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> The Federal reserve would buy them all up at the now discounted rate. Further proving to anyone else holding bonds how worthless dollars are.

mywittyname 6y ago
T-bonds and dollars are basically the same thing. A t-bond is basically a bank account with the US Treasury saying that you gave them USD and that you're entitled to that USD back, with interest, at some later date. Saying China "dumping" t-bonds is bad for America is like saying that a person "dumping" CDs is bad for a bank. The seller is the one getting hosed on the deal, because they are forced to sell at a discount (otherwise, it wouldn't constitute dumping). The bank / treasury already knows they need to pay back the money at some point. Also, a trillion dollars in t-bonds isn't that much. The Fed has purchased hundreds of billion on several occasions without much fanfare. A trillion bucks won't do much more than trigger some NYTimes articles on the subject.
- insert_coin 6y ago
  Dollars are dollars now, bonds are dollars in the future. They are not the same. Dumping bonds is not just an economic decision, but also a trust decision. You hold bonds because you trust the US. Dumping bonds means you no longer trust the US ability to pay back those bonds with dollars worth anything; that you lost hope of ever getting repaid. And of course you lose your nominal amounts of dollars, who's arguing that? You still dump them because you are taking your loses today instead taking more tomorrow.
  - mywittyname 6y ago
    > They are not the same. They are cash and cash-equivalents. Meaning, the same. Many large business transactions are done using t-bonds. The amount of dollars in the economy is surprisingly small, thus, at some price point, it becomes necessarily to pay in t-bonds.
    - insert_coin 6y ago
      > They are cash and cash-equivalents. Meaning, the same. > Many large business transactions are done using t-bonds. The amount of dollars in the economy is surprisingly small, thus, at some price point, it becomes necessarily to pay in t-bonds. Then they are not the same. You admit they are not the same, then deny they are not the same. If they were the same they would be called the same, and would be the same. They can be equivalent and they are used similarly, just as a house can be used as "cash-equivalent" under certain circumstances. But they are different instruments that allow different (and some similar) uses.

mywittyname 6y ago

T-bonds and dollars are basically the same thing. A t-bond is basically a bank account with the US Treasury saying that you gave them USD and that you're entitled to that USD back, with interest, at some later date. Saying China "dumping" t-bonds is bad for America is like saying that a person "dumping" CDs is bad for a bank. The seller is the one getting hosed on the deal, because they are forced to sell at a discount (otherwise, it wouldn't constitute dumping). The bank / treasury already knows they need to pay back the money at some point. Also, a trillion dollars in t-bonds isn't that much. The Fed has purchased hundreds of billion on several occasions without much fanfare. A trillion bucks won't do much more than trigger some NYTimes articles on the subject.

insert_coin 6y ago
Dollars are dollars now, bonds are dollars in the future. They are not the same. Dumping bonds is not just an economic decision, but also a trust decision. You hold bonds because you trust the US. Dumping bonds means you no longer trust the US ability to pay back those bonds with dollars worth anything; that you lost hope of ever getting repaid. And of course you lose your nominal amounts of dollars, who's arguing that? You still dump them because you are taking your loses today instead taking more tomorrow.
- mywittyname 6y ago
  > They are not the same. They are cash and cash-equivalents. Meaning, the same. Many large business transactions are done using t-bonds. The amount of dollars in the economy is surprisingly small, thus, at some price point, it becomes necessarily to pay in t-bonds.
  - insert_coin 6y ago
    > They are cash and cash-equivalents. Meaning, the same. > Many large business transactions are done using t-bonds. The amount of dollars in the economy is surprisingly small, thus, at some price point, it becomes necessarily to pay in t-bonds. Then they are not the same. You admit they are not the same, then deny they are not the same. If they were the same they would be called the same, and would be the same. They can be equivalent and they are used similarly, just as a house can be used as "cash-equivalent" under certain circumstances. But they are different instruments that allow different (and some similar) uses.