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Sorry, I don't follow. Zero interest? Are we talking about the same interest? We're paying hundreds of billions of dollars to China in interest. In what world i
by mehrdadn 7y ago
Sorry, I don't follow. Zero interest? Are we talking about the same interest? We're paying hundreds of billions of dollars to China in interest. In what world is China going to let the US keep its money and lower the interest it receives in return to zero?
- atq2119 7y agoIn the world where China wants to keep its own currency at a low value in order to continue the export-driven economic policy. Look, obviously China can sell its US treasuries in exchange for "cash" (electronic balances in a current account). If it did that, the US would only benefit. If China then exchanged this USD "cash" into another currency, the worst that would happen is for the USD to reduce in value in the foreign exchange markets, which would boost US exports and therefore boost the US economy. Yeah, US consumers would have somewhat less purchasing power for some time, but that only balances out the fact that US consumers currently have somewhat more purchasing power than they would "naturally" have.
- ianai 7y agoThat’s the most straightforward explanation ive seen yet!
- deleted 7y ago[deleted]
- almost_usual 7y agoDon’t think China has _let_ power over the United States. I’d imagine some agreement would be met that would be in the best interest of both nations. At least I would hope for that...