U.S owes China $1.1 Trillion, what if U.S refuse to pay back?

[Αиgяу вιя∂]

 

[cloud4000]

The day US refuses to honor its debt is the day US economy will collapse and the dollar abandoned as a reserve currency. In essence, chaos will ensue.

 

[Nilgiri]

The day US refuses to honor its debt is the day US economy will collapse and the dollar abandoned as a reserve currency. In essence, chaos will ensue.

Wrong.

Read the full thread from this post on:

https://defence.pk/pdf/threads/sena...ebt-owed-to-china.663227/page-3#post-12277218

 

[Nilgiri]

wrong. @Nilgiri please tell him why


oops!

 

[cloud4000]

I think cloud4000 believes that he is living in an ethical world, while the fact is that it is full of pirates.

Perhaps. But such a decision will have repercussions beyond just spiting China. It will also set a dangerous precedent where US can cancel a debt owed to anyone by government action. Who will trust a government who easily violates its contract as a borrower? Would you give them your money?

 

[Nilgiri]

It will also set a dangerous precedent where US can cancel a debt owed to anyone by government action. Who will trust a government who easily violates its contract as a borrower? Would you give them your money?

Sure. Just dont do stupid crap for full 2 months or so (regarding corona information) with so much grievous economic damage in the end for everyone else (because you lied to them about it)...and you wont have to pay up. I think the precedent is fine from the US perspective.

Or simply dont enter the USD system to begin with. Your choice to enter (quite easily in China's case after cold war) in the end...and then indulge in it to the level of currency peg for extreme low price labour protection....at huge long term liability cost and vulnerability.

Tell me any other country that checks all these boxes?

Then ask why any other country would extrapolate that as a "potential" to themselves afterwards?

 

[Trango Towers]

I think cloud4000 believes that he is living in an ethical world, while the fact is that it is full of pirates.

He is Indian....let him be. Dont tax him. He will blow a fuze

 

[cloud4000]

Sure. Just dont do stupid crap for full 2 months or so (regarding corona information) with so much grievous economic damage in the end for everyone else (because you lied to them about it)...and you wont have to pay up. I think the precedent is fine from the US perspective.

Or simply dont enter the USD system to begin with. Your choice to enter (quite easily in China's case after cold war) in the end...and then indulge in it to the level of currency peg for extreme low price labour protection....at huge long term liability cost and vulnerability.

Tell me any other country that checks all these boxes?

Then ask why any other country would extrapolate that as a "potential" to themselves afterwards?

If it's just about punishing China there are other ways to do it without sacrificing America's credit rating...and credibility. If you want to just stop trading with China, that's an option but an unrealistic one.

 

[Nilgiri]

without sacrificing America's credit rating

You still seem to not understand how this works.

How do you sacrifice a credit rating when you are the provider and guarantor of it institutionally to begin with?...that EVERYONE has bought into?...not for 5 years or 10 years or 20 years ...but nearly a century now.

US just now... created the largest one year national debt for itself EVER...and by a huge margin too, its not even close.

Want to tell me how many (incl China) will buy into it and how many will similarly buy into T-bonds that China (ought to be in a more "rational" world but wont) dumping on world market right now?

If you want to just stop trading with China, that's an option but an unrealistic one.

Huh, whoever said anything about that? That's where the basic profits lie, why would that be altered? That would literally be taxing you own people too. The point is to tax the CPC...by what they chose to do in first place.

 

[cloud4000]

You still seem to not understand how this works.

Oh, I understand...I just think it's a good idea. That's all.

US just now... created the largest one year national debt for itself EVER...and by a huge margin too, its not even close.

US debts sell because the US always pays until the day it doesn't.

 

[Jungibaaz]

T bill holdings by foreign countries vary year on year by a large margin, in recent years China's actually reduced the amount of T bills in its portfolio. Japan's holdings are almost matching China's total last I checked. Something like 8% of US debt is owned by China. With a new round of QE, the fed alone might be holding x4 the volume of treasuries compared to China.

Yes, a major sell off would cause a huge and immediate liquidity shortage in treasury markets and disrupt them, while the price of treasuries nosedives and yields spike, this might be problematic for the US in the short term, but it isn't the end of the US hegemony. A massive potential dent, but not the end.

What you really need is to take down is this huge 60% share of world forex reserves that USD has:

China would need to first have some system of trade in place that is credible enough for all of its major trading partners to sign off on. And then it would begin the long, drawn out, protracted game of trying to win political and economic allies willing to trade in Yuan or whatever else is decided upon instead of USD. US dollar hegemony can't last forever, I agree that the more its weaponised by the US the more motivated opponents will be to build an alternative. However, an alternative isn't there yet, and China's benefiting a lot from the current system. Sure they settle trade in USD and then park the money in treasuries, but the yields are decent, China's growing and doing quite well, if nothing else but for stability's sake they may want to stay within the current system but once in a while check US hegemony as the latest trade war has shown.

 

[Nilgiri]

US debts sell because the US always pays until the day it doesn't.

In an ideal world of political peers (institutional democracies when talking about currency/credit of the largest one of them) yes.

Or similarly the opposite (totalitarian/authoritarian non-democracies when talking about currency/credit/GOSPLAN/COMECON of the largest one of them which used to be USSR).

China is not a political peer to first group, never was and wont be in forseeable future....in fact the antithesis of it in many ways.

They never paid into the political peer system (there are ways to do this, long topic)....like say Japan, Europe. rest of Americas and to lesser degree parts of developing world.

Means it was compartmentalised quid pro quo stuff after cold war ended...which is another long topic as to the why (genesis arguably starts with Nixon handshake with Mao and why).

It (China) can thus be made an example of if the US is willing to bear the risk and escalation ladder (located mostly outside the economic realm given USD seignioriage and western institutional backing).

You can simply see for yourself how it plays out.

 

[ARMalik]

Come on guys, powerful countries like China has more more indepth knowledge of what is about to take place in advance. And if China had information on things going wrong, it would have ALREADY DIVERSIFIED. Example, there has been news floating around for at least 18 months that China has bought thousands of TONS of Gold. For those of you who don't know, Gold is now classified as Tier-1 asset according to Basel-3 accord. The only other instrument that is tier-1 is US dollar. So, if US refuses to pay Debt, it will not only hasten the ejection of US dollar as the Tier-1 asset, it will also indicate that US IS BROKE. A lot of bankers already know that US is broke - it is only the common people in US who think that US has sound economy.

 

[Han Patriot]

Trump just said no default on bonds.

 

[mmr]

Trump just said no default on bonds.

trump will only default when it is his own business. clown even bankrupt a casino once.