[Old_Mil]

US Treasury Secretary Henry Paulson, in an interview this week on the US television network ABC, rejected suggestions that changes in Chinese bond purchases could affect the United States economy.

You bet it will. A government that is committed to deficit spending *must* have a buyer for its bonds. If it does not, it must raise interest rates till it finds such a buyer. I'm waiting for the economic illiterates who say that a trade deficit is no big deal because the new economic model is for China to sell us stuff and for us to pay them back in treasuries to show up.

[maui_hawaii]

China holds approximately 3% of our total debt.

If they check out of the game completely the US can recover in that front within a very short period of time.

Things like the tax code in the US and its nexus to prices of municiple bonds....

And the Fed interest rates itself...how it nexuses bond markets and even bank rates on CDs... both of those alone have way WAY more market impact on the interest the government pays out than China does.

China doesn't control jack.

[Toddsterpatriot]

You bet it will.

How much?

A government that is committed to deficit spending *must* have a buyer for its bonds.

The deficit is a small % of our GDP. Much smaller than it was 4 years ago.

If it does not, it must raise interest rates till it finds such a buyer.

So what?

I'm waiting for the economic illiterates ........ to show up.

You're already here.

who say that a trade deficit is no big deal

The trade deficit is no big deal.

because the new economic model is for China to sell us stuff and for us to pay them back in treasuries

We pay them with dollars. You know, cash. What they do with those dollars is up to them. If they bought GM bonds would that be bad for America?