China Buys-Up US Debt At A Rate Of $15 Billion Dollars Per Month

Oh the american paranoia! The chinese are not "buying" US debt to cripple your economy. They are buying dollars to purchase oil. This is also the reason why they are looking at offloading their dollars for euros since a number of oil producers are looking at switching to euros. Iran is one of China's oil suppliers and Iran wants to sell oil in euros, hence why the US has such an interest in Iran.

It is true that if China was to offload all its dollars for a.n.other currency then the US economy would collapse. However this is not China's fault but the US's for being dependant on its currency as the currency for world oil trade.

The total dependance on oil trade to prop up the US economy also explains why the US admin continues to invest in the oil economy despite global warming. It is also explains why it lies to its citizens about the causes and cures of global warming. God forbid the US citizen knows the truth since a cutback in worldwide oil consumption (without an alternate "industry") spells the end of the US economy!

The US cannot afford any of the following:

1. Switch from oil to a.n.other energy source.
2. Switch by an major oil producer from dollar to euro (like Saddam did!)
3. Antagonise China.

if china dumps 400 billion on the open market - then the usa is in trouble.

$1000 weekly shopping bills for the average family , $50 a gallon for fuel and inflation that is out of control

when china go after taiwan the usa won`t get involved

Economics... not my strong suit.

Is it possible for the US Governmnent or whoever controls it , to put a hold on international purchases of this type?

Not sure how that effects the stock market/trading, but I am sure that would cause some turmoil.

if the government put a hold on this , then the effects would be similar - as you are looking at an `income` shortfall of 16 billion per month (from china alone) - but spending remains the same

Originally posted by malcr
Oh the american paranoia! The chinese are not "buying" US debt to cripple your economy. They are buying dollars to purchase oil. This is also the reason why they are looking at offloading their dollars for euros since a number of oil producers are looking at switching to euros. Iran is one of China's oil suppliers and Iran wants to sell oil in euros, hence why the US has such an interest in Iran.

It is true that if China was to offload all its dollars for a.n.other currency then the US economy would collapse. However this is not China's fault but the US's for being dependant on its currency as the currency for world oil trade.

The total dependance on oil trade to prop up the US economy also explains why the US admin continues to invest in the oil economy despite global warming. It is also explains why it lies to its citizens about the causes and cures of global warming. God forbid the US citizen knows the truth since a cutback in worldwide oil consumption (without an alternate "industry") spells the end of the US economy!

The US cannot afford any of the following:

1. Switch from oil to a.n.other energy source.
2. Switch by an major oil producer from dollar to euro (like Saddam did!)
3. Antagonise China.

Those are some pretty harsh warnings at the end there, cap'n. I'd say if I were even slightly pre-disposed to paranoia, you would have sent me twitching!

In fact, it sounds like the last three items are not outside of the realm of possibility, considering who's still in the White House.

Originally posted by the_sentinal
I think China will pull the rug out from under US very soon, just a few more mis-steps by the Bush administration and we should see the Chinese scuddle our economy, then when we are weak militarily we'll see them invade Taiwan.

My friend, I don't think that China needs an excuse to invade anybody at all...they will just do it how and when they want to and guess what - NO ONE will be able to stop it so enjoy the ride when it happens

Valorian,

That sounds an awful lot like the United States of just ten years ago. Are you sure you're not enjoying that realization just a little?

This is one of the problems with the Us that has bugged me for a long time. The growing US deficit is our biggest strategic weakness. If another country really decided they wanted to hurt the US, all they would have to do is buy up a large share of the growing debt and then cash in on it when the US gets into a jam. They could cripple our economy, and there's nothing we could do to stop it.

Tim

Originally posted by Ghost01
This is one of the problems with the Us that has bugged me for a long time. The growing US deficit is our biggest strategic weakness. If another country really decided they wanted to hurt the US, all they would have to do is buy up a large share of the growing debt and then cash in on it when the US gets into a jam. They could cripple our economy, and there's nothing we could do to stop it.

Tim

How and when would they do that? Not only would that country lose money (nobody would buy the stuff on the market if the investment goes to hell) and China would just cripple the world's econmy in the process which would obliterate their own economy.

Now why would that make sense?

The US, EU, and China are the main players in the world's global markets. If something happens to either one of them, the world feels it.

Originally posted by AllSeeingI
Here are some more facts about the numbers:
China buys about $15 billion dollars per month of the US national debt.
That equals $500 million dollars per day.
That equals $180 billion dollars per year.

And remember that National Debt is the debt of the people which means we OWE China.

