Page 3 of 3 FirstFirst 123
Results 21 to 25 of 25

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

  1. #21
    Banned Iriemon's Avatar
    Join Date
    Aug 2005
    Location
    Miami
    Last Seen
    12-19-15 @ 10:38 AM
    Lean
    Undisclosed
    Posts
    19,405

    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.
    I agree that the fact that US Govt debt is in dollars as opposed to some other currency gives the US a big advantage over other countries whose debt is held in foreign currencies. However, that advantage cannot be played so cavalierly as you suggest because the willingness of nations to hold debt in US dollars is tied to the expectation that it will be repaid, and repaid in dollars that are not worth significantly less than the amount borrowed.

    A default by the US government on its debt obligations even to a specific holder like China would have vast reprecussions in the world financial system and result in a major devaluation in the dollar and willingness to hold US debt. The advantage you point out of issuing debt in US dollars would be lost.

    The debt of the US makes the Govt vulnerable because if China decides to start unloading USG debt as opposed to borrowing more, the cost of replacing that debt will likely be higher.

    China holds leverage

  2. #22
    Professor
    shiznit770's Avatar
    Join Date
    Sep 2008
    Location
    Naperville, IL
    Last Seen
    07-08-10 @ 07:09 PM
    Gender
    Lean
    Undisclosed
    Posts
    1,393

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

    I think China's building itself up to be the next super power. Not because of their purchases of US debt, but because of the amount of money they take into their country. They have over a trillion US dollars in cash reserve assets and they keep adding to it. Their "bailout" policy was to increase infrastructure instead of buying their way out. I have a feeling when the US economy falls China will be the first to step up and take its place. The big difference will be that they won't build themselves up by using another country as we did with China, but their own people instead.

  3. #23
    Banned Iriemon's Avatar
    Join Date
    Aug 2005
    Location
    Miami
    Last Seen
    12-19-15 @ 10:38 AM
    Lean
    Undisclosed
    Posts
    19,405

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

    Quote Originally Posted by shiznit770 View Post
    I think China's building itself up to be the next super power. Not because of their purchases of US debt, but because of the amount of money they take into their country. They have over a trillion US dollars in cash reserve assets and they keep adding to it. Their "bailout" policy was to increase infrastructure instead of buying their way out. I have a feeling when the US economy falls China will be the first to step up and take its place. The big difference will be that they won't build themselves up by using another country as we did with China, but their own people instead.
    By its shear size China will be a player. But IMO there are some fundamental issues the Chinese will have to overcome before it is able to really reach a dominant position. Fundamentally, I think a non-democratic government system is ultimately inconsistent with a capitalist economy, because utimately it does not have to be responsive. The Chinses government has been willing to let some capitalistic elements grow within China, but only to the extent it does not challenge or threaten government control.

  4. #24
    Professor
    shiznit770's Avatar
    Join Date
    Sep 2008
    Location
    Naperville, IL
    Last Seen
    07-08-10 @ 07:09 PM
    Gender
    Lean
    Undisclosed
    Posts
    1,393

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

    Quote Originally Posted by Iriemon View Post
    By its shear size China will be a player. But IMO there are some fundamental issues the Chinese will have to overcome before it is able to really reach a dominant position. Fundamentally, I think a non-democratic government system is ultimately inconsistent with a capitalist economy, because utimately it does not have to be responsive. The Chinses government has been willing to let some capitalistic elements grow within China, but only to the extent it does not challenge or threaten government control.
    Who said capitalism or democracy is a prerequisite to being a super-power?

  5. #25
    Banned Iriemon's Avatar
    Join Date
    Aug 2005
    Location
    Miami
    Last Seen
    12-19-15 @ 10:38 AM
    Lean
    Undisclosed
    Posts
    19,405

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

    Quote Originally Posted by shiznit770 View Post
    Who said capitalism or democracy is a prerequisite to being a super-power?
    That's true, tho in the long run any capability of a nation to be on a super power level (depending on how you define it) requires an economy to support it.

Page 3 of 3 FirstFirst 123

Posting Permissions

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