http://www.chinadaily.com.cn/china/2008-12/17/content_7311752.htm said:China increased its holdings of US treasury securities by $65.9 billion in October, consolidating its place as the No 1 holder of American debt, according to the Treasury's latest report on international capital flows.
It was China's largest monthly increase this year, pushing the country's total holdings to $652.9 billion, compared with $587 billion at the end of September, when it replaced Japan to become the top holder of US debt.
The continual increases in US debt holdings in recent months have triggered fierce domestic debate, as the country has channeled almost a third of its $2 trillion of foreign exchange reserves into US treasury securities.
Isn't socialism wonderful.
Quoted from Orius
(For those that think that the average U.S. citizen shoulders the nations debt, think again.)
Sooner or later (IMO later) this debt will have to be repaid by American US Taxpayers.
However in the meantime don't you realize that this gives China enormous clout over US interests Worldwide, China can dictate US Foreign Policy.
Do not imagine that this will not happen, when someone holds that kind of debt over you, they can tell US to jump, the US response will be 'How High?'.
For those that think that the average U.S. citizen shoulders the nations debt, think again.
For those that think that the average U.S. citizen shoulders the nations debt, think again.
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.
No wonder why my last pay check was paid in yuans...:roll:
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.
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 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.
-- 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 --
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.
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.
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 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.
Who said capitalism or democracy is a prerequisite to being a super-power?
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