You dont have to adopt any particular economic school of thought of political pursuasion to understand the following: When the US Treasury issues bonds, it sells them to a specific, vetted, contracted group of buyers, called primary dealers. Those primary dealers *then turn around* and sell those bonds on the open (secondary) market. This is where China, Japan, and all other foreign creditors get their US bonds. This means something very important: WE DO NOT BORROW FROM FOREIGN NATIONS. If I sold my bike to a friend, and that friend then sold it to a stranger, did I sell the bike to the stranger? Did I get paid by the stranger? NO! Same principle. This fact should be accepted by monetarists, MMTers, Austrians, Republicans, Democrats, and anyone else concerned with such matters. It is a nonpartisan, nonpolitical fact, not a theory of any sort. Additionally, US Code (Title 31, I believe- Treasury) explicitly states that *foreign creditors MAY NOT call in our debts to them*. China (and any other foreign creditor) is forbidden- by law, and thus by user agreement- to demand repayment before their bonds come due. I even cringe referring to them as creditors, but the more I nitpick here, the more my point will be lost...
Posted on: Wed, 02 Apr 2014 21:17:08 +0000
Trending Topics
Recently Viewed Topics
© 2015