China is buying the debt of US citizens at a rate of about $600 per citizen per year.

The frightening thing is that these numbers are expected to double or triple in the years to come.

Umm, I think it's time to ask the government where our Federal tax dollars are going. That's about 800 billion/year that could be paying this off. I think this economy puts too much into the credit system. Everyone know that you can't survive with credit debt. Everyone, it would appear, but our government.

And just think. Next time everyone feels so passionate about that Democrat or Republican you rushed out to vote for just remember that these are the same people who have been putting us into this. Now maybe some will see the sense in why I keep saying America needs a political remodeling job from top to bottom. With special up grades that put firm term limits on elected officials and revoke any lobbist out of Washington that has any ties to Banks, Oil, Drugs. Just to start.

I am new to this site yet I have been lurking around for some time know, I could not resist this thread as it is one of the reasons why our Dollar is loosing value. China knows that America buys all the products that its growing economy is making. They are to the point were the pollution from their industry's are ruining rivers etc just like American did when we went towards industrialization. The problem is they underbid time and time again interest rates to buy up our debt. They always bid lowest so that they can keep a toehold in our economy. Maybe if we all ripped up our credit cards and invested in ourselfs by buying our debt back we can curb some inflation. Though just like the commercial says "How do I do it", "I am in debt up to my eyeballs", "Someone please help me". I don't think most Americans will be able to invest instead of go in debt. Its a cycle like a snake eating its tail more debt, more inflation wich causes more debt. We used to be able to have a nice house etc etc. on one paycheck per family. Then again a consumer based society is all about spend spend spend. We are the cause of this problem just as much as our leaders. Anybody can buy U.S. debt just look into it at the link below.

www.publicdebt.treas.gov...

We have to understand also that in our economy to be able to offer the best value for the money to the consumer we have to be able to compete for prices.

That is not what US markets are doing now, as we lose companies to oversea markets is money that is not invested in our economy anymore, making us spenders.

The US deficit is out of control, the countries that used to compete with us are now our bankers.

Taking into consideration at the rate US is losing companies and how many companies are in the market for sell any or our now bankers can purchase them at will.

Whom are the ones losing in this deplorable economy? The hard working class of legal American citizens.

America Is No Superpower

The federal budget is deep in the red, adding to America's dependency on debt. The United States cannot even go to war unless foreigners are willing to finance it.

The United States is heavily dependent on imports for manufactured goods, including advanced technology products. In 2005, U.S. dependency (in dollar amounts) on imported manufactured goods was twice as large as U.S. dependency on imported oil. In the 21st century, the United States has experienced a rapid increase in dependency on imports of advanced technology products. A country dependent on foreigners for manufactures and advanced technology products is not a superpower.

One of the most important issues is that due to Offshoring and illegal immigrations, the jobs left behind in America are to benefit the illegal immigration because of cheap labor.

US cannot create jobs for what used to be middle class anymore due of outsourcing, but the jobs been generated are the perfect choice for illegal immigrant slave workers.

Our nation is creating a safe haven for illegals not for Americans, but tax payer Americans and our next generations for years to come will have to pay for the increasing and out of control debt.

www.economyincrisis.org...




[edit on 15-5-2007 by marg6043]

No matter how you slice it, Americans are fast becoming the victims of bad economic policy. The situation is made worse by the knoweldge that our leaders intend to exploit the chaos created by this situation for their own gain. As this tragedy plays out, we keep hoping for rational action.

It's not coming. We won't be in a position to fix this until it has broken. then and only then will we see a decisive majority step forward to do the dirty work of reconstruction. For the time being, that's going to mean that YOU have to take steps to protect your-self.

Pay off your debts. Don't pick up any new debts, and go out of your way to keep raw cash on hand. If you have atleast 30 days of operating capitol on hand (no small thing), you should be able to weather the storm when it hits. Bear in mind that nobody really knows how it'll play out, but we can all take prudent steps to ensure that we survive it.

The problem I see is that people don't appreciate the numbers. This goes with war and national debt. If people could fully comprehend all of those huge numbers when they see them they'd react far differently. The human brain is technically incapable of computing the full scope when viewing a large number, under normal circumstances. Each zero makes the number look bigger, but that's as far as it goes. I happen to be working on a short video that seeks to solve this problem, with those who view it, once and for all...

[edit on 15-5-2007 by IgnoranceIsntBlisss]

Originally posted by AllSeeingI
That is a good point. However take a look at the chart and see that many nations are not buying more US debt. Many nations such as: Japan, Germany, Switzerland, Italy, Norway, and Mexico have all decreased their holdings of US debt.

