Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: justa-hairyape
As things are right now, the US MUST sell a large amount of US Treasury debt each week, every week just to pay the interest on the National debt.

The interest rate remains low if there is a successful bidding and sale of these bonds.

Currently, the largest purchaser, by far, is China. They pay cash on the barrelhead.

If, for any reason, there is an unsuccessful sale, the lender of last resort, the Federal Reserve, will buy the bonds. It is done with the click of a mouse, but what effectively happens is fiat paper money is printed and put in circulation.

This act immediately begins serious inflation AND next week's bonds must carry significantly higher interest for any chance of a successful sale.

Should the Chinese decide to pass on a bond purchase, it is unlikely that any other nation or group of nations would risk taking up the slack.

Effectively, the Chinese have the power to decide if and when we go into hyper inflation and economic collapse.

Interestingly, the Chinese are no longer irresponsible utopian socialists. A significant (but falling) portion of their economy hinges on sale of Chinese manufactured goods in the US. They do not want to lose that business, but they also will not be stuck with bad debt.

17 posted on 12/19/2009 8:37:04 AM PST by Navy Patriot (Sarah and the Conservatives will rock your world.)
[ Post Reply | Private Reply | To 14 | View Replies ]


To: Navy Patriot
Chinese have the oldest written weather records in human history. They are the ones who made sure Obama got no legal deal in Copenhagen. Russia slowed the big mo, then China went for the kill.
19 posted on 12/19/2009 4:47:59 PM PST by justa-hairyape
[ Post Reply | Private Reply | To 17 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson