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You’re correct here; however, the narrative that China wants Americans to see is that they can mess up the dollar. The truth is selling a huge pile of dollar de
by ttul 7y ago
You’re correct here; however, the narrative that China wants Americans to see is that they can mess up the dollar. The truth is selling a huge pile of dollar denominated bonds wouldn’t do much other than hurt China by pushing up the yuan and thus depressing exports even further.
- adventured 7y agoAnd given that the dollar has been very relatively high for the last five years, now is an ideal time for China to begin selling. I'd like to see them get on with it. The Fed should immediately start a repurchase program and take the entire position off of China's hands permanently. China of course won't do any such thing, even if the trade war gets worse. The only value in it is the bluff, because it would barely scratch the dollar if they began more aggressively selling. It'd be a great excuse for the Fed to run some more QE and lower the cost of some US debt.