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To: Loud Mime

How does one “call in” debt?


6 posted on 01/30/2015 12:16:26 AM PST by 1rudeboy
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To: 1rudeboy
How does one “call in” debt?

Extremely simplified: the Chinese hold govt bonds which were sold by the US to get the cash to finance the recent rounds of quantitative easing (QE). The bonds have a date when they mature/become due to be paid. They can be extended by continuing to pay the interest only and defer the principal/face amount. To "call" the bond means the holder will no longer just accept interest payments and expects the face amount/principal to be paid.

More extremely simplified: it's like you hold a check from a buddy which would pay back a personal loan you made to him. You agree to hold the check, i.e. not cash it at the bank, as long as he pays you smaller amount on a regular basis. Finally, you decide you need all your money back so you tell him you're headed to the bank to cash/deposit the check so the money better be in his account.

Hopefully I've not confused the matter for you but you could take your query to a search engine and start clicking whatever links you get with the search. It would probably be more accurate/in-depth but I did state my response above would be simplified. Not a finance person here but I do think I understand the basics with my whole 3 hour college course in finance...

7 posted on 01/30/2015 12:39:51 AM PST by T-Bird45 (It feels like the seventies, and it shouldn't.)
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