4 ms·

> Once the Chinese economy is strong enough that they don't want to be the "cheap manufacturing country for the world", I suspect they will drop US debt like a

> Once the Chinese economy is strong enough that they don't want to be the "cheap manufacturing country for the world", I suspect they will drop US debt like a hot potato It's also a huge bargaining chip. If China dumped a trillion dollars of US financial instruments at firesale prices over the course of a year, that would cause a lot of mayhem.

refurb 8y ago
But why would they do that? It makes no sense. It’s like buying a car from a friend then turning around and selling it for a dollar. You hurt yourself more than you hurt the other person.
- michaelt 8y ago
  Same reason you might fire a $65,000 missile at a $500 truck: Because despite the greater harm to yourself, you believe you can take it and they can't.
  - conanbatt 8y ago
    China does not have that level of wealth
hak8or 8y ago
Not really. China holds a very small portion (less than 10%) of USA debt. https://goo.gl/images/e6Jmrb https://goo.gl/images/e6Jmrb
smsm42 8y ago
> I suspect they will drop US debt like a hot potato I mean they suddenly decide that the asset they bought in trillions as safest investment available around is suddenly worthless - and not only try to hide it, but actually loudly proclaim that all their holding are worthless (I imagine so that it would be easier to sell them at the best price?) I don't see China doing something like that. First, they would need to find a reason why US debt has become worse investment than yesterday - and second, even if they find this reason, they won't ever "drop it like hot potato" - that would be a suicide (in Chinese conditions, probably a literal one for somebody that would cause such loss of billions to the state). > If China dumped a trillion dollars of US financial instruments at firesale prices over the course of a year, that would cause a lot of mayhem. Why would they? Other than collective insanity, there'd be no reason for such behavior.
- AlexCoventry 8y ago
  > Why would they? Economic warfare.
- brianpgordon 8y ago
  > I imagine so that it would be easier to sell them at the best price What? How would telling the world that US debt is worthless help them sell their holdings of US debt at higher prices?
  - smsm42 8y ago
    <sarcasm>

refurb 8y ago

But why would they do that? It makes no sense. It’s like buying a car from a friend then turning around and selling it for a dollar. You hurt yourself more than you hurt the other person.

michaelt 8y ago
Same reason you might fire a $65,000 missile at a $500 truck: Because despite the greater harm to yourself, you believe you can take it and they can't.
- conanbatt 8y ago
  China does not have that level of wealth

hak8or 8y ago

Not really. China holds a very small portion (less than 10%) of USA debt. https://goo.gl/images/e6Jmrb https://goo.gl/images/e6Jmrb

smsm42 8y ago

> I suspect they will drop US debt like a hot potato I mean they suddenly decide that the asset they bought in trillions as safest investment available around is suddenly worthless - and not only try to hide it, but actually loudly proclaim that all their holding are worthless (I imagine so that it would be easier to sell them at the best price?) I don't see China doing something like that. First, they would need to find a reason why US debt has become worse investment than yesterday - and second, even if they find this reason, they won't ever "drop it like hot potato" - that would be a suicide (in Chinese conditions, probably a literal one for somebody that would cause such loss of billions to the state). > If China dumped a trillion dollars of US financial instruments at firesale prices over the course of a year, that would cause a lot of mayhem. Why would they? Other than collective insanity, there'd be no reason for such behavior.

AlexCoventry 8y ago
> Why would they? Economic warfare.
brianpgordon 8y ago
> I imagine so that it would be easier to sell them at the best price What? How would telling the world that US debt is worthless help them sell their holdings of US debt at higher prices?
- smsm42 8y ago
  <sarcasm>