[Aquinasfan]

They are spending the money. On factories, machines, infrastructure, oil, other commodities and new buildings. Most of which are NOT in the USA.

And what do those people do with the money? They spend it. Eventually, someone's going to buy some American stuff with the money. Otherwise, they'll be left holding a bunch of worthless green paper.

[Paul Ross]

And what do those people do with the money? They spend it.

Not necessarily, as China has successfully shown with their 15 years pattern of hoarding.

Eventually, someone's going to buy some American stuff with the money. Otherwise, they'll be left holding a bunch of worthless green paper.

Apparently the Chinese are cool with that...so long as they get all our industry and technology.

[jeremiah]

If the money they have is just so much worthless paper, that would mean the money we hold would be worthless. What if they used the excess to buy oil futures, or gold bullion? Wouldn't it drive up the price of such things, leading them to have more money? If they bought using US dollars, then sold into say Euros, wouldn't that have the effect of collapsing our money?