# $1,190,000,000,000,000.



## I'm Howard (Oct 13, 2010)

This is the amount of U.S Treasuries held by China(I think I have enough 0's for Trillion?).

Guess who is the power in Asia, next stop, Taiwan.


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## andrewf (Mar 1, 2010)

What was that saying again? Something like:

If I owe the bank ten thousand dollars, I have a problem. If I owe the bank ten million dollars, the bank has a problem.

That China owns all those treasuries is not necessarily a sign of its power. Buying treasuries is the tax China has been paying to buy growth. It can't stop buying treasuries, despite their yield of near zero, without triggering a deleterious rise in their own currency.


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## I'm Howard (Oct 13, 2010)

Two drunks staggering down the street, holding each other up.


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## sags (May 15, 2010)

China is using all those US dollars to buy resources around the world.

They are thinking in 100 year terms, while the politicians in Washington are arguing about raising their debt limit.


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## peterk (May 16, 2010)

That's 3 too many zeros 

We just had an interesting discussion about this in my macro economics class last week. China holding massive US bonds isn't an indication of China's power over the USA but merely a showing, and a result of, the two countries being locked together in commerce. It's hard to get away from the borrower/bank mindset of "uh oh I owe way more money than I can pay back, I'm screwed" but unlike a bank, China has no viable threat nor course of action nor desire to get "paid back" As andrewf said, china is barely able to control their rate of growth and inflation, they have no desire to have more money in their system. 

Furthermore, it's also hard to get away from the mindset that we can go to the bank and exchange our canadian dollars for whatever currency we want. But China holds $US bonds, it's American money. The only thing china could do with the money if it called the US's loan (which it won't) is spend it to purchase American goods and exports, which is a GOOD thing for the US economy. 
That's what I've learned so far anyways. I imagine it's quite simplified, and it would be interesting to hear more details of the China/US interaction from an economist.
The point is though, that just because the US owes China "money" doesn't mean it has any control over it at all.


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## sags (May 15, 2010)

"The debtor is slave to the lender"

China won't precipitate their own demise, but to have the US Secretary of State, the Secretary of the Treasury, and the President of the US, directly appeal to China to continue buying US debt, reveals much about who controls the relationship.


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## OhGreatGuru (May 24, 2009)

Propping up the US dollar helps to keep their currency undervalued, which is good for Chinese exports.


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## OptsyEagle (Nov 29, 2009)

It seems like there has to be something wrong when China basically has to lend the US money, so that the US can keep buying stuff from China.

It reminds me of Nortel at the end of the 90's when their revenues were rising rapidly, but so were their accounts receivable. They were basically lending the money to their customers so they would buy Nortel products.

By the way ... how did that all workout for Nortel, in the end.


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## the-royal-mail (Dec 11, 2009)

OptsyEagle said:


> By the way ... how did that all workout for Nortel, in the end.


Worked out great for those at the top who made off like bandits.

As usual, all the little worker bees got screwed.


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## Eclectic12 (Oct 20, 2010)

OptsyEagle said:


> It seems like there has to be something wrong when China basically has to lend the US money, so that the US can keep buying stuff from China.
> 
> It reminds me of Nortel at the end of the 90's when their revenues were rising rapidly, but so were their accounts receivable. They were basically lending the money to their customers so they would buy Nortel products.
> 
> By the way ... how did that all workout for Nortel, in the end.


Hmmm ... I'm sure this didn't help.

However, several ex-Nortel types pointed out some other factors that helped in the demise. One was paying top dollar for a new technology/company that "might" become dominant twenty years later. Another was having five project teams working the same problem/product.


Cheers


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## LondonHomes (Dec 29, 2010)

sags said:


> China is using all those US dollars to buy resources around the world.
> 
> They are thinking in 100 year terms, while the politicians in Washington are arguing about raising their debt limit.


The Chinese government can afford to think in 100 year terms when they don't need to seek re-election every 2 or 4 years based upon short term accomplishments.


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## KLR650 (Sep 12, 2010)

I'm Howard said:


> Two drunks staggering down the street, holding each other up.


That sums it up quite nicely...leads one to wonder how bad the hangover will be?


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## andrewf (Mar 1, 2010)

I think having a 100 year plan is over-rated. One thing you know for certain: whatever predictions you make for 100 years out will be terribly, terribly incorrect.


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## HaroldCrump (Jun 10, 2009)

The ghosts of Mao and Deng are turning in their graves.
What, oh what, has become of their country.


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## RichmondMan (Jan 31, 2011)

Oh, that´s a huge number.


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## Brian Weatherdon CFP (Jan 18, 2011)

My eyes cannot adjust to that many zeroes. Unfathomable #.

It supports value of investing in low-debt high-growth emerging economies.

