MrRodgers
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quote:
ORIGINAL: heavyblinker
quote:
ORIGINAL: MrRodgers
First that would be shooting themselves in the foot as that being the very denomination of all that debt they hold plus if anything. they want the dollar to go up so they could convert US dollars into more Euros, Pounds or ok...Rubbles and Yuan.
Get it ?
China could crash the dollar by selling off all of their American currency at once.
I probably shouldn't have tried to use such a ridiculous hypothetical situation to get in shots about how dangerous Trump is to the global economy, but it IS possible even if it would be extremely stupid of them, because it would be worse than 2008 and result in a global depression... but the fact that it is possible means that there is still a chance that some implausible scenario could arise, probably due to escalations brought about by Trump's ridiculous plan to attack China directly, where China might want to crash the global economy just to prove their point. Something like if Trump forced the rest of the world to exclude China from all trade deals under threat of nuclear armageddon or something... I don't even know, because it all just seems so absurd, but that is what tamaka has been worried about so I'm indulging her.
I was earlier talking about mutually assured destruction because the cold war nuclear standoff is basically the same scenario as this economic one-- it tends to prevent catastrophe and conflict as opposed to inviting it, so you end up with things like the TPP instead of direct action being taken against China.
But this isn't even a standoff at all, really, because China is already in the process of gradually strengthening the yuan by selling off their holdings. If they do it gradually there won't be any kind of panic. However there is no real question as to whether or not China's emphasis on wealth over jobs will lead to America no longer being the world's foremost economy-- it's definitely going to happen.
I've spent the last hour or so looking into even the plausibility of China'a ability to and motivation for selling some let alone all of it's US bonds and here is what I've found.
First, the effort is to build back the Yuan as China wants to maintain both the Yaun's (also called the Renminbi) domestic and international standing. No currency can hope to achieve such a status in trade if it is seen as increasingly worthless against other international currencies.
In line with that, it is also doing so to support the Chinese currency as it signs MoU (memorandums of understanding) with European and other banks to increase banking transactions in the Yaun. Few would do so as with other currencies...if they are worthless.
The Yuan stands at .14 (cents) as of 8/16. Still a steep hill to climb for any truly significant change in current international business. The difference with China say as opposed to other such currencies, (like Mexico for example) is that [it] has over $3.4 trillion in cash and US bonds to effect such moves vis-a-vis the Yuan.
In as much as there still is and will be for years to come (at the current unprecedented high sell off for 2014 to 2016, it would still take China 6 years to sell all US debt) for any effect on the US economy and the international confidence in the US dollar. As exemplified by 2-10 year US debt still selling out immediately and as rates plunged on 10 year notes to under 2% but came back to 2.27% just to fall again to 2.18%.
So while such conjecture says it is theoretically possible, China still has neither the capability or the intent to even try to sell ALL of its US debt. and certainly not in any sudden move. Neither could we suffer anything like a global recession which is among the last things China wants to see.
< Message edited by MrRodgers -- 11/24/2016 1:00:17 AM >
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Under capitalism, man exploits man. Under communism, it's just the opposite.
J K Galbraith
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RE: Trade between the US and China over past 30 years - 
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