Folks, Here’s the thing to keep in mind -— It’s a symbiotic financial relationship.
tWe are China’s largest customer, and since many smaller customers also settle their international trade in U.S. dollars, roughly 70% of China’s $3 trillion reserves are in dollars. In theory, it could sell some of those dollars for other currencies or for commodities, like gold or oil, but in practice, given the huge sums they are already holding, its hard for China to sell off even some of its dollars without undermining the value of what it has left.
Even if it could do that, there just aren’t any markets that are as large or liquid as the market for U.S. Treasuries, to accommodate the amounts of money we’re talking about.
Unless they want to kill their economy, they can’t just dump our dollars even if they wanted to. WE DIE, THEY DIE WITH US.
Spot on. They’re kinda in the same position as the banks that loaned all that money to people to buy houses who had no chance of repaying the loans. They aren’t any better off by foreclosing on us, and it’s going to take a long time - if ever - before they become whole again.
The Chinese government does not give one crap about its people. If it gets into a war of any kind with the U.S. (like over Taiwan), they are going to trash our currency and tell their people to go spit.
They have done it before, and they will do it again...