China won’t Finance U.S. Debt; We Hate You…you are devaluing your Dollar! Hyperinflation Collapse?
Who will finance our debt? Who has confidence in the fiscal responsibility of the U.S. congress? Will our dollar collapse, and if it does, what will be the consequence of such a collapse? I don’t know the answers to these questions, but I do know one thing, and that is that I hate my government; they are corrupt, right down to the bone. The corruption is cancerous, so drastic steps must be taken; they must be replaced in their entirety.
jbranstetter04
Why do Japan and China keep on buying dollars?
The dollar has fallen about twenty percent against the Euro in the last year but China and Japan continue to accumulate large dollar surpluses. At the same time, many economists worry that they will dump their holdings, sending the dollar into a free fall.
Michael Dooley, Peter Garber, and David Folkerts-Landau suggest that this financial policy is no accident. They view the Chinese and Japanese as pursuing deliberate full employment policies. They buy and hold dollars, not as an investment, but rather to subsidize their own exports. Read this summary of the argument, or buy an NBER working paper here. Garber puts the point bluntly:
http://www.marginalrevolution.com/marginalrevolution/2004/01/why_do_japan_an.html
China is right to have doubts about who will buy all America’s debt
Chinese doubts about the value of US Treasury bonds highlight a crucial question: who will buy the estimated $2.7 trillion (£1.9 trillion) to $4.2 trillion of debt expected to be issued over the next two years?
With annual foreign purchases accounting for less than a tenth of the low end of that range, and domestic investors unable to bridge the gap, the Chinese are right to worry.
Yu Yongding, former adviser to the Peoples Bank of China, recently demanded guarantees for the value of Chinas $682bn of Treasury securities. Then Luo Ping, director of the China Banking Regulatory Commission, said that China had misgivings about the US economy, but despite this it would continue to buy Treasuries. The two statements appear designed to raise the issue non-confrontationally before new chief US diplomat Hillary Clintons visit to Beijing on February 20.
China worries about the dollars value against other currencies, particularly the yuan. With US interest rates so low, the dollars value may slide. However, President Barack Obama has repeatedly said he wants a strong dollar, and indeed its trade-weighted value rose 13.9pc between April and December 2008.
The other area of concern for China is the value of its Treasuries. Given the US borrowing requirement and its lax monetary policy, Treasury bond yields could well rise sharply, causing a corresponding price decline. If Chinas holdings match Treasuries average 48-month duration, then a 5pc rise in yields, from 1.72pc on the 5-year note to 6.72pc, would lose China 17.5pc of its holdings value, or $119bn.
Foreign buyers have absorbed a little over $200bn of Treasuries annually, a useful contribution to financing the $459bn 2008 deficit, but only a modest help towards the $1.35 trillion minimum average deficit forecast for 2009 and 2010.
Unless that changes substantially, there will be $1trillion annually to be raised by the Treasury from domestic sources, more than double the previous record from domestic and foreign sources together, plus whatever is needed to bail out the banks.
Even if the US savings rate were to rise from zero to its long-term average of 8pc of disposable personal income, that would create only an additional $830bn of savings — not enough to fund the domestic share of the deficit. Interest rates would probably have to rise substantially to pull in more foreign investors.
Yu is right to worry.
http://www.telegraph.co.uk/finance/breakingviewscom/4611408/China-is-right-to-have-doubts-about-who-will-buy-all-Americas-debt.html
Duration : 0:3:37
25 Comments to China won’t Finance U.S. Debt; We Hate You…you are devaluing your Dollar! Hyperinflation Collapse?
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@planetcave
Yes …
@planetcave
Yes they have a high government debt but on the other hand the household debts are very low, they have a high saving quote and so can afford a higher government debt. The USA on the other hand has high household debts, high government debt, high business debt, etc… and has a deficit of 1 trillion a year atm + a huge trade gap
Start with raising …
Start with raising taxes substantially, on the level in Europe or reduce spending, there is no other way. Reduce your trade gap with especially China. This will minimise the risk of higher interest rates (caused by higher risks that usa cant repay their debt). Reduce military spending.
and that is exactly …
and that is exactly why the chinese are heavily investing and making deals with the EU, Russia, Africa and Latin America.
a good fallback just in case the US goes tits up.
@iTeaze888 Not …
@iTeaze888 Not Capiltalism idiot! those bailouts which are a huge reason why inflation is happening is a Socialist idea!
Fuck Socialism!
WW3 people, and WE …
WW3 people, and WE are gonna loan that cash with our lives..NICE THANK YOU CAPITALISM!
Anything with ISM on the end is bad..
Except in arts..
I think the Chinese …
I think the Chinese are deluding themselves into thinking the US will pay their debt, when in fact they’ll either pay in printed money, or not pay at all.
When the US falls, so will China. That’s the only reason China still lends the US anything.
devalue the dollar …
devalue the dollar more and we all have to pay $5 for a roll of toilet paper to wipe our ass!
Lol, lets see you …
Lol, lets see you get out of this mess.
First you must get …
First you must get rid of federal bank and corrupt politicians! I guess Obama is trying his best but USA really need to do something smart and fast!!
The American …
The American Medicare scheme is already in $62 trillion in debt. The stock market is worth about $36 trillion, so this is pretty serious. How can you pull yourself out of something like that? 44% of America’s debt is owned by foreign countries, hope something good will come out before it’s too late.
All three guys on …
All three guys on this video are regular guys. The news they talk about are very real. USA is officially Bankrupt. tata!!!
all three on this …
all three on this vid are faggots
you notice how …
you notice how those two “conservatives” refused to acknowledge printing the money and inflation?
Pfft, they suck at …
Pfft, they suck at that too.
German pron FTW!!!
@magemaatikko check …
@magemaatikko check your sentences before you post them. FOB
hey your right …
hey your right there
but….that wont get them out of debt
i mean even the perverts in holland arnt that stupid to buy 2trillon dollars of porn…
(i wounder what that would look like)
Poor chinese, they …
Poor chinese, they dont the fact that US wont pay its depth long time. China is just financing americans luxury life while they live in recession them selves. US economy is brink of collapse really!
US is only good at …
US is only good at making porn.
I like the …
I like the statement at 1:39
“Were only going to be able to borrow this money if we show we’re being.fiscally responsible”
If we were really responsible we wouldn’t be borrowing ANY money PERIOD!!!!
What a stupid quote …
What a stupid quote…
LOL, Taiwan is gona …
LOL, Taiwan is gona get up!
THIS IS A FARCE. …
THIS IS A FARCE. CHINA OWNS THE US AND IT IS DONE BY DESIGN. THEY GET HIGHER INTEREST FOREVER AND THE SMALLER COUNTRIES THAT HAVE BEEN TAKEN OVER BY AMERICAN PRODUCTS AS THEY HAVE BEEN LEVIED WITH HIGHERE INTEREST FROM US LOANS A THEY ARE FORCED TO BECOME MORE DEPENDENT ON THE us. NOW CHINA PRODUCTS ARE PRECEDENT HERE AND WE HAVE BECOME DEPENDENT ON CHINA..THE GLOBALIZATION OF ECONOMY FOR ONE WORLD POWER IS DONE BY DELIBERATE DESIGN. WORLD TRADE THE BABYLONIAN EMPIRE
All of this media …
All of this media crap and the bad theater out of D.C. is to divert your attention away from the real problem – Japan. The great car producers with unlimited subsidies given to export companies is at risk of collapsing. They have no natural resources and their debt level is unsustainable.
Search for “CIA NEW …
Search for “CIA NEW FIASCO”
omg wow no kidding …
omg wow no kidding man!!! So screwed up man!! They are so finally waking up to this eh??? GOOD!