What will a US-buck be worth once all the spending & stimulation is done?


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## the-royal-mail (Dec 11, 2009)

Not sure Brian, but I am concerned for the people in that country. They are in financial ruin and their actions show no remorse or will to change. Not only is their dollar going down down down, what will happen to all those people when the gov't tries to reign in their spending? I predict chaos. People are in debt, losing their homes, can't find work. Not the kind of populace you want to tangle with. People do strange, unpredictable things on an empty stomach.

If this describes any American lurkers, I feel for you.


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## LondonHomes (Dec 29, 2010)

the-royal-mail said:


> They are in financial ruin and their actions show no remorse or will to change.
> 
> If this describes any American lurkers, I feel for you.


I find your lack of faith in AMERICAN EXCEPTIONALISM disturbing. 

The United States is the execption, it is qualitatively different from other nations and can spend like a drunken sailor as long and often as it wants without consequence.


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## HaroldCrump (Jun 10, 2009)

The theory of American Exceptionalism is anachonistic and discredited by now.
It used to be the fav. of American right-wing economists (so-called) back in the post-war era when they proudly claimed that America has managed to short-circuit the capitalist path to progress otherwise followed by Britain and other West European countries.
Those that truly understood the process such as Schumpeter, Gurley, Baran and Sweezy, etc. knew that it was merely a fallacy.
America is as much subject to the process of historical materialism as Britain or any other country.
They are now finally coming to terms with it.
It's time to pay the piper...


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## MikeT (Feb 16, 2010)

andrewf said:


> What was that saying again? Something like:
> 
> If I owe the bank ten thousand dollars, I have a problem. If I owe the bank ten million dollars, the bank has a problem.
> 
> That China owns all those treasuries is not necessarily a sign of its power. Buying treasuries is the tax China has been paying to buy growth. It can't stop buying treasuries, despite their yield of near zero, without triggering a deleterious rise in their own currency.



They just have to sell renminbis to keep their currency low, there is no real requirement to buy only treasuries. They can and do buy other things. 

However, they can't risk a default ... and that is exactly the risk they take if they quit buying treasuries cold turkey.

Its all one giant house of cards, it may crash.. it may turn into a stone castle one day. Who knows.


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## I'm Howard (Oct 13, 2010)

Russia and China have just stricken a large trade deal and will use each others currencies, NOT the $U.S,

I am in the U.S, the vast majority of the people are oblivious to their problem, they just feel things will turn out alright eventually.

Many of We Snowbirds have been nailed with speeding tickets, the police are out in droves, they knock you up over the maximum to get the most cash they can.

Out of State are targeted, they identify us by fact we have front license plates, they know we will just pay.


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## sags (May 15, 2010)

Canada holds 77 Billion in US debt, which is a fair amount for a small country.

Maybe we should just exchange the money for Michigan.


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## financialnoob (Feb 26, 2011)

sags said:


> Canada holds 77 Billion in US debt, which is a fair amount for a small country.
> 
> Maybe we should just exchange the money for Michigan.


Michigan isn't worth 1/10th that price.


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## LondonHomes (Dec 29, 2010)

To Clarify my last post:



LondonHomes said:


> I find your lack of faith in AMERICAN EXCEPTIONALISM disturbing.


You need to read the above in your best Darth Vadar voice.



LondonHomes said:


> The United States is the execption, it is qualitatively different from other nations and can spend like a drunken sailor as long and often as it wants without consequence.


You need to note the


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## 72camaross (Apr 26, 2010)

sags said:


> Canada holds 77 Billion in US debt, which is a fair amount for a small country.
> 
> Maybe we should just exchange the money for Michigan.


haha I laughed at this...but I'd take Alaska back!


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## HaroldCrump (Jun 10, 2009)

What we really want is Florida.
Disney World and Pensacola, here we come!


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## K-133 (Apr 30, 2010)

72camaross said:


> haha I laughed at this...but I'd take Alaska back!


We could rename the 'Canadian King Crab'


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## I'm Howard (Oct 13, 2010)

I live in 55 Plus Commuinity in Lakeland, Florida, Spring Training Camp for the Detroit Tigers and one hour from Dunedin.

This community is rapidly becoming mainly Canadian as they appear to be the major buyers of Real Estate in this area.

$1.03, NO H.S.T, 7% Sales Tax, 80F Weather.


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## sags (May 15, 2010)

Oh man......raining, cold and miserable here in Southwestern Ontario.

A mucky mess with all the snow and sand melting away together.

Swing batter...........swing batter........sssswwwiiinnnggg batter sounds good.


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## MikeT (Feb 16, 2010)

Alaska was never part of Canada.


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## andrewf (Mar 1, 2010)

Well, _parts_ of Alaska were once Canadian.


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