to depression levels. I don't know why people fantasize about war with China. It's not going to happen. China has never been imperialist to the levels America has, although in modern times it is engaging in more cultural imperialism than ever before.

  4. #14
    User
    Join Date
    Dec 2008
    Last Seen
    02-15-09 @ 04:04 PM
    Lean
    Undisclosed
    Posts
    77

    Re: China now #1 holder of U.S. debt

    The reason China continues to invest in the US even though its economy is obiusly in serious trouble is that there is no other currency big enough for china to invest in. Yen not invested is lost yen, they need the investment market, even though they run the risk of losing it all in a dollar collapse, better than letting it sit around...

  5. #15
    Banned
    Join Date
    Oct 2006
    Last Seen
    04-24-09 @ 08:26 AM
    Gender
    Lean
    Independent
    Posts
    964

    Re: China now #1 holder of U.S. debt

    Quote Originally Posted by cheat3 View Post
    The reason China continues to invest in the US even though its economy is obiusly in serious trouble is that there is no other currency big enough for china to invest in. Yen not invested is lost yen, they need the investment market, even though they run the risk of losing it all in a dollar collapse, better than letting it sit around...
    I love your spelling of "yuan".

  6. #16
    Equal Opportunity Hater
    obvious Child's Avatar
    Join Date
    Apr 2008
    Location
    0.0, -2.3 on the Political Compass
    Last Seen
    12-09-14 @ 11:36 PM
    Lean
    Other
    Posts
    19,883

    Re: China now #1 holder of U.S. debt

    Quote Originally Posted by jallman View Post
    I highly doubt that China will be dictating US foreign policy any time soon. Debts come with contracts and these contracts would include payment guidelines, none of which would include US sovereignty in its affairs taking a hit.
    Well, not in a direct form and not anytime soon. What we have to worry about is if China manages to decouple its economy from us and find large substitute markets elsewhere they can effectively wield a hybrid soft-hard power on us through threats of debt. By being in a position where we are no longer their major market, they can effectively sell all of the debt they hold in one minute kicking the bottom out of the US securities market rendering our capacity to borrow moot. They won't do it now because they are too dependent on us. I've said this before, if I was a hyper-nationalist, decoupling would be my #1 fear.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

  7. #17
    Sage
    Infinite Chaos's Avatar
    Join Date
    Oct 2007
    Last Seen
    11-19-17 @ 06:45 PM
    Lean
    Undisclosed
    Posts
    14,858

    Re: China now #1 holder of U.S. debt

    Quote Originally Posted by Orius View Post
    -- Economically, the U.S. is already outmatched. If China dumped its currency holdings onto the open market tomorrow, the U.S. economy would crash in an instant to depression levels --
    This has already happened once in recent history when the US used its economic leverage over the UK to stop the Suez crisis.

    The Suez Crisis

    As someone else pointed out, it would simply be a case of the one country asking the other to jump as high as it liked. That too was the changing of just who was a world "superpower."

    America ignores history at its own peril if it lets foreign debt get too large.

  8. #18
    Sage
    Ikari's Avatar
    Join Date
    Dec 2006
    Location
    Colorado
    Last Seen
    12-08-17 @ 01:05 AM
    Gender
    Lean
    Libertarian - Left
    Posts
    54,124

    Re: China now #1 holder of U.S. debt

    Quote Originally Posted by Orius View Post
    China has no need for war. Economically, the U.S. is already outmatched. If China dumped its currency holdings onto the open market tomorrow, the U.S. economy would crash in an instant to depression levels. I don't know why people fantasize about war with China. It's not going to happen. China has never been imperialist to the levels America has, although in modern times it is engaging in more cultural imperialism than ever before.
    It's not a fantasy about war, it's a statement that they can't force us to pay back. People want to sit and say "they won", but this was the sucker bet. They lent us money, we'll use inflation to pay them back in dollars worth less than what we got. Furthermore, this has caused artificial inflation of the Chinese currency since their banks are all government run with strong rules; their banking must be done in their currency. So when they buy our debt, they buy in US dollars, but then they have to use their banks to convert to yuan. If deflation hits, then they are in even more trouble since it starts become viable to move more production State side. China's already taking that hit.

    They can go ahead and off load our debt to whomever they want, it will have no affect on us. Those are loans already made, we already have that money. The important thing about that debt is the other way around, it's the guarantee that America will pay it back that people now find valuable. It's based in part on the strength of American consumerism. Usually a good bet. But facts remain, our debt is written in our dollar, we can make our dollar. Now we're not going to just print off the debt of course, but the point is that our debt is written in a fiat currency that we control. We already use inflation to our advantage on this already (inflation is good to debtors). No one can control us by holding our debt, they can't call it it. First off, we can manipulate it to be advantageous to us. Secondly, how would the force us? And WTF would happen to someone like China if we said "no"? They'd be screwed. Big debtors hold power over lenders because the lender has to get that money back.
    You know the time is right to take control, we gotta take offense against the status quo

    Quote Originally Posted by A. de Tocqueville
    "I should have loved freedom, I believe, at all times, but in the time in which we live I am ready to worship it."

