China has a $1 trillion trade war weapon. Will it ever use it?

[zectech]

higher yields would increase the cost of borrowing and raise the deficit. Governments loves low yields. This is the scam of the century, making foreigners 'value' the toilet paper dollar and the toilet paper bonds.

 

[nahtanbob]

higher yields would increase the cost of borrowing and raise the deficit. Governments loves low yields. This is the scam of the century, making foreigners 'value' the toilet paper dollar and the toilet paper bonds.

if I sell the treasury bonds where do I park my money ? Gold ?? @zectech

 

[maithil]

Not gonna happen. Big brother Xi is not that crazy,yet. Will be similar to sawing own foot.

 

[hiseen]

It is useless because it is an "economic" nuclear weapon and is useless unless committed suicide.
However, it is not conducive to the Us, it is not harmful to Cn.

 

[Han Patriot]

if china dumps the holdings it will be at a loss. there is money lost. China is the seller.
end of discussion

Why would it be at a loss? You will definitely make money as long as you sold it at a price higher than the price you bought it. You get dollars in the end after selling, and you use those dollars to buy commodities like gold and let the seller kept that piece of paper. When that happens, it means the international trading system will collapse. China will not sell those bonds until it is really really bad.

Not gonna happen. Big brother Xi is not that crazy,yet. Will be similar to sawing own foot.

It is not jus swing off your foot, it is literally destroying the current trading system. Dollars are nothing but promises to pay, in the end, the one holding it is at a loss when the system collapses. It is worth something when the system is still rolling.

 

[KungFuLee]

if china dumps the holdings it will be at a loss. there is money lost. China is the seller.
end of discussion

Actually, it depends on the market value. I don't think you understood what the poster said when the poster say US Dollar will devalue and Yuan will basically shafted.

People won't buy T-Bond if they know the price is going to pummel and the only way people will buy is the interest rate is spiked, but US won't stand there and look at a spiked interest rate, they will do something to limit it

Which mean US will install monetary policy to cap the interest rate spike, which mean they either inject more money in the Treasury to hold the interest rate and keep the flow, or they print more money to hold the interest way to keep the flow. Seeing why there are T-Bond in the first place, Reserve bank won't be able to inject more money into Treasury apart from a major tax hike, which mean US will print more money as in QE package to curb the interest rate.

On the other hand, Chinese Yuan will be destabilised as most of the guarantee of Yuan is in T-Bond, release them all will basically drain out most if not all of tradable foreign currency value in China, Yuan will collapse. As long as China is developing, needing more money to develop, they needed to absorb large amount of T-Bond, which is the only thing stable enough to guarantee a future return. So using T-Bond as a weapon is a non-start to begin with.

 

[Asian.Century]

Beijing could trigger a panic in bond markets by dumping some of the $1.1 trillion in US Treasuries that it owns.

By releasing a flood of US Treasuries, the price would collapse, sending yields (or interest rates) soaring and causing American borrowing costs to rocket.