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If foreign governments decide to stop buying our debt what will happen to the dollar?

With interest rates now near 0% and our currency depreciating, there has been no real incentive for foreign governments to want to continue to buy our debt, which is issued in the form of Treasury Bills. But do foreign governments have a choice? The Chinese, the largest holders of U.S. debt, have their currency pegged to the U.S. dollar. If they stop purchasing our debt, their currency, and thus their economy, will go right into the toilet along with ours. If they decide to sell the U.S. debt that they hold, the U.S. dollar will take a huge hit, which will in turn cause the Yuan to take a large hit. This is the inherent problem with the Ponzi scheme that has been run over the last 30 years. We consume more than we produce, and those who buy our debt continue to pump money into the system, which perpetuates the cycle. It is still possible that foreigners will make the strategic decision that their economy can withstand the short-term shock to their economy if they sell their dollar reserves. While their economy may recover, will the U.S. recover? Who will buy our debt? These questions remain to be answered by our policy makers. And so far they have continued the gamble leaving our economy, destroyed by, really, the combination of everyone since the 1900’s to the equally inept errors by the Obama administration more than doubling the debt during his administration. And selling bonds to push the destruction (kick the can) down the road while taking down social security, medicare, our back up funds, and a lot of our resources to use to stay alive is just idiocy. But it bails him and his administration out for the time being. That is unless the countries who hold our debts go beyond their capacity and start selling out and stopping sales from us. We have been left in the hands of other countries and we are extremely vulnerable.

Thanks Barack, We knew you weren’t qualified when you got elected. And you sure proved it.

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