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IPFS News Link • Federal Reserve

China Sells Whopping $34.2 Billion Treasuries In December

Gradually we are getting confirmation that Chinese "posturing" about offloading US debt is all too real. The most recent TIC data confirmed the Treasury's greatest nightmare: China is now dumping US bonds. In December China sold $34.2 billion of debt ($38.8 billion in Bills sold offset by $4.6 billion in Bonds purchased), lowering its total holdings $755.4 billion, the lowest since February 2009, and for the first time in many years relinquishing the top US debt holder spot to Japan, which bought $11.5 billion (mostly in Bonds, selling $1.4 billion Bills) bringing its total to $768.8 billion. Also, very oddly, the surge in UK holding continues, providing yet another clue as to the identity if the "direct bidder" - as we first assumed, these are merely UK centers transacting primarily on behalf of China as well as hedge funds, which are accumulating US debt under the radar. UK holdings increased from $230.7 billion to $302.5 billion in December: a stunning $70 billion increase in a two month span. Yet, with the identity of the UK-based buyers a secret, it really could be anyone... Anyone with very deep pockets.

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Comment by Ross Wolf
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The Chinese Communist Government has usurped U.S. global economic power, by allowing Congress to borrow billions from China. China need only raise its interest rate on U.S. Loans or call its loans to potentially cripple U.S. military defense budgets. A default by U.S. Government on China loans would destroy U.S. credit ratings and the dollar globally, particularly with oil producing nations that accept U.S. Dollars. U.S. Government would have to impose higher taxes on U.S. Citizens and corporations to pay escalating interests on China loans, shrinking U.S. Citizens’ discretionary income needed to buy American products and services, resulting in greater U.S. unemployment. U.S. borrowing and deficit spending have run the debt ceiling past 14 Trillion, at some point that will strangle the U.S. economy. Meanwhile China is restraining its economy from expanding. The recent Supreme Court decision in Citizens United v. Federal Election Commission appears to put corporations at par with "natural persons", i.e. humans eliminating limits on corporate political contributions. China can now use both its financial interests in corporations it owns in the U.S. or has interests, to exert its economic power to influence U.S. foreign policy and on federal/state legislation that could affect the U.S. economy, even American democracy.