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? :)
“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.
“Or is there NO correlation and I should leave the thread? :)”
Get out! Common sense has no place when discussing national debt!