Not sure if this is a good thing. They own $1.5 trillion of the US debt, or like 19%. What happen when they say “Pay us, NOW!”
I imagine the same thing that was always going to happen: “We don’t have the money. I guess you’ll have to come and get it.”
Then, war.
Of course, I could see Trump working a deal, but it would likely require Congress’ cooperation. That would also mean war.
They can’t.
They have to sell the bonds to someone else. We already sold them under terms.
We saw off the branch they're sitting on.
“What happen when they say “Pay us, NOW!”
Nothing. They hold bonds with defined maturity dates out a decade or so.
L
They own $1.5 trillion of the US debt, or like 19%. What happen when they say “Pay us, NOW!”
We'd point at them and laugh. China's longterm strategy is to keep the Yuan price-stable against the USD and the way they've done that is to plow billions of those trade surplus dollars into US gubmint debt. That keeps their job growth going up, and prevents slowdowns that would cause their entire scheme to implode. They are and have been rats on a wheel, and Congress has as a consequence no self-control vis a vis the federal deficit. The tariff fight is important to both sides, but much more important, long term, to the Chinese, and they know that ultimately they must lose it. Mitigating our leverage is the big climb in US petroleum production and exports.
We just pay them in gold plated tungsten bars we got from someone else.
> What happen when they say “Pay us, NOW!”
Say “I’d rather owe it to you than cheat you out of it”
“They own $1.5 trillion of the US debt, or like 19%. What happen when they say “Pay us, NOW!”
They own about $1.1 trillion of the US debt, or like 5%.
If they try to sell all those treasuries at once, the market will gag, until the Federal Reserve intervenes and buys them (a fraction of the few trillion they bought during the 2008 crisis). So it would essentially be a few days of drama (just in financial circles), followed by an accounting entry on the Fed’s holdings.
China on the other hand, would then be out of hard currency accounts, with which to clear shipments at its ports. Real, essential imports, like oil and gas, could be held up, as is starting to happen in Iran.
That’s the best part - they can’t. They *HAVE* to wait for the bond to ‘mature’ aka the date the loan comes due. They cannot call it in early. All they can do is sell the bond to someone else, probably at a significant discount... which would then start depressing the market and drop the value of their current holdings further... which might make them have to sell more, etc., etc.
we just print it and pray they don’t spend it
China can’t accelerate payment on USDebt.
If they want to convert to cash, they can sell their bonds. Plenty of buyers will show up when they do.
The US economy is the best looking horse in the glue factory.