And the answer from Beijing is;
“Okay, we won’t buy any more of your debt instruments. Will look for your new address on history’s junk pile.”
Ivanka is quite the something, just the same!
Uncle Sam: Are you kidding, China? You run on American IOUs even if you get them in the guise of some other country’s official currency. If we quit ordering products from you your house of cards would meet a total-destruction tornado.
Maybe China will threaten to stop making Trump’s cheap line of clothing. What a hypocrite.
GOOD! Then we can start balancing the budget. Trump described them perfectly.
If the PRC would stop buying our debt, they’d be doing us a favor.
There are two reasons why the natural tendency for interest rates to rise in the face of so much debt issuance haven’t come to be yet:
1. the PRC buying our paper.
2. Now the Fed’s QE programs.
If interest rates rose as they should have been all through the 00’s, the cost of issuing so much debt in ALL sectors (government, muni, private, mortgage) would have gone up and people wouldn’t have been doing such idiotic things as buying houses on interest-only loans.
The PRC was an enabler to this process, and we enabled the PRC with an equally idiotic “free trade” policy.