They dump those bonds, making interest rates skyrocket, and all of the sudden servicing the interest on our debt becomes 2/3 of our annual budget.
Without China and the rest of the world buying our bonds, there is no deficit spending.
Here's a laugh for you: http://www.nbc.com/saturday-night-live/video/china-cold-open/n12611?snl=1
The Federal Reserve would buy up all those Chindese-held Treasurys if they were to dump them. End of story. That’s what quantitative easing was. China has no leverage owing is money. We have the leverage.
The real joke is China pretending they could dump $1 trillion in bonds and it wouldn’t affect their economy...
Yu
R
wong...
That was a very funny video clip, and it brings up a good point. It is our deficit federal and trade spending that has created the current problem.
The government spends more than it takes in, thus the 20 trillion dollar federal deficit.
Americans consume a huge amount of stuff, thus in a competitive economy, companies move overseas, so they can produce the lowest priced stuff.
Of course, Chinese do not consume as much as Americans, and they have a regulated economy, thus they do not buy as much from overseas, even though their population is 5 times bigger than the US.
The Chinese owe u 1 trillion dollars plus in term of accumulated war aid and food aid we lent them from WW2 thru the 80’s(no one really talks about it but it’s true) not including any interest on said debts. They want to dump their bonds that fine but we can just say...we’ll just cancel your debts from aid we lent you and call it even!
“They dump those bonds”
Where? To dump something means to sell it to someone else? To who??