How China's attempts to get rid of the US national debt can end

5

A few days ago, Beijing made it clear to the whole world through its "secret mouthpiece" that it is ready, if necessary, to quickly dump all its assets, denominated in US government debt. And he can indeed do this in response to aggressive actions by Washington. But the reality is that it is in China's own interest not to. And, let's face it, Russia too.

Like us told earlier, China owns treasuries for a huge amount of $ 1 trillion and threatens to start selling 20% ​​of its bonds, and, if necessary, all 100%. Neither technically nor legally can anyone prevent Beijing from doing this. It is believed that this should bring down the American the economy... But in reality, the consequences of such a step are assessed very differently.



According to the pessimistic point of view, a one-time dumping of trillions of Treasuries will lead to a chain reaction on the stock exchange. The day of the week when this happens will inevitably be called "black." Due to the outbreak of general panic in the market, the US will not be able to fulfill its obligations and will declare a default. Bubbles of IT corporations will burst, the dollar will fall in price, inflation will accelerate. Millions of American citizens will know how much a pound is dashing. But do not forget that the collapse of the United States will have a very high price.

“Hegemon” is why he is a “hegemon” in order to pull the rest of the world economy down with him. The American market is the most important for both exporters from Europe and from China. And, by the way, Russia, which supplies the United States, for example, metals and oil. If he, the market, collapses, the economic model of almost all players without exception will be covered with a copper basin. Demand for oil and gas will fall, and with them prices for hydrocarbons, which will negatively affect our federal budget. For the PRC, organically linked to the United States, its own blow will be even more painful, as millions of now unemployed Chinese workers will have to learn to hunt sparrows.

There are also more moderate estimates. According to them, the "fatal blow" of the Celestial Empire will not be so fatal. Yes, a trillion dollars is a lot of money, but the annual US budget today is 3,3 trillion. The US national debt has reached 26 trillion dollars, that is, China owns "only" 1/26 of it. This is a lot, but not critical. Moreover, the United States has a fantastic privilege to print its national currency uncontrollably as the main international means of payment. As long as the whole world is ready to accept dollars, nothing catastrophic will happen to the American economy. They will "draw" on a computer in the Federal Reserve a figure with the required number of zeros and make payments to creditors.

It is quite possible that China will indeed continue to get rid of US government debt bonds, which have become less interesting against the backdrop of zero rates, but will do it in a metered and gradual manner. Cash will obviously not hurt Beijing during the impending crisis, and it can be invested in other assets, such as gold and the euro.
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  1. steelmaker
    steelmaker
    -1
    8 September 2020 15: 16
    The PRC owns treasuries for a huge amount of $ 1 trillion and threatens to start selling 20% ​​of its bonds, and, if necessary, all 100%.

    I will say again: "Ponty is Chinese."
    "Who tried to eat the elephant?" - as in the movie "About Little Red Riding Hood."
  2. 123
    123
    +5
    8 September 2020 15: 16
    The day of the week when this happens will inevitably be called "black." Due to the outbreak of general panic in the market, the US will not be able to fulfill its obligations and will declare a default. Bubbles of IT corporations will burst, the dollar will fall in price, inflation will accelerate. Millions of American citizens will know how much a pound is dashing.

    Come on, scare. laughing In the spring, if I am not mistaken, they printed 5 trillion, from the consequences, the dollar fell by 10% and by the end of the year they promise to fall by about the same amount. The Fed's rabid printer can handle it. A ton of cut paper is more, a ton less, for cheaters it does not matter.

    “Hegemon” is why he is a “hegemon” in order to pull the rest of the world economy down with him. The American market is the most important for both exporters from Europe and from China. And, by the way, Russia, which supplies the United States, for example, metals and oil. If it, the market, collapses, the economic model of almost all players without exception will be covered with a copper basin. Demand for oil and gas will fall, and with them prices for hydrocarbons, which will negatively affect our federal budget.

    Should we persuade the Chinese not to? By the way, the share of the USA in trade is at the level of statistical error. Figs with them - Chinese citizens, merge, we do not mind. Yes Moreover, Russia trades real oil and gas, and not all kinds of futures. Losses will be, but this is temporary, trade will improve, the means of payment will be agreed.

    As long as the whole world is ready to accept dollars, nothing catastrophic will happen to the American economy. They will "draw" on a computer in the Federal Reserve a figure with the required number of zeros and make payments to creditors.

    That's for sure. Yes But that's the point, if the Chinese start to drain dollars, this means that not the whole world is ready to accept them, but China is a significant part of the world economy. And if this useful initiative is supported by a number of other countries .... The demand for the dollar will fall, the Fed, of course, will continue to print candy wrappers, but they will inevitably depreciate, which means you will have to print even more, in general, a vicious circle. The constantly falling currency is not so convenient for settlements in international trade, which, again, will affect demand. As a result, the United States will not be able to finance the inflated expenditures, especially the fleet, and without military force it is impossible to impose its own rules on the world.
    In general, a very interesting development of events can turn out. good
    Comrade Chinese, we agree, you can start. Popcorn is stocked, ready for viewing. For the success of the enterprise. drinks
  3. Alexzn
    Alexzn
    0
    9 September 2020 07: 37
    Quote: 123
    oh well, scare. In the spring, if I am not mistaken, they printed 5 trillion, from the consequences, the dollar fell by 10% and by the end of the year they promise to fall by about the same amount.

    As a matter of fact, all countries have launched a machine to fulfill their budget obligations and the scale of exchange rates has changed little. In Russia, the dollar has even grown (we will not go into the reasons), as in most countries. At the beginning of the year, the dollar was worth about 7 yuan, now 6,9 - the scale has been preserved.
  4. AlexisCrow
    AlexisCrow
    +2
    10 September 2020 12: 36
    If China gives up the dollar, the Americans will survive it ... But !! If all the BRICS countries give up the dollar (and the example of China may be contagious), then the American currency will actually sink, since it will cease to be the main global means of payment in fact, and will cease to bring the Americans income from transactions between countries. This is a direct devaluation of the money printed. They will only have to burn their money, since their volume in the world will no longer be in demand either, but it is huge! As a result, the needs of the American army and other State Department expenses, including the organization of a mess around the world, will sink. And only after that there will be a real crisis in the United States, which are used to dictating their terms. As a result, the Americans will start fighting ... but I do not think that they are able to defeat China or Russia, much less the union of these countries. Most likely, they will accept a reality over which they have no control, or they will be destroyed.
  5. Denis K
    Denis K
    +1
    26 September 2020 19: 29
    China will dump its debt obligations only on the eve of the war over the island of Taiwan.

    They will not find a better time than in the US elections for the next 5-10 years, most likely they will take advantage of this (in fact, this is the only chance to resolve this issue) ... the empire should grow. They will transfer all the dollars received to euros and shares of developing companies around the world ... In addition, in 5 years they will have problems with the population ... (there will be no resource for a new leap, resettlement will begin ... they will say it is necessary to give birth ... 5 children.)

    But it is difficult to say further about expansion ..., for us it will certainly be better if they go to Asia (Vietnam, Myanmar, Indonesia and down to Pope New Guinea ... including Australia) Africa (Ethiopia, CAR, Congo DR ... the center where it is warm and humid) is also possible along the Dar al-Salam (Tanzania) railway line to Lobito (Angola)
    South Central America. (Panama, Costa Rica, Colombia)

    So we stock up obediently, sit exactly on the bottom and trade with everyone. (Buying technology, building housing for migrants, making them farmers in the Far East) .. requesting some warm territories for ourselves as a result ..

    Yes, you can still think about what in this regard will begin in the Mediterranean and how they will divide Poland.