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No, I read it right. It's American public debt they hold. They don't have 1 trillion dollars in cash sitting in a vault. They are holding U.S. Treasury bonds
by carboncopy 11y ago
No, I read it right. It's American public debt they hold. They don't have 1 trillion dollars in cash sitting in a vault. They are holding U.S. Treasury bonds.
And again, I don't understand why having 1 trillion dollars in a reserve bank is a useful measure of economic power. The Chinese economy has a GDP of $10tn compared with the U.S. economy of $17tn. That is an example of a meaningful metric of power.
^^^
the parent commenter edited his entry after I submitted my original comment, which changes the relevance of my comment.
- jcoffland 11y agoThey have $3.9T worth of cash reserves sitting in a vault in addition to holding over $1T in US debt.
- khuey 11y agoNo, they don't. There's only 1.4 trillion dollars in circulation. http://www.federalreserve.gov/faqs/currency_12773.htm http://www.federalreserve.gov/faqs/currency_12773.htm
- jcoffland 11y agoNot all of their cash reserves are denominated in US dollars.
- khuey 11y agoThere's around 5 trillion US dollars worth of hard currency in the world. http://gizmodo.com/5995301/how-much-money-is-there-on-earth http://gizmodo.com/5995301/how-much-money-is-there-on-earth 80% of it is not sitting in a vault in China.
- StreamBright 11y agoI think it is more like economic long term insurance than power.