It is possible that China is simply buying enough of the US debt until it destroys the US dollar. This is economic warfare and China is buying economic weaponry in the shape of US debt. So what Im saying is that it might be more profitable to China to buy our debt and use it against us KNOWING they wont see that money again.

I don't think that's a good way to look at debt. Look at debt in terms of Bonds (T-Bills, whatever). They way debt is exchanged internationally (and domestically) is with bonds that pay interest to the bearer of the bond.

If you buy a bond, someone has to be willing to sell you a bond. That someone can be a person, a corporation, or even a government. Likewise, if you sell a bond, you will not get much traction unless you have a buyer to that bond. The way you influence buyers of the debt is with the interest rate, and any premium.

For example, I can sell you a $1,000 bond note that pays 20% interest for $1,200. You would be then paying a "premium" for that interest rate. Bonds also lose value depending on the issue, the interest rates, and the market in general. Just as when investors sell huge numbers of shares of a company, the price of the shares will plumet.

In other words if China wanted to "drop" all of its US Treasury debt, a couple of things would happen:

1. There would have to be buyers. (You can't sell the debt if there is no one to sell to.)

2. The market would have a sudden influx of supply. (you know, supply and demand).

3. When supply increases, prices generally decrease.

4. Thus, China would be losing some if not all of its original investment as it sells off all of the US debt (after each bond it sells, the price of the bond will decrease).


The reason a lot of countries (AND indivudal investors) do not buy US debt instruments is because of the low interest rate it gives. The reason the US can get away with the low interest rate is because it has a low chance of default. You can see similar examples in the bond market. If you wanted to take a chance, you could buy "junk bonds" that provide a high amount of interest, but come with a larger chance your investment will become nothing. On a micro scale, you will notice that GE bonds provide less interest than an upstart internet company. On a macro scale, you would expect to see stable countries paying out less interest than unstable.

As a citizen, I look at the national debt in terms of our ability to repay. I tend to think of it in the same terms that I use to understand my own credit card debt. The simple fact of the matter isthat we've got a bigger balance owed than we can pay.

When it comes to the China problem, we need to understand that they are essentially enabling our bad habit to gain a future political advantage over us. Under the wrong conditions, our government can be destroyed without firing a shot. I don't care who you are, there always comes a point when that option starts to look...."attractive."

They serve us, or we serve them. It's that simple for any government. We are not being well served by our own elected leaders. They are in fact bein well served by taking advantage of us, and they know it.

Originally posted by stumason

Thats not quite how it works.....

Do that and watch the value of the dollar plummet. Then how are you going to buy anything?

China could be doing this to actually prop up the US economy, so it still has a buyer for its goods... Needless to say, the US is no longer China's number one trading partner....

If I remember my econ classes correctly (it's been a while), Japan was doing this not long ago for several reasons.

1) They wanted to prop the American dollar up so Americans could afford Japanese goods
2) They wanted to keep the Yen down so Japanese goods would still be cheap to Americans

In the end, the USD was overvalued and the Yen was severaly undervalued. The worst part is that Japan was literally printing billions of Yen a day to keep their currency down, and using this money to finance US debt. In other words, they were financing US debt with almost imaginary money.

I think the article I read was called "Japan's money alchemy" or something along those lines. It was maybe 4 or 5 years ago.

I'm not an econ major but to me this just seems like a time bomb waiting to happen.

Originally posted by Justin Oldham
As a citizen, I look at the national debt in terms of our ability to repay. The simple fact of the matter is that we've got a bigger balance owed than we can pay. When it comes to the China problem, we need to understand that they are essentially enabling our bad habit to gain a future political advantage over us. Under the wrong conditions, our government can be destroyed without firing a shot.

And along that note that you mention in your post Justin.

I'm curious as to the consequences if (or probably more correctly when) we switch over to the Amero currency, what happens to that investment/debt?
Are "all bets off" and we start anew debt free? Would the other nations then have to accept a portion of the debt (Mexico/Canada)? Would China (and whomever else that has purchased the debt) be left holding the bag (so to speak, a empty bag)?


(I'm reaching for the Aspirin bottle),
Johnny



[edit on 15-5-2007 by JohnnyAnonymous]

My understanding of he situation is that if we were to switch over to a new currency that the new specie would be re-valued and the old green backs would be taken back at an unfavorable exchange rate. Remember that the FDIC only ensures bank losses at 1 to 10 with a maximum payout of $100,000 per account. Expect those rules to apply in the event that the national debt is leveraged.