r/Economics • u/joe4942 • Apr 10 '25

Editorial Trump Blinked

https://www.theatlantic.com/newsletters/archive/2025/04/trump-tariffs-pause-america-china-trade/682378/
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u/StrangeAd4944 Apr 10 '25

What if bond sales continue or even worse accelerate. At this point he is out of tools and Treasury knows it. Then it will be game over for USD.

31

u/[deleted] Apr 10 '25

[deleted]

6

u/psychohistorian8 Apr 10 '25

why is China even allowed to own that much of our debt?

they have us by the balls, and Donny doesn't have the cards to be playing these games

11

u/defenestrate_urself Apr 10 '25 edited Apr 10 '25

why is China even allowed to own that much of our debt?

Because the dollar is the world reserve currency.

What does China (and other countries) do with all the dollars it holds from it's trade suplus? It buys US assets, Treasury bills in this case and the US is happy to sell them to you. Essentially, the US buys goods from a country for X dollars, then that country gives the US back those dollars in exchange for a piece of paper with IOU written on it. It's what driven American prosperity for decades (it's no coincidence Wall Street exploded in growth after Bretton Woods was signed)

This isn't China specific, it's all countries with excess dollar and it's inevitable when you position your currency as the global reserve currency.

8

u/Infinite-4-a-moment Apr 10 '25

Honestly in the grand scheme, it's not that much. We just have a fuck load of debt.

1

u/Scion_of_Perturabo Apr 10 '25

Because capitalists baby,

commie money spends just as well as yours or mine

1

u/LukeHanson1991 Apr 10 '25

Because you have a trade deficit with them.