Senator Graham Wants to Default on $1 Trillion Debt Owed to China

[Aspen]

Lindsey Graham has been losing it ever since his boyfriend John Mccain died.

 

[PakFactor]

Why today's US government is full of retards and dimwits, US used to be a very respectable country decades ago.

You would be surprised with the quality of graduates US is throwing out, majority are illiterate on basic fundamentals of how the economy works. I’ll say one thing schooling isn’t made for everyone.

9/11 smoked their brains.

That and college grads don’t absorb basics. Their more focused on stupid liberal arts courses or getting a degree in english, communication or history, with the bare minimum grades just to get the paper.

I’m an adjunct lecturer at a community college (if time permits outside my small business time to time I pick a class to teach outside my insurance agency) teach Entrepreneurship and Business Management courses the quality of students is abysmal in the US they wouldn’t be able to balance a receivable/payable account if their life depended on it.

 

[atan651]

Chinese govt should seize all US assets in China in retaliation. I'm sure that will be enough to cover the $1 trillion in treasuries.

 

[PakFactor]

Chinese govt should seize all US assets in China in retaliation. I'm sure that will be enough to cover the $1 trillion in treasuries.

Yes. It’s more than enough, but it’s a suicide altogether. These sort of actions could accelerate a Warm War into a Cold War.

 

[Aspen]

Chinese govt should seize all US assets in China in retaliation. I'm sure that will be enough to cover the $1 trillion in treasuries.

Now we're talking

 

[Nilgiri]

No. Since your credit card will be in local denominated currency. But countries would definitely default on their external liabilities. Countries trade in dollars because of the inherent trust in US system. If they do politics with that trust, dollar will be doomed.

Not really. It would be tantamount to asking every major economy country at point of gun muzzle, are you on US/west side or pick China?

If US gets enough support (and it very likely will if it pursues this route given no one is integrated with China among them as they are with the US.... given the USD and all related institutions and "soft power"), then it simply bears very little consequence for it.

Anyone pick the 2nd option, simply needs a follow up question.....why does China itself use the USD...that too without paying into it?

The third question is not even a question....rather an action....simply void the serial range of T-bills as required. China can't dump them on anyone else unless they want some paperweights or material for sandbags.

The 4th question (or maybe the "zeroth" chronologically) is the deepest one, why doesn't China dump them right now (say in small streams and as non-serialised as possible) at this major hint of what threat the US has up its sleeve and declared it brazenly.

Anyone can answer this 4th question? It has to do with the underlying reason for formation of the T-bill stockpile to begin with.

 

[Pax Ottomana]

Then US dollars will be as cheap as used toilet paper, no more global dollar domination, good for the world indeed.

What's bad for the US is automatically good for the rest of the world. So perhaps they should go ahead and do it then.

 

[Aspen]

The 4th question (or maybe the "zeroth" chronologically) is the deepest one, why doesn't China dump them right now (say in small streams and as non-serialised as possible) at this major hint of what threat the US has up its sleeve and declared it brazenly.

US can't really stop China from dumping the dollar. In the short term, it would be a bad idea, but in the long term it would be a good idea. I think Chinese leadership knows that ditching the dollar will be in their favor in long-term.

China is the only country that could pull off dumping the dollar and force people to switch out of US system.

US will be the global leader until some huge event causes a major disruption and China ditching the dollar seems like it could definitely be just that. At minimum, dollar will be severely weakened, if China plays their cards right, yuan could replace dollar in all of Asia in such a situation. Many countries that support US like Japan and South Korea depend on China and if they are forced to pick sides, they will pick China because Japanese and South Korean economy will be destroyed if they get cut off from China.

I don't think China are afraid of American threats if China ditches dollar because Americans have the most to lose and Chinese will get stronger in such a move. It will shift global power balance towards China. I think it is inevitable that China will ditch the dollar at some day because they will gain from it and hurt US by doing it. Trade war with US has proved it. Chinese leadership has seen the downsides of using weaponized dollar are not worth advantages. Just because China has not ditched dollar yet does not mean it could not do it today if they wanted to. Chinese are good at calling American bluff. Increased American recklessness will speed up China's decision to do so.

 

[Nilgiri]

US can't really stop China from dumping the dollar.

They have just said plainly and openly what they are planning to.

Whats stopping China?

Actually more interesting question is, who would buy these from China now to begin with given they would be worthless later (since US would just cancel them by serial range so if you bought them from China you are SOL too)

China didnt get these to dump them one fine day. They knew what they were getting into and why.

