About 45% of US debt now is held by foreign nations. Both China and Japan hold over a trillion each of US debt. No trade war.
You forget that USA can (in theory, and likely in practice with a sufficiently unhinged leadership) just inflate its debt anyway via quantitative easing or whatever.
Yes but ... wrote:
China would hate to throw away their foreign reserve account value by trying to dump US securities. How about this 'tool' China has:. They direct Kim Jong Un to threaten something totally crazy unless the tarriffs are moderated? Don't think economic sanctions are the only thing on the table, for either country.
China does not a trade war. US would be hurt far more. Bank of America does not want to foreclose on your home. BoA prefers their customers make timely payments. China has US debt as leverage against US. US has no equal leverage versus China.
King of Debt me wrote:
About 45% of US debt now is held by foreign nations. Both China and Japan hold over a trillion each of US debt. No trade war.
You forget that USA can (in theory, and likely in practice with a sufficiently unhinged leadership) just inflate its debt anyway via quantitative easing or whatever.
You didn't respond to me, but as we know that is my quote. Q.E. was successful circa 2009. I don't know if Q.E. could raise enough money to counter a mass liquidation of US bonds, notes, bills?
It sounds silly but from 2008-2016 the US would have loved it if China started dumping treasury bonds and dollars; it would have resulted in further depreciation of the dollar and provided a much needed boost to demand to close the yawning output gap that continued to persist and plague the US economy; it is also a misconception that China dumping US debt would result in massive interest rate raises; for one China would very likely not consider this scenario of mass dumping treasury bonds in a short period since they'd lose a lot of money themselves if interest rates (/bond prices precipitously declined as a result) and two, the US has a monetary authority, a history of credibly controlling inflation and keeping it moderate/ relative political stability, and it's own domestic currency with almost no foreign currency debt; these factors allow it to exert aggressive control over the money supply to combat any potential volatile changes in asset markets that would result in big swings in interest rates or bond prices.
fromtheheart wrote:
The precious running shoes that we all covet will cost $250 or more. Barefoot running will see a resurgence.
Ha ha, yes - and running shoes will miraculously now last more than 250 / 300 miles before needing replaced!
Gaylord Ruppture wrote:
fromtheheart wrote:
The precious running shoes that we all covet will cost $250 or more. Barefoot running will see a resurgence.
Ha ha, yes - and running shoes will miraculously now last more than 250 / 300 miles before needing replaced!
Running shoes would become great again!!
Consider wrote:
But how will China feed a couple billion people without buying our grain? How will China handle the increase in unemployment? In my opinion, the impact on China will be much worse.
Both countries will see increases in prices and loss of jobs. The real question is which country can bear this. The reality is America has had a very good past century which is great for the people but also means that people will have grown soft. This is not meant as an insult but rather a reality. During the Second World War China suffered 15,000,000 casualties, the US less than half a million. China saw its cities destroyed and the Rape of Nanking, the US suffered Pearl Harbor. After the war China entered a civil war which killed a further 8 million. Following that there was the Great Leap Forward, 30 million deaths due to starvation, 2.5 million due to 'violence'. After that there was the Cultural Revolution, 3 million deaths. For the US the greatest stress on society since WW2 was Vietnam, but that did not result in US civilian casualties on American soil.
The Chinese have been brought up in a world where bad times means millions of deaths. For the Chinese the effects of this trade war will be relatively trivial. If 50,000 jobs are lost in the US people will march in the streets and Congress will be in a frenzy worrying about the effect on the November elections. In China politicians will just go back to their siesta - wake me up when 500,000 have died.