daily timewaster

Thursday, April 5, 2018

SOTD

Zoologist Civit soap, Omega brush, Portland Cascade Steel straight, Proraso Eucalyptus aftershave

There's been a lot of talk lately about trade war with Red China, and the importance of how much of our debt they hold

Some trenchant thoughts on all that from around the web:

“The T-bill bomb that many have suggested is China’s supposed ace is utter rubbish. The logic is that in a real spat the Chinese, the second-largest foreign holder of U.S. government debt, could just dump some of the U.S. T-bills it holds on the market and crash the U.S. economy. That’s not how things work. *You cannot just walk up to the U.S. Treasury building and demand your money back; it’s a fixed term note. *Any interim sale of a T-bill to another party has to have a buyer. No buyer, no sale. *China could theoretically try and sell its T-bills whenever the U.S. Treasury was trying to sell new debt and that would raise the cost of U.S. financing. But not only is the U.S. T-bill market the largest in the world so it would have to be a big sale, but what would “massive” success bring? It would push down the value of the U.S. dollar. Considering the Chinese regularly intervene in their markets to push the U.S. dollar up so that they can sell more goods into the U.S. market, it would work at cross purposes to the set of Chinese policies that make the Chinese economy possible. *And of course, the U.S. Federal Reserve can simply mop up the T-bill market if it chooses by printing currency. It’s a perk of running the global currency.”

China depends on the USA for trade far more than we depend on them. We’re the least internationally integrated country on the planet by percentage of GDP. We export food, and, including Canada, energy (on our own within 2 years.)

They hold no cards, anyone who tells you otherwise is either ignorant or lying. They can’t even protect their own sea lanes, and they import 75% of their energy and a decent amount of food as well. All it would take is the US military announcing they won’t protect chinese shipping and the entire country folds like a house of cards built on top of a smaller house of cards."

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"Red China holds about $1.1 Trillion in Treasuries, the same as Japan, and about 5% of US debt. The US Federal Reserve owns about twice that, and US investors/companies as a whole own $14 trillion of it.

While it's true if the Chinese 'dumped' their US treasuries it would be bad for the dollar ... It would also be bad for the Yuan because it is still mostly pegged to the dollar..."

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A weak dollar/strong yuan absolutely murders the Chinese export potential globally, this is why their monetary policy has long been criticized for the artificial devaluation of yuan to aid exports. Dumping usd by selling treasuries on the market would be bad for them, and of course holding foreign currency reserves is a strategic national security imperative which is the reason they hold usd in the first place.

It would be a punch in the gut for the US, which we can handle.

It would be a shotgun blast to the head for China. They would die.

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