Saturday, December 18, 2010

That old "China debt" nonsense

So some apocalyptic Austrian types are still whining about how many U.S. Treasuries China holds and how this makes us somehow beholden to China. Err.... no.

Our debt to China is denominated in dollars. We can get out from under our debt from China by simply having the Federal Reserve print freshly minted $100 bills and flying pallets of them to Beijing. It’s called the PRINTING PRESS. I realize that, to the Austrian mind, the printing press is some newfangled invention that isn't ever gong to catch on, but the Federal Reserve has some mighty fine printing presses -- why, some of their printing presses don't even need *paper*, they create money by simply moving zeros and ones in computer data registers that represent bank account balances! Whoa! What a concept!

China knows this, which is why it’s been diversifying its investment portfolio away from Treasuries recently. But since our grifter class (oops, “upper class”) has been buying the Treasuries instead because their mattresses are already overstuffed, that hasn’t resulted in any problems finding buyers for Treasuries… much the contrary, Treasuries are so hot a commodity right now as a mattress substitute that in some cases they’re selling for *NEGATIVE* interest!

It always amuses me that people forget that money is just toilet paper with pictures of dead people on it. Real wealth is the stuff you *buy* with money (which is the whole point of money, remember? As a token to make trade -- buying and selling -- easier). We have the stuff China sold us. China has the toilet paper, whole piles of it, which they're holding onto as if it's actually worth something. Who, indeed, is the sucker here?

- Badtux the Monetary Penguin


  1. Who, indeed, is the sucker here?

    I'm not at all sure that a choice is mandatory.


  2. But, but, if China calls in our debts our whole economy will collapse.


    Good luck getting even fairly reasonable, somewhat educated people to understand what you're saying here. "They" badly need China to be a bogeyman, both for our two-minute hate, & to disguise their own criminal mishandling of our economy.

    It's all China's fault! They won't devalue their currency!

    Oh, and good luck telling people about the carry trade, the real reason for pushing devaluation of the RMB.

  3. Most of our paper money isn't in this country, it's in other countries where they seem to treasure it.

    Toilet paper with pictures of dead people on it, hahahahaha

  4. But, but, if China calls in our debts our whole economy will collapse.

    Na, we'll start a war with them.


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