[late]

I would say the impact of mass borrowing from Covid would have a greater impact to the US economy than who holds 4% of their debt. Besides, the liability of debt is who holds it, not who owes it. I once (and perhaps still believe) that if China sold off US debt all in one go it would create US inflation. But when I watch the amount of "new money" that is currently being handed out with no plan of drawing that back in, well if that doesn't create high inflation then perhaps the MMTs have it right after all. 2008 only made a blip on inflation figures during QE and perhaps that will occur again. I don't know. So I will be watching the next few years with interest. My instinct is this is going to come back and hurt us once everyone starts spending again due to excess cash in the system. But if I am wrong, then I don't see how China can sell $1tn in the bond market to create a negative US economic power play when the US have just quadrupled that amount and just plonked it into their economy with little effect since last year.

You're thinking people are rational.

I wish.

It really wouldn't be hard to dump enough of the debt to set off global panic selling. They've got enough to do it.

But it would absolutely destroy their economy, as well.

One of their big fears is another Chinese government collapsing, and setting off chaos. So they won't. But you can be they are sorely tempted.

[Istanbuller]

I know bonds have schedules. I know that treasury bonds are classified as default free financial assets in most finance books. But do you know why they say there is no default risk? Governments have unlimited authority of printing money and borrowing. Famous economist Keynes say that we are all dead in the long run. So he says we shouldn't care.

I disagree all of these Keynesian views. The US carriies a huge default risk. .US government pays its debt with further borrowing and printing more money. You leave a debt burden to future generations. You leave a huge inflation problem to future generations. China will crush your kids.

[Steve_American]

I know bonds have schedules. I know that treasury bonds are classified as default free financial assets in most finance books. But do you know why they say there is no default risk? Governments have unlimited authority of printing money and borrowing. Famous economist Keynes say that we are all dead in the long run. So he says we shouldn't care.

I disagree all of these Keynesian views. The US carriies a huge default risk. .US government pays its debt with further borrowing and printing more money. You leave a debt burden to future generations. You leave a huge inflation problem to future generations. China will crush your kids.

IMHO, you are totally wrong, because MMTers are right.

And also because, the problem for the US vi sa vi China is that it holds all those dollars. It doesn't matter if they are paper dollars, eletronic dollars, or US bond dollars. There is no functional difference between these 3 kinds of dollars in terms of what damage can be done to the US by China.
. . . For example, if it had eleronic dollars China could dump them on the international market. It is the same as dumping bonds. No big deal. In fact, if the US Gov. was smart, it could just buy all the dollars or bonds being sold by China. Why not do this?
.

[Istanbuller]

"Every dollar is being spending by US government and the public" go to China. Democrats' policies directly making the US more dependent on China. Takeover is much more close than you can imagine. All those money spend on 2 trillion dollars covid bill and 3 trillion dollars on infrastructure bill will end up at Chinese hands.

Kudlow: Stimulus payments to Americans are stimulating China's economy

Fox Business Network host Larry Kudlow warned Monday of the unintended consequences of stimulus payments and high government spending.

KUDLOW: These big stimulus packages passed last December and January are, in fact, temporarily helping the economy to rise up, and we are seeing it in the first quarter. But here's something that I don't like, and I have to credit my good friend DJ Nordquist. She was our World Bank executive director, former CEA [Council of Economic Advisers] staff director. She sent a memo to Kevin Hassett, Larry Lindsey, and myself to show that unfortunately these "stimmies" are actually stimulating China as much or more than the U.S.

China's GDP [went] up 18% in Q1, led by exports rising 38%, those are exports to the U.S. It's a new record. Meanwhile, US retail sales jumped 14% in the first quarter.

So let's walk through this. Congress, in its wisdom, shelled nearly $3 trillion in "stimmies". The "stimmies" lead in part to surging consumer spending, and unfortunately, surging consumer spending went to buying all kinds of goods and gadgets, including Apple's iPhone. All this led to massive China growth and exports and a larger U.S. trade deficit with China than ever before.

This is not what folks bargained for. This is major unintended consequences. Do we really want to help China this way? Do we really want to stimulate China? I don't think so, and I think from the standpoint of way too much government spending, which is bad on the merits, and rising taxes to pay for it, which is bad on the merits, our Chinese stimulus packages are very, very bad, Right? Don't they use the money to buy military weapons aimed at U.S. cyberhacking and threatening Taiwan, etc., etc.? Not to speak of human rights and Uighur and Hong Kong democracy. Do we really want to help China?

https://www.foxbusiness.com/kudlow/kudl ... na-economy

Sponsored by Democrats and Owned by China.

[Steve_American]

lolwhut?

No you jack ass. Bonds have a schedule, you can't just call in debt.

What you can do is sell off the debt in the open market. However, it would hurt Beijing too.

Also, China has in the past, sold a lot of their bonds in the past, and the market just ate them up. It's not clear if a sell off would really hurt the US all that much.

I totally agree, except for the part I highlighted.
IMHO, it is totally clear that even if China dumped all their US bonds on the market, and took a bath for selling them all at once and sent the market price tumbling, that this would not effect the US in *any* way. The Fed. can, and typically does, buy a big chunk of each day's bond sales the next day. The US Gov. does control the interest rate of its bonds. The market can't drive the interest rate up. IIRC, some guys tried to do this to Japan some years ago and discovered that the BoJ has more resources (access to yen) than they do, and as a result they took a bath.
.

[JohnRawls]

"Every dollar is being spending by US government and the public" go to China. Democrats' policies directly making the US more dependent on China. Takeover is much more close than you can imagine. All those money spend on 2 trillion dollars covid bill and 3 trillion dollars on infrastructure bill will end up at Chinese hands.


Sponsored by Democrats and Owned by China.

We live in a global world. It is also stimulating the EU economy, but you don't care about that. Since EU is spending additional Euros on the same thing then it is stimulating US, China and Turkeys economy to a degree.

[Istanbuller]

We live in a global world. It is also stimulating the EU economy, but you don't care about that. Since EU is spending additional Euros on the same thing then it is stimulating US, China and Turkeys economy to a degree.

Turkey gets none. Erdoğan's mismanagement of economy results in foreign investment/ capital flight. Interest in finance is forbidden in Islamic belief. Erdoğan says that banks should offer interest rate close to 0 even when inflation is around %20.

I used to be able to buy things from outside via the internet. Now I can't do. Purchasing power decreased incredibly. I am now as poor as I was 15 years ago.

[JohnRawls]

Turkey gets none. Erdoğan's mismanagement of economy results in foreign investment/ capital flight. Interest in finance is forbidden in Islamic belief. Erdoğan says that banks should offer interest rate close to 0 even when inflation is around %20.

I used to be able to buy things from outside via the internet. Now I can't do. Purchasing power decreased incredibly. I am now as poor as I was 15 years ago.

How it works is that that spending in US and EU trickles down as demand for different products, materials or services that Turkey or China produces. That is the main "stimulus".