Again you have to look at why China went this route (along with simply leveraging it at most), its big part of their currency peg (and what level maintained at) and why thats a firm Chinese policy too.

 

[gambit]

Actually more interesting question is, who would buy these from China now to begin with given they would be worthless later (since US would just cancel them by serial range so if you bought them from China you are SOL too)

We will have to wait for our community college economics professor to explain that part.

 

[Vikram.veda]

Not really. It would be tantamount to asking every major economy country at point of gun muzzle, are you on US/west side or pick China?

If US gets enough support (and it very likely will if it pursues this route given no one is integrated with China among them as they are with the US.... given the USD and all related institutions and "soft power"), then it simply bears very little consequence for it.

Anyone pick the 2nd option, simply needs a follow up question.....why does China itself use the USD...that too without paying into it?

The third question is not even a question....rather an action....simply void the serial range of T-bills as required. China can't dump them on anyone else unless they want some paperweights or material for sandbags.

The 4th question (or maybe the "zeroth" chronologically) is the deepest one, why doesn't China dump them right now (say in small streams and as non-serialised as possible) at this major hint of what threat the US has up its sleeve and declared it brazenly.

Anyone can answer this 4th question? It has to do with the underlying reason for formation of the T-bill stockpile to begin with.

If they dump dollars, wouldn't that raise their currency visa vis dollar? Isn't it counter productive to their export economy?

 

[Pax Ottomana]

They have just said plainly and openly what they are planning to.

Whats stopping China?

Actually more interesting question is, who would buy these from China now to begin with given they would be worthless later (since US would just cancel them by serial range so if you bought them from China you are SOL too)

China didnt get these to dump them one fine day. They knew what they were getting into and why.

Again you have to look at why China went this route (along with simply leveraging it at most), its big part of their currency peg (and what level maintained at) and why thats a firm Chinese policy too.

I'm not sure the US can just "cancel" a range of US Dollars just because they're held by China, which is said to be over $3 TRILLION. This is a fiat currency we're talking about with nothing tangible to back it up (e.g. no gold, silver, diamonds, oil, etc.) If the US pulls something like that the USD would become completely worthless overnight and Americans would set the Fed building on fire.

 

[Aspen]

They have just said plainly and openly what they are planning to.

Whats stopping China?

Actually more interesting question is, who would buy these from China now to begin with given they would be worthless later (since US would just cancel them by serial range so if you bought them from China you are SOL too)

China didnt get these to dump them one fine day. They knew what they were getting into and why.

Again you have to look at why China went this route (along with simply leveraging it at most), its big part of their currency peg (and what level maintained at) and why thats a firm Chinese policy too.

I think China will wait until their economy overtakes US economy and then seize the moment to dump the dollar.

Once Chinese economy passes the US economy to become world's largest economy, countries of the world will have to decide if they want to do business with the world's largest economy (China) or the 2nd largest economy (US). Europe will stick with dollar. East Asia will switch to Yuan. Rest of the world is a toss up.

Each country will have to decide if they can live without China trade. Any country that can survive without China trade will use dollar. Any country who cannot survive without China trade will have to switch to yuan.

There are too many benefits to ditch the dollar. The only reason countries haven't done it yet is because they are waiting for someone else to do it first. Once China ditches the dollar, its domino effect and any country that doesn't depend on US will also ditch the dollar. US can sanction a few countries, they cannot sanction half of the world for ditching the dollar because then sanctions will have no effect.

If they dump dollars, wouldn't that raise their currency visa vis dollar? Isn't it counter productive to their export economy?

Not if China dumping the dollar starts a domino effect and other countries also dump the dollar. China's export economy will actually benefit because demand for yuan will increase and demand for dollar will decrease.

 

[Pax Ottomana]

US Dollar's losing its "#1 reserve currency" status poses an existential threat to the United States. They may be inclined towards not allowing it. Chine will probably also have to catch up to the US militarily first.

I'm not saying that the US would declare war on China. But they're masters of proxy warfare. They may trigger trouble in South China Sea, Taiwan, Xinjiang, Sea of Japan, etc. and try to slowly bleed China so that they will never challenge the USD.

 

[gambit]

Not if China dumping the dollar starts a domino effect and other countries also dump the dollar. China's export economy will actually benefit because demand for yuan will increase and demand for dollar will decrease.

I have been hearing that since '09 when I was invited here. In every claim of 'dumping', China always come out ahead. Not just China, but also Venezuela and Russia. And yet, if what you say is technically true, then what happened? Why not, like Nike said: Just do it? ?China WILL win, no?