But dumping treasuries would be slow, and buying gold as an alternative would surge in price if bought in bulk? What are other options besides investing in gold or building up the Silk Road?
Chinese Economics Thread
- Thread starter Norfolk
- Start date
Hendrik_2000
Lieutenant General
Start reducing the export and prod Chinese consumer to spend their money Therefore allowing manufacturer to market their product inside the country. But easier said then done due to inadequate Social security program and cultural value.
Export is the root cause of accumulating dollar that need to be sterilized by buying Treasury. Otherwise it will cause too much Yuan when repatriated.As the proceed from export must be converted to yuan Causing too much money chasing too few good Inflation
plawolf
Lieutenant General
The idea of the US ‘selectively’ defaulting against only Chinese held US treasuries is pure fantasy dreamed up by idiots without even the most rudimentary understanding of what treasures are and how they are traded.
US government treasuries are not government IOUs that promises to pay only the specific person they were issued to, it’s a governmental promise to pay monies to whoever presents the treasuries at the time of maturity. In that sense, they are simply a form of cash.
The US can no more selectively invalidate Chinese held treasuries than it can try to invalidate printed American Dollars that Chinese banks hold.
All China needs to do to get around any such silly attempts at defaults by the US is to sell the treasuries it holds that are due for maturity within the next year for so within the year, which would only be a tiny fraction of the total debts held (government T-Bonds typically have maturities between 10-30 years), so there is zero need to try to offload the entire stock immediately.
The only actual immediate damage that the US can do to China, which would be hard for China to immediately avoid, would be if it refused to make interest payments due. But that is only on certain treasuries, and can be easily mitigated in the medium to long term.
The damage the US can do to China with such moves would be limited, but the damage it will do to itself in trying would be monumental.
Ironically, America would do far more damage to China economically from the trashing of the value of its entire treasury stock, and currency than it could from cheated interest payments and any actual cancelled T-Bills China somehow didn’t manage to offload before maturity (which would likely only be a tiny token amount, which China deliberately kept to both test America and also demonstrate beyond any doubt that they can stoop so low to the market to cement the demise of the USD as a global reserve currency).
T-Bills, like all Fiat money, has no intrinsic value. It only has value because governments promise to pay the holder, and people choose to believe them.
If a government breaks that promise to even one person for no good reason, everyone else who holds government IOUs will panic that their own pieces of paper are also going to be made worthless.
There is no surer way to end the petrol-dollar and even the dollar status as an international reserve currency than to break that most fundamental bond of trustworthiness through deliberate choice and malice, which is on a completely different plain of existence to defaulting as a result of economic mismanagement or political strife, which in itself carried heavy and long term economic costs to governments and economies that have defaulted in the past.
America trying to default against China isn’t like shooting oneself in the foot, it’s more like pulling the pin off a live grenade and swallow it before it went boom.
US government treasuries are not government IOUs that promises to pay only the specific person they were issued to, it’s a governmental promise to pay monies to whoever presents the treasuries at the time of maturity. In that sense, they are simply a form of cash.
The US can no more selectively invalidate Chinese held treasuries than it can try to invalidate printed American Dollars that Chinese banks hold.
All China needs to do to get around any such silly attempts at defaults by the US is to sell the treasuries it holds that are due for maturity within the next year for so within the year, which would only be a tiny fraction of the total debts held (government T-Bonds typically have maturities between 10-30 years), so there is zero need to try to offload the entire stock immediately.
The only actual immediate damage that the US can do to China, which would be hard for China to immediately avoid, would be if it refused to make interest payments due. But that is only on certain treasuries, and can be easily mitigated in the medium to long term.
The damage the US can do to China with such moves would be limited, but the damage it will do to itself in trying would be monumental.
Ironically, America would do far more damage to China economically from the trashing of the value of its entire treasury stock, and currency than it could from cheated interest payments and any actual cancelled T-Bills China somehow didn’t manage to offload before maturity (which would likely only be a tiny token amount, which China deliberately kept to both test America and also demonstrate beyond any doubt that they can stoop so low to the market to cement the demise of the USD as a global reserve currency).
T-Bills, like all Fiat money, has no intrinsic value. It only has value because governments promise to pay the holder, and people choose to believe them.
If a government breaks that promise to even one person for no good reason, everyone else who holds government IOUs will panic that their own pieces of paper are also going to be made worthless.
There is no surer way to end the petrol-dollar and even the dollar status as an international reserve currency than to break that most fundamental bond of trustworthiness through deliberate choice and malice, which is on a completely different plain of existence to defaulting as a result of economic mismanagement or political strife, which in itself carried heavy and long term economic costs to governments and economies that have defaulted in the past.
America trying to default against China isn’t like shooting oneself in the foot, it’s more like pulling the pin off a live grenade and swallow it before it went boom.
Jura The idiot
General
Friday at 6:11 PM
Chinese economy to embrace resounding rebound in Q2
so follow the link
if interested
and now there's a prediction (I mean numbers) for the second quarter of 2020 inside
Chinese economy to embrace resounding rebound in Q2
so follow the link
if interested
Chinese Oil Refiners Snap Up Bargains as Activity Resumes
39 minutes ago (Apr 19, 2020 08:45PM ET)
© Reuters. Chinese Oil Refiners Snap Up Bargains as Activity Resumes
(Bloomberg) --
Chinese refiners are snapping up low-price oil from all over the world as Asia’s largest economy emerges from a virus-driven slump.
Varieties such as Alaska North Slope, Canada’s Cold Lake and Brazil’s Lula have been offered at steep discounts to global benchmark prices over the past week as sellers scrambled to secure buyers. Processors in China -- where throughput is back to pre-virus levels -- are snagging many of the bargains as much of the rest of the world remains in lockdown.
I wonder if China can use left over labor to make more oil storage and store enough oil for years to come?
Oil has a shelf life after extraction. You can’t just hoard them and forget about them.
manqiangrexue
Brigadier
There are chemical stabilizers though that can greatly extend that time to a year or 2? Not sure.
Holy crap, I forgot who predicted this in the trade war, but he said that the trade war is advantageous to China because of the low price of oil and China can buy 3x the amount it can get than it was back in 2018
PiSigma
"the engineer"
Chemicals are expensive. When crude is selling from negative dollars to the $20 range, no point buying chemicals. Those chemicals cost $20 a liter!
I'm hesitant to believe your argument completely. Wouldn't investors view it as a special case since there's such animus against China?