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Sorry Big Mac, But China Owns Very Little Of Our Debt
31 January 2008I know Big Mac’s strength is not the economy or those business type things. But to set the record straight…
China is not the largest holder of American debt. You are.
You hold ~73% of the American Debt. 45% through the Federal Reserve and 28% in T-Bonds etc.
Anyway, the Chinese still don’t own nearly as much of our federal debt as the Japanese do—and neither of those countries has been purchasing nearly as much as the British have. Here’s an idea: Maybe if the Chinese would sell their excess US treasury securities to the Brits, everybody (Chinese, Brits, American doom-peddlers) would be happier, and we could spend more time debating how best to grow the economy faster, and less time conjuring up nightmares about when the Chinese government might turn itself into a financial suicide bomber by dumping their US treasuries all at once.
So when the government wants to spend money it does not have it prints up some money and to balance the books it sells the offsetting amount to the Federal Reserve and the Fed issues bonds, some of which it holds, some of which it sells, overly simplified I know. Some is sold outside of the government to other governments and private companies and people.
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