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To: Principled
China could do that, but then they'd just be screwing people who own treasuries,no the U.S. government (it has to pay back face value either way), and the price of treasuries would probably rise back to normal levels after the sale, because the sale was not based on economic fundamentals.
56 posted on 07/30/2002 4:26:11 AM PDT by Thane_Banquo
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To: Thane_Banquo
China could do that, but then they'd just be screwing people who own treasuries,...

People who already own them won't be affected unless they sell prior to maturation. But potential buyers wouldn't be as prone to buying them.... making them worth less. Meaning the yield would have to increase in order to sell the same amount. Meaning the US gov't would have to pony up and pay higher interest. So it doesn't screw individual AMericans, except in the sense that the debt incurred by gov't is ultimately borne by individuals.

... the U.S. government (it has to pay back face value either way...

Don't forget the interest it pays. Remember a major reason folks buy those things is to get the interest.

65 posted on 07/30/2002 6:27:58 AM PDT by Principled
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