"Borrowing it from China"
- Thread starter H Roark
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WilliamC
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Check out
http://en.wikipedia.org/wiki/United_States_public_debt
for a start.
Consequences of foreign ownership of U.S. debt
A traditional defense of the national debt is that we "owe the debt to ourselves", but that is increasingly not true. The US debt in the hands of foreign governments is 25% of the total[26], virtually double the 1988 figure of 13%.[27] Despite the declining willingness of foreign investors to continue investing in dollar denominated instruments as the US Dollar has fallen in 2007,[28] the U.S. Treasury statistics indicate that, at the end of 2006, foreigners held 44% of federal debt held by the public.[29] About 66% of that 44% was held by the central banks of other countries, in particular the central banks of Japan and China. In total, lenders from Japan and China held 47% of the foreign-owned debt.[30] Some argue this exposes the United States to potential financial or political risk that either banks will stop buying Treasury securities or start selling them heavily. In fact, the debt held by Japan reached a maximum in August of 2004 and has fallen nearly 3% since then.[31]
Last year, the central banks of Italy, Russia, Sweden, and the United Arab Emirates announced they would reduce their dollar holdings slightly, with Sweden moving from a 90% dollar based foreign reserve to 85%. [32] On May 20, 2007, Kuwait discontinued pegging its currency exclulsively to the dollar preferring to use the dollar in a basket of currencies.[33] Syria made a similar announcement on June 4th, 2007.[34]
And for lot's more where that came from
http://www.google.com/search?hl=en&q=china+financing+us+debt&btnG=Google+Search
http://en.wikipedia.org/wiki/United_States_public_debt
for a start.
Consequences of foreign ownership of U.S. debt
A traditional defense of the national debt is that we "owe the debt to ourselves", but that is increasingly not true. The US debt in the hands of foreign governments is 25% of the total[26], virtually double the 1988 figure of 13%.[27] Despite the declining willingness of foreign investors to continue investing in dollar denominated instruments as the US Dollar has fallen in 2007,[28] the U.S. Treasury statistics indicate that, at the end of 2006, foreigners held 44% of federal debt held by the public.[29] About 66% of that 44% was held by the central banks of other countries, in particular the central banks of Japan and China. In total, lenders from Japan and China held 47% of the foreign-owned debt.[30] Some argue this exposes the United States to potential financial or political risk that either banks will stop buying Treasury securities or start selling them heavily. In fact, the debt held by Japan reached a maximum in August of 2004 and has fallen nearly 3% since then.[31]
Last year, the central banks of Italy, Russia, Sweden, and the United Arab Emirates announced they would reduce their dollar holdings slightly, with Sweden moving from a 90% dollar based foreign reserve to 85%. [32] On May 20, 2007, Kuwait discontinued pegging its currency exclulsively to the dollar preferring to use the dollar in a basket of currencies.[33] Syria made a similar announcement on June 4th, 2007.[34]
And for lot's more where that came from
http://www.google.com/search?hl=en&q=china+financing+us+debt&btnG=Google+Search
slantedview
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- May 23, 2007
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- 3,114
short answer - our debt is usually in the form of government treasury bills, much of which are bought by the chinese. so in essence, we are "borrowing" from the chinese by creating treasury bills that are purchased by the chinese.
As someone who runs an software outsourcing company, let me explain it as I understand it.
The answer is that every time the USA needs to finance debt, they sell treasuries at auctions. In the old days, these were bought by domestic buyers, but now-a-days, it's mostly foreign buyers - specifically, countries that have a lot of USD and nothing to do with them, China, Japan, and oil-producing countries.
The Chinese do not float their currency, it is controlled by their government. It is artificially low against the USD (though they are correcting that slowly), and this has encouraged many people to move factories and resources off-shore to China.
This has allowed China to build up significant skills and factories. But, because they are paid in US dollars, it has created inflation. The first thing that companies that sell to the USA do is take their dollars to the bank and exchange them for Chinese yuan (also called the RMB, translated literally, "the people's currency").
So, there is China, with billions and billions in US dollars and no idea what to do with them. Well, they use a significant part of them to buy US treasuries, effectively buying US debt. On the surface, this seems like a great idea - they finance the US debt, and Americans keep buying their cheap crap.
The problem for the US is the debt is not sustainable, and it is causing our factories (and high-tech) jobs to go to China, leaving us with a "service" economy that is quite hollow. The problem for China is they are buying US debt which will probably never be paid back, and they are holding USD reserves that are worth less every day.
If the Chinese ever try to use significant amounts of their reserves, or dump them on the market, it would create significant inflation (these dollars were just printed from the printing press, and are out of circulation as long as China doesn't use them).
The answer is that every time the USA needs to finance debt, they sell treasuries at auctions. In the old days, these were bought by domestic buyers, but now-a-days, it's mostly foreign buyers - specifically, countries that have a lot of USD and nothing to do with them, China, Japan, and oil-producing countries.
The Chinese do not float their currency, it is controlled by their government. It is artificially low against the USD (though they are correcting that slowly), and this has encouraged many people to move factories and resources off-shore to China.
This has allowed China to build up significant skills and factories. But, because they are paid in US dollars, it has created inflation. The first thing that companies that sell to the USA do is take their dollars to the bank and exchange them for Chinese yuan (also called the RMB, translated literally, "the people's currency").
So, there is China, with billions and billions in US dollars and no idea what to do with them. Well, they use a significant part of them to buy US treasuries, effectively buying US debt. On the surface, this seems like a great idea - they finance the US debt, and Americans keep buying their cheap crap.
The problem for the US is the debt is not sustainable, and it is causing our factories (and high-tech) jobs to go to China, leaving us with a "service" economy that is quite hollow. The problem for China is they are buying US debt which will probably never be paid back, and they are holding USD reserves that are worth less every day.
If the Chinese ever try to use significant amounts of their reserves, or dump them on the market, it would create significant inflation (these dollars were just printed from the printing press, and are out of circulation as long as China doesn't use them).
weatherbill
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- Jun 19, 2007
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- 1,113
that's the fear, that china or the mid east countries would start dumping, or maybe on purpose with a green light from the int'l banksters, to ussher in the Amero to replace the dollar....... having gold and silver at this conversion time when the dollar becomes worthless could make someone profit well if buying and selling thru this season of crash wisely. Then as the Amero becomes worth something, maybe convert over to an appreciating currency liek the Amero if we are forced to accept it.
the dollar will continue its slide. the int'l bankers control its value. inflation will continue, as ben bern the banke will keep the path of trying to inflate us into prosperity........this is purposeful as a set up to bring the amero and consolidate their controls........collectivism will be the politics of all who say they are for the Constitution, but are liars.
the dollar will continue its slide. the int'l bankers control its value. inflation will continue, as ben bern the banke will keep the path of trying to inflate us into prosperity........this is purposeful as a set up to bring the amero and consolidate their controls........collectivism will be the politics of all who say they are for the Constitution, but are liars.
