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I think the trade balance is too skewed in favor of the US. It will be painful for both sides, but we have a lot more goods we can tariff than they can. Of cou

I think the trade balance is too skewed in favor of the US. It will be painful for both sides, but we have a lot more goods we can tariff than they can. Of course, they could also dump their US treasuries, but it would be a pyrrhic victory for China. They would hurt themselves too much in the process.

nostromo 7y ago
The US Fed would simply buy the dumped treasuries as an emergency measure. The Fed already owns twice as many treasuries as does China, so it could also just pause the balance sheet reduction program. It wouldn't dramatically hurt the US long term.
- tyre 7y ago
  That's a bold statement. We're talking about over $1tn in treasuries. While the US debt is already around $22tn, that's a pretty huge weight
- topmonk 7y ago
  But what happens to all that cash they would use to buy the treasuries with? Where is that $1.1 trillion going to flow into?
  - LegitShady 7y ago
    Whoever sells the treasuries gets the money. That's how buying and selling works.
    - topmonk 7y ago
      You understand that China is unlikely to just leave the cash sitting around, aren't you? That money will probably end up being dumped on Forex crashing the US dollar.
      - LegitShady 7y ago
        Chinese currency is artificially valued and its foreign value depends on their forex exchange and large US dollar reserves. If china dumps us dollars it will devalue the dollar, and it will destroy the chinese currency beyond saving. Thats not a one sided situation, that's a situation far more likely to destroy the chinese than the US. They're using their USD to buoy their crashing currency, not to dump out of spite to try to crash the USD.
astronautjones 7y ago
they can sell off more of the real estate they hoard and substantially effect that market again
- mdorazio 7y ago
  I don't think that would work. There's a huge amount of pent-up demand in many markets for real estate, with buyers just waiting for prices to slightly drop. I'm pretty confident the amount of real estate held by China that they could force sale of would be snapped up by local markets without issue.

nostromo 7y ago

The US Fed would simply buy the dumped treasuries as an emergency measure. The Fed already owns twice as many treasuries as does China, so it could also just pause the balance sheet reduction program. It wouldn't dramatically hurt the US long term.

tyre 7y ago
That's a bold statement. We're talking about over $1tn in treasuries. While the US debt is already around $22tn, that's a pretty huge weight
topmonk 7y ago
But what happens to all that cash they would use to buy the treasuries with? Where is that $1.1 trillion going to flow into?
- LegitShady 7y ago
  Whoever sells the treasuries gets the money. That's how buying and selling works.
  - topmonk 7y ago
    You understand that China is unlikely to just leave the cash sitting around, aren't you? That money will probably end up being dumped on Forex crashing the US dollar.
    - LegitShady 7y ago
      Chinese currency is artificially valued and its foreign value depends on their forex exchange and large US dollar reserves. If china dumps us dollars it will devalue the dollar, and it will destroy the chinese currency beyond saving. Thats not a one sided situation, that's a situation far more likely to destroy the chinese than the US. They're using their USD to buoy their crashing currency, not to dump out of spite to try to crash the USD.

astronautjones 7y ago

they can sell off more of the real estate they hoard and substantially effect that market again

mdorazio 7y ago
I don't think that would work. There's a huge amount of pent-up demand in many markets for real estate, with buyers just waiting for prices to slightly drop. I'm pretty confident the amount of real estate held by China that they could force sale of would be snapped up by local markets without issue.