Posted on 08/21/2019 4:46:29 AM PDT by BeauBo
Japan surpassed China in June as the top holder of U.S. Treasuries as the trade war between the world's two largest economies intensified.
Japan increased its holdings of U.S. bonds, bills and notes by $21.9 billion to $1.12 trillion, the highest level in more than 2 1/2 years, according to data released by the Treasury Department on Thursday...
The last time Japan held the position as America's largest foreign creditor was May 2017...
China's U.S. debt hoard has come under increased scrutiny in the trade dispute amid speculation that the Asian nation could sell Treasuries in response.
(Excerpt) Read more at amp.thestate.com ...
The Federal Reserve Bank can buy a trillion in treasuries, if it thinks it is a good idea. It did so in 2011, and again in 2013.
They started systematically selling right around the time of Trump's election, and have sold about $400 billion since, and now hold about $2 trillion.
Social Security holds about $3 trillion.
Other Federal Government programs (like FedGov TSP or Military retirement accounts) hold another $3 trillion.
Other foreigners (outside of Japan and China) hold around another $4 trillion.
The public, local Governments in the USA and mutual funds hold about another $7 trillion.
How’s a country with a 232 percent debt to GDP ratio go around buying yuge amounts of bonds.
Or is there NO correlation and I should leave the thread? :)
Not bangin’ on you FReind but WTH is with that headline? It is almost impossible to parse.
They may LABEL the courses “Journalism” but they don’t even teach the basics.
WTH is with that headline? It is almost impossible to parse.
I passed on a different article, because I thought its headline was worse: “USD Firm After TIC Flows, China Trumped as Top Treasury Holder”.
A lot of people fret that China owns some overwhelming amount of our debt, like they have us on a string, that they could pull anytime.
The reality is really more the opposite, where China depends on it’s access to US markets, to keep some real cash flowing in, to prevent its super indebted economy from failing to meet its interest payments.
Thanks for those numbers.
Puts China’s “debt grip” on us into perspective — not yuge.
Sidebar: I wonder...is Trump and our new Space Command and China paralleling Reagan and SDI/Star Wars and USSR?
“How’s a country with a 232 percent debt to GDP ratio go around buying yuge amounts of bonds.”
They kind of have to. They get paid in dollars for their exports to the USA, and have to pay in dollars for their huge imports of oil, gas, raw materials and food.
Big accounts of US Treasury bonds are kind of like their checking and savings accounts in dollars (more like their savings accounts). US Treasuries are about 1/3 of China’s total foreign reserves (around $1T out of $3T). About another trillion in China’ foreign reserve are other dollar based accounts. Probably around 2/3 of a trillion in Euros, and the rest in Japanese Yen and British Pounds.
They need around a minimum of around a half trillion in hard foreign reserves (overwhelmingly dollars) on account, just to keep cargoes clearing their ports, in and out, at current volumes.
Their total debt load economy-wide is many, many times their foreign reserve holdings. They may keep a good checking account balance to cover contingencies, but they are mortgaged to the hilt. It is like they have a big house and flashy car, but are living far beyond their means, juggling credit cards and barely making minimum payments.
“I wonder...is Trump and our new Space Command and China paralleling Reagan and SDI/Star Wars and USSR?”
That, and the withdrawal from the INF Treaty, threaten the fundamental basis of China’s military strategy against us. The Intermediate range missiles in particular, are going to impose significant costs on their military, to start hardening and defending critical assets, rather than building offensive capability.
Boy that was the best explanation that could have been given.
Er...I hate to ask but we all know what happens to PEOPLE with the big house and flashy car who can Barely pay their credit cards every month.
At some point MANY give up and do debt settlement for pennies on the dollar or claim bankruptcy.
So I’m afraid to know what an entire country would do.
[They kind of have to. They get paid in dollars for their exports to the USA, and have to pay in dollars for their huge imports of oil, gas, raw materials and food.]
President Trump should ban all trade with china as a currency manipulator and communist regime. That solves the china problem once and for all and allows us to trade with allies instead of enemies.
“Or is there NO correlation and I should leave the thread? :)”
Get out! Common sense has no place when discussing national debt!
That’s true :)
“I’m afraid to know what an entire country would do.” (when their debt bubble bursts)
In the case of China, you have a lot of company, including a lot of Chinese.
They have a joke in China: This may be the worst year in a decade, but it will be the best year of the next decade.
Insiders saw the debt getting crazy high years ago, and started trying to get their money out en masse. The communists imposed some pretty draconian capital controls, to forbid people from transferring money out of China in 2017.
The Chinese Government has also used their foreign reserves to intervene in their stock markets, and International currency markets, to prevent a crash of their equities or currency. They also use direct pressure from the Government on big players in their financial markets, in a way that is foreign to us - essentially ordering them to buy and sell and lend - or else.
When one (or a few) of their historic bubbles burst, it has the potential to be worse for them than 2008 crash, or Japan’s crash in the 1990s, that led to their “lost decade” (which stretched into two decades), of low/no growth and stagnated standards of living.
Lots of businesses shutting down, lots of unemployment, lots of people losing their life savings in stock market or housing price crashes, and currency devaluation.
“They can pay in any currency they want to use.” (for their imports)
In theory yes, but in practice, most of their actual contracts require dollars. Just saying.
It sounds like it’s gonna be pretty dam bad.
But when you have dictators trying to mix in capitalism, I guess it makes things worse because they won’t let natural recessions happen.
If that makes sense cause I have no idea :)
The concept of debt grip verges on stupidity. The purchase of American bonds is the safest and most liquid investment the foreigners can make.
The purchasers are not all governments but capitalists looking for safety
We got the money. They got paper.
[In theory yes, but in practice, most of their actual contracts require dollars. Just saying.]
Your analysis is correct. May I add that when they purchase US debt it depresses the value of the Yuan v US dollars. China has used that for years as part of it’s currency manipulation.
The people who fret about China selling our debt don’t realize it would hurt China by making their goods more expensive here...the opposite of what they want.
The ones who fret about them “calling” our debt are just completely ignorant.
>>“USD Firm After TIC Flows, China Trumped as Top Treasury Holder”.<<
Just one tick better than “Zaphod Breeblebrox is one hoody frood”
Thanks BeauBo.
lamented that "neither party is interested in talking about the debt and the deficit.
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