THE HOLES ARE STARTING TO MULTIPLY OVER AND OVER ON THE MODERN DAY TITANIC.AMERICA’S #1 CREDITOR,THE CHINESE GOVERNMENT, IS NOT ONLY USING ITS MASSIVE U.S. DOLLAR RESERVE TO GIVE LOANS TO MINERALLY RICH NATIONS AND BUYING RAW MATERIALS AND PRECIOUS ORES ,SHE IS DOING SOMETHING SMART AND SECRETLY IN THE OPEN.
CHINA IS BUYING SMALLER AMOUNTS OF DOLLAR DENOMINATED TREASURIES & BONDS TO KEEP OTHERS FROM THINKING SHE HAS LOST FAITH IN THE DOLLAR,AND AT THE SAME TIME SHE IS EITHER CONDUCTING HER NATION TO NATION TRADE IN YUAN REPLACING DOLLAR TRANSACTION AND SHE IS SELLING HUGE AMOUNTS OF DOLLAR RELATED TREASURIES,BOND,AND OTHER ASSETS TO REDUCE ANY DEFAULT OF THE DOLLAR(THROUGH QUANTITATIVE EASING”PRINTING MONEY” OR A INTERNATIONAL RUN ON THE DOLLAR) WHICH SEEMS MORE AND MORE LIKELY AND SOONER THAN MANY THINK.—-
PLEASE REMEMBER THAT THIS IS NOT THE END,THIS IS ONLY THE BEGINNING!;”China aggressively reducing us debt – Sign of things to come

The United States needs to borrow nearly $10 trillion over the next decade, including about $1.6 trillion this year.

Where’s it going to come from?

This is critical question, because resistance on the part of creditors will drive up interest rates, clobbering the housing market and demolishing the value of whatever cash savings Americans have left. The other answer–our government lending the money to itself–will destroy the value of the dollar, and that wouldn’t help too many people, either (except debtors–it would help debtors because they will be able to repay nominal debts with toilet-paper dollars.

For now, the money we’re borrowing is coming from somewhere, thankfully. But it’s not coming from China, which has funded our spending for most of the past decade. As you can see in the chart above from the NYT, China’s absolute purchases of Treasury debt continued to rise through last year, but the percentage of our borrowing that China is funding is shrinking fast.

Here’s Floyd Norris in the NYT:

China reduced its holdings of Treasury securities by $25 billion in June, the most China had ever sold in a month…

China and Hong Kong, which is reported separately but is combined under China in the accompanying graphic, together covered more than half of the increase in the amount of Treasuries sold to the public — that is, to buyers other than United States governme nt agencies like the Federal Reserve or Social Security — in 2006.

That share had fallen to 22 percent last year, when the government increased its public debt by a record $1.2 trillion. In the first half of 2009, China and Hong Kong acquired only 9 percent of the more than $800 billion worth of Treasuries that were sold.
Posted by NextEconomy at 10:26 PM
Labels: china, dollar collapse, dollar decline, new economy “