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To: neutrino
"It helps build their industrial base with us paying for it. Moreover, they can use our debt against us."

... and just how does that happen without those green pieces of paper coming back to us and being redeemed for goods or services ?
61 posted on 06/30/2004 8:25:53 PM PDT by RS (Just because they're out to get him doesn't mean he's not guilty)
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To: RS
... and just how does that happen without those green pieces of paper coming back to us and being redeemed for goods or services ?

Suppose an individual owes lots of money on a credit card. The bank quits lending him money. He must then find another lender who will provide him money despite his high level of debt. Suddenly, his interest costs are higher.

Or - China could sell our debt, probably at a loss, to a third party and purchase Euros, gold, or other commodities. The liquidation of the paper depresses the market price, which increases the effective interest rate. Notice that this soaks up money available for purchase of dollar denominated paper and does not purchase any U.S. goods or services.

And, finally, they may well view a write off of our debt as a cost of empire.

62 posted on 06/30/2004 8:31:39 PM PDT by neutrino (Against stupidity the very Gods themselves contend in vain.)
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