By Douglas V. Gibbs
Author, Speaker, Instructor, Radio Host
China owns much of our debt. They purchase American debt because communism falls apart without a strong capitalist economy to suck off of. However, if China ever decided to liquidate their holdings, the United States would be in serious economic trouble.
According to Bloomberg News, China's purchasing rate of U.S. Treasuries may be on the verge of slowing down, or stopping.
China is currently reviewing its foreign-exchange holdings. The recommendations coming out of the review is that China should begin slowing or halting purchases of U.S. Treasuries. The growing stock market, and economic jump-start under the Trump administration, despite all of the Republican President's efforts, could be for naught if China decides to step away.
China holds the world’s largest foreign-exchange reserves, at $3.1 trillion, and regularly assesses its strategy for investing them.
It is possible that a Chinese adjustment might not be met with fears and may somehow weather the storm, and take the China news in stride. The nation’s net purchases of Treasuries, after all, have already slowed “significantly.”
The only way to know for sure is to see what happens when it happens.
Experts are hoping that does not become a reality.
-- Political Pistachio Conservative News and Commentary
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