15-20% unemployment among young graduates. Households stuck with massive debts. Children & young adults having to study Xi Jinping Thought. Emperor Xi facing growing revolt from the military. It's not pretty in the US, but China leads in the race downhill.
China isn't going to dump its USTs, much as it wants to. XJP will end up hurting the country's fragile economy if he devalues the vast holding of its USTs. Sure, the US is in trouble, but China is in far worse shape. The Emperor will be dethroned if it worsens.
What does it matter if it would hurt the Chinese economy when it would kill the U.S.'s? We don't have official records but I'm willing to wager that most of China's trade is now in local currencies and so it's 1 tn USD surplus is not actually denominated entirely in USD.
If China refuses to accept the USD, U.S. consumption in goods, of which 90%+ involves China either as whole product or intermediate good in supply chain, ceases virtually overnight.
Of course they aren't going to do that while significant assets are still in the U.S. or in USD-denominated investments but those can be liquidated even at a loss if the incentive is to cripple the U.S.
In fact rates are going to remain elevated in the States to preclude just that potential occurrence of mass UST liquidation.
If China is self-sufficient in the employment of local currencies to secure trade, it's game over for the U.S. and its unbacked excess consumption. There's a reason Trump has the country in a spin right now; the peril of the situation is fully apparent.
Thank you Charles. Please share it with your friends.
Looks like China is the place to be. Seems like the least worst place in the world.
15-20% unemployment among young graduates. Households stuck with massive debts. Children & young adults having to study Xi Jinping Thought. Emperor Xi facing growing revolt from the military. It's not pretty in the US, but China leads in the race downhill.
I'd much rather take all that than a U.S. whose entire standard of living now depends on China not dumping its USTs.
China isn't going to dump its USTs, much as it wants to. XJP will end up hurting the country's fragile economy if he devalues the vast holding of its USTs. Sure, the US is in trouble, but China is in far worse shape. The Emperor will be dethroned if it worsens.
What does it matter if it would hurt the Chinese economy when it would kill the U.S.'s? We don't have official records but I'm willing to wager that most of China's trade is now in local currencies and so it's 1 tn USD surplus is not actually denominated entirely in USD.
If China refuses to accept the USD, U.S. consumption in goods, of which 90%+ involves China either as whole product or intermediate good in supply chain, ceases virtually overnight.
Of course they aren't going to do that while significant assets are still in the U.S. or in USD-denominated investments but those can be liquidated even at a loss if the incentive is to cripple the U.S.
In fact rates are going to remain elevated in the States to preclude just that potential occurrence of mass UST liquidation.
If China is self-sufficient in the employment of local currencies to secure trade, it's game over for the U.S. and its unbacked excess consumption. There's a reason Trump has the country in a spin right now; the peril of the situation is fully apparent.
Great article, very informative, well researched and comprehensive.