You are viewing a single comment's thread.

view the rest of the comments →

[–] Chimpfighter [S] ago  (edited ago)

What if China, and others decide to dump a shit ton of tbills at once , combined with some serious domestic political.instability/.armed conflict here ? People start hoarding food batteries ammo etc ?

Tangible items are more desired than paper money.

Overseas people get nervous and get rid of dollars for other currency , or gold and silver ? Shit can snowball fast. Not saying it's likely , but it's possible

[–] WORF_MOTORBOATS_TROI ago 

Political commentators exaggerate the possibility that that will happen and they exaggerate what the consequences would be if that were to happen because it's good for ratings. The more t-bills that China sells they will get diminsihing returns because the value of the remaining t-bills that they own will fall along with the exchange rate as the USD falls. As long as you need USD to buy US assets then a falling foreign exchange rate would make US assets a bargain for anyone who holds non-USD currency or assets. Whatever disruption there is in the US would have to be so widespread that it affected the ability of people to buy things from America.

What would be most likely to happen would be China gradually sells off t-bills and uses the money to buy other things that are denominated in USD so that the overall demand for US currency is not changing significantly. This would help preserve the value of the other t-bills China owns and could also give them greater control over the US economy. If they take that money and buy a shit ton of soybeans and corn every year, or if they buy real estate and businesses in the US, it's an investment but it's also control over their rival. Remember when Trump had a trade war with China when so he could renegotiate our trade deals with them and he had to pass an agricultural stimulus bill to bail out farmers who lost china as a customer for their rice/soybeans/corn? That's the kind of thing that gives them control especially since our political system means short term economic harm to a population group can have long-term personal and professional consequences for the US politicians who are representing us in our dealings with China.