China to retaliate by not buying treasuries
- Thread starter Cuddles
- Start date
Omg, USA is screwed big time
What are they going to do with all their $USD from their trade surplus with us?
They have three choices:
1- Hold dollars
2- Buy US treasuries
3- Buy more stuff from the US
It really doesn’t matter as long as they want to maintain a trade surplus, they will either support our treasury market, or support the dollar, or support our economy.
They have three choices:
1- Hold dollars
2- Buy US treasuries
3- Buy more stuff from the US
It really doesn’t matter as long as they want to maintain a trade surplus, they will either support our treasury market, or support the dollar, or support our economy.
If they REALLY want to screw US, they can do a fire sale of the treasuries that they hold to push the yield into super high to make the already flat yield curve now inversed triggering another market melt down in the US and then start the currency war all over again by devaluing the RMB yuan even further against USD to make it super cheap and USD super expensive so US exports won't sell at all widening the trade gap even more.
So now the US will be facing a crippled market and an artificially strong USD that won't allow US to sell any of the exports starting another long recession.
If the Fed is smart enough, it won't devalue the USD to help with the exports but if it's not and start to devalue USD, China can buy up US Treasuries all over again under cheap USD and with yield so high, the Treasuries price will be dirt cheap.
Of course with the economy in recession, the Fed would next be lowering interest rate then pushing the yield lower on Treasuries and China can sell US Treasuries again now that its price is higher and possibly triggering another yield curve inversing, round and round we go.
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If they sold massively it means that the US bought massively non american products. US citizens are part of the problem. They are very patriotic... until they see that made in China stuff is much cheaper then made in the US stuff.
The US helped creating "the problem". So it was no about "the good favors", it was about favors for the US citizens by being able to buy cheaper. It favored their wallet (in short term view). A lot of famous American brands produce in the Far East. Ask Apple and dozens of other US multinationals.
the Chinese have terrific choices, none which are on your list. your opinion that the US can push the Chinese around is not based on reality. the whole world is diversifying away from the $US as a reserve currency. your view of America as the one dominant center of the world is past history.
as long as the $US has value they will buy goods from all over the world but particularly hard assets in Africa and Latin America.that is a great opportunity for the Chinese. there are new trade blocs being formed. the US will be excluded if it is not careful.
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Americans are playing with fire here. They think they can shit on Mexican and Muslim pride because their buying power is pathetic. Trying the same on China, which has way more competitively priced choices from Europe and other Asian countries is a zero sum game.