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#1
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Re: Question about US/china relations
The US would find it very hard to finance its debt (govt bonds continually mature and they have to keep rolling it over, along with issuing new debt), so the interest we would have to pay would go way up. The value of China's holdings would drop sharply (when interest rates go up, bond prices go down), so they would get a much lower return than the otherwise might have gotten by not dumping all their US bonds.
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#2
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Re: Question about US/china relations
[ QUOTE ]
or at least educated speculation [/ QUOTE ] The way I see it at the moment is that China exports goods to The US and the US exports printed pieces of paper to China in return. These are IOUs that I expect can't be paid. I don't really see how China's economy would 'be destroyed' if they stopped receiving increasingly worthless debt chitties from The US in payment for their exports. As soon as the Chinese people stop subsidising the American capitalist orgy, the better off they will be. |
#3
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Re: Question about US/china relations
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I don't really see how China's economy would 'be destroyed' if they stopped receiving increasingly worthless debt chitties from The US in payment for their exports. [/ QUOTE ] You are right but for the wrong reasons. Japan is China's major trading partner followed by the EU then the USA. If you think it would't damage their economy severely you are mistaken but these days it likely would not cause a total financial collapse. Jimbo |
#4
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Re: Question about US/china relations
[ QUOTE ]
[ QUOTE ] I don't really see how China's economy would 'be destroyed' if they stopped receiving increasingly worthless debt chitties from The US in payment for their exports. [/ QUOTE ] You are right but for the wrong reasons. Japan is China's major trading partner followed by the EU then the USA. If you think it would't damage their economy severely you are mistaken but these days it likely would not cause a total financial collapse. Jimbo [/ QUOTE ] I don't understand why they would lose the US as a trading partner. It seems to me that the amount of imports to the US would just decrease, and the US would have to find a way to pay with something other than IOUs, no? I mean, the US wont just default on the loan. The US will "pay" it back in heavily deflated currency. China made a bad investment. They will keep exporting to the US at an amount that the US can afford. China just made a bad invesment and it will hurt bad. I just think going they way they are now is more damaging to their economy long term than stopping. |
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