Until October, the Chinese were generally making up for their decreasing holdings in Treasury bills by increasing their holdings of longer-term U.S. Treasury securities. Thus, until October, China’s overall holdings of U.S. debt continued to increase.
Since October, however, China has also started to divest from longer-term U.S. Treasury securities. Thus, as reported by the Treasury Department, China’s ownership of the U.S. national debt has decreased in each of the last five months on record, including November, December, January, February and March...overall Chinese holdings of U.S. debt...peaked at $1.1753 trillion last October...As of March 2011, overall Chinese holdings of U.S. debt had decreased to 1.1449 trillion.
March is the latest data available. Do you want to bet on who was selling in April, May and June? It appears that China is dumping somewhere between 3% and 4% of its Treasury holdings onto the Fed.
In other words, QE2 appears to have been taken advantage of by the Chinese and other foreigners to dump some Treasury securities, rather QE2 being a bailout of the PIIGs and it had little to do with the U.S.).
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