[Alberta's Child]

They are losing money in the deal because the interest rates on the bonds are lower than the effective rate of currency inflation.

This is one of the curious consequences of a massive trade deficit between two countries. One country (China) may sell a lot of products to the other (USA), but we aren't bartering for those products. They get paid in U.S. dollars, and they can't eat them so they have to figure out what to do with them.

[TwelveOfTwenty]

Yes, but buying products made in China has the effect of creating tax payers to fund their military and space programs. Meanwhile, we're funding more entitlement programs.

As for the bonds, the interest is only part of the expected income. The face value over their initial cost is also part of the equation. Now I'm not sure of the type of bonds and treasuries we're selling to other nations, so maybe they are taking a loss by buying our debt. But I doubt it.