  9. #19
    Banned
    Join Date
    Jun 2008
    Location
    Canada
    Last Seen
    12-26-10 @ 06:57 PM
    Gender
    Lean
    Independent
    Posts
    8,083

    Re: China now #1 holder of U.S. debt

    Quote Originally Posted by Ikari View Post
    It's not a fantasy about war, it's a statement that they can't force us to pay back. People want to sit and say "they won", but this was the sucker bet. They lent us money, we'll use inflation to pay them back in dollars worth less than what we got.
    I wasn't talking about winning or losing, just economic facts.

    Quote Originally Posted by Ikari View Post
    Furthermore, this has caused artificial inflation of the Chinese currency since their banks are all government run with strong rules; their banking must be done in their currency. So when they buy our debt, they buy in US dollars, but then they have to use their banks to convert to yuan. If deflation hits, then they are in even more trouble since it starts become viable to move more production State side. China's already taking that hit.
    I see your line of thinking, but it's not accurate. China is suffering now because its market is intimately tied to the U.S. market, which is currently in recession. This is why China continues to buy U.S. currency shares, since so many others are bailing out of their stocks due to the collapsing market. If the U.S. crashes, China crashes even harder. Policy analyst in China have questioned this approach though. How long can you keep afloat a sinking ship really?

    Quote Originally Posted by Ikari View Post
    They can go ahead and off load our debt to whomever they want, it will have no affect on us. Those are loans already made, we already have that money. The important thing about that debt is the other way around, it's the guarantee that America will pay it back that people now find valuable. It's based in part on the strength of American consumerism. Usually a good bet. But facts remain, our debt is written in our dollar, we can make our dollar. Now we're not going to just print off the debt of course, but the point is that our debt is written in a fiat currency that we control.
    The U.S. makes its own currency, sure, but it's the market that determines its value. Currency operates on the principle of supply and demand just like any other commodity. If the U.S. economy begins to tank, then people will sell their currency shares because the value of the dollar is not making them as much profit. In turn, the value of U.S. currency drops. China, in the past, has allieviated this problem by purchasing treasury shares in order to prop up the dollar in the name of its own interests. China is the ultimate bail-out, even beyond the current recession problems.

    This is why if China dumps its currency shares onto the market, supply of U.S. currency shares will skyrocket and the value will plummet. Sure, people would probably buy it back over time, but trillions of dollars in currency shares won't be bought up over night. And what would be the incentive if the value of those dollars was now worthless?

    Quote Originally Posted by Ikari View Post
    We already use inflation to our advantage on this already (inflation is good to debtors). No one can control us by holding our debt, they can't call it it.
    Not strictly speaking, no... and I don't think China would ever play that card because it would damage its own interests. But technically, it has the ability.

    Quote Originally Posted by Ikari View Post
    First off, we can manipulate it to be advantageous to us. Secondly, how would the force us? And WTF would happen to someone like China if we said "no"? They'd be screwed. Big debtors hold power over lenders because the lender has to get that money back.
    Well, China also owes the U.S. money, but its domestic growth rate has been approx. 10% annually for the past 10 years and it is increasingly in a better position to pay off debt. However, the amount of U.S. debt China is shouldering is larger than other nations. Your methodology would work if debt was distributed evenly, but it's not. A great deal of the chips are in one pile.

    At any rate, there will be no war with China... if there were, the U.S. would be shooting itself in the foot.

  10. #20
    Libertarian socialist

    Join Date
    Jul 2005
    Location
    Staffs, England
    Last Seen
    12-13-17 @ 07:20 PM
    Gender
    Lean
    Very Liberal
    Posts
    6,730

    Re: China now #1 holder of U.S. debt

    Quote Originally Posted by Infinite Chaos View Post
    This has already happened once in recent history when the US used its economic leverage over the UK to stop the Suez crisis.

    The Suez Crisis

    As someone else pointed out, it would simply be a case of the one country asking the other to jump as high as it liked. That too was the changing of just who was a world "superpower."

    America ignores history at its own peril if it lets foreign debt get too large.
    Indeed. The UK was bailed out by the U.S after the war and continued paying back debt untill the early 2000s. This would explain why UK foriegn policy has been pretty much dictated by the U.S ever since. A good example is how our government tacitly [at the very least] supported the vietnam war despite being very left wing at the time. If the same happens with China and the U.S then that doesnt bode well for the world.

Page 2 of 3 FirstFirst 123 LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •