09-10-2010 01:18 PM
China and US bonds
09-10-2010 03:00 PM
Re: China and US bonds
The trade surplus means by definition that they have dollars they have to do something with. If not treasuries what?
They could bid up oil and other commodities. Not fun for us. They could buy assets in this country, could be good for those that need assets to appreciate.
How does Krugman propose to replace China at treasury auctions? The fed printing and buying? That could help the currency over the cliff. Or the Treasury paying more interest to attract other buyers, that is going to blow the deficit to the moon.
More than a water pistol, but whatever it is they are not likely to use it.