We're borrowing money from China?!?!

[skypilot]

We're borrowing money from China to help pay for the tax cuts?!?!

That's what Clinton just said on AirAmerica. I know the interview is a rebroadcast but this is the first time I've heard it. I didn't know anything about this borrowing from China thing. Is this true? I knew this administration was slashing money from different programs and not funding others to pay for the cuts but BORROWING MONEY FROM CHINA??

[physioex]

1. Were you aware of the massive trade defecit?

That should give you a hint. It is similar to what Japan was doing in the 80's. I think China is a bigger threat since they are a bigger country and have lots of cheap labor...

[htuttle]

2. Of course -- that's what happens at Treasury auctions

The vast majority of buyers at Treasury auctions are from outside the US. When we sell them Treasury 'instruments' (T-bills, bonds), we are essentially borrowing money from them.

In case you weren't aware, there are at least 4 or 6 entities out there, the Chinese gov't being one of them, that could bankrupt the US government in a moment if they wished simply by trying to redeem their treasury bonds. Other big Treasury investors are Japan, British banks, and the Saudi/Emirate crowd. Any of them could easily bankrupt us -- IF they were willing to take a big loss themselves, of course.

[SoCalDem]

Every time we BUY stuff from them, and they DON'T buy from us,

we are "borrowing" from them.. Let's just hope they don;t get mad and call in our loans :(

[NewJeffCT]

3. China has been supporting our debt for a while now

Their currency is tied to the dollar currently, so it is in their interest to keep it from total collapse. If China ever decided to tie their currency to the Euro instead of the dollar, we'd be in some really deep doo-doo, as they would have no incentive to keep the dollar afloat.

[hatrack]

4. We're borrowing money from ANYBODY who'll buy our bonds

Granted, China's share of our money is growing faster than anybody else's these days, though I don't know how much of that is going into Treasury instruments, or who the biggest current purchaser is.

I'm fairly sure that Japan is our single biggest creditor.

[ProdigalJunkMail]

5. if i am not mistaken...

we borrow from them...they borrow from us...we lend to France...they buy some Airbus Jets...then Airbus invests in Boeing...Boeing uses that money to hire more employees...those employees make money and pay the US taxes...

I think that is how it works...
theProdigal

[markdd]

6. Raygun made us a net debtor nation.

Japan and China were buying our bonds in droves back then and haven't quit buying yet. God help us if they ever decide to demand immediate payment.

[Joanne98]

7. You didn't know that?????????

I don't think europe will even loan us any more. We're bankrupt.

[denverbill]

8. Sure we are.

Like the previous poster said, we have an enormous trade deficit with China. That means China has tons of extra American dollars, which they don't use to purchase American goods and services. So, they can either use the dollars to buy something like oil and pay in dollars, or they can buy American investments, like treasury bonds, real estate, or stocks.

[Massacure]

9. 7 trillion dollar debt

Thats about 3 years of full government spending. 600 billion a year on the damn military that sits on its ass doing nothing in Korea, Japan, Germany, etc.

The federal government should give up some of it's power and give it to the state governments. The state governments can't borrow money. (thankfully)

[onecitizen]

10. Oh yeah!

I've been worried about this for a long time now. China holds our future in THEIR hands! I've wondered why people aren't more concerned about this. So Clinton's talkin' about it huh? Good!

[skypilot]

12. I guess I've been more worried...

...about the Saudis. You could fill a set of encyclopedias with what I don't know about how money works on an international scale.

[necso]

11. The Chinese are buying up US notes.

Large holdings of these notes give them the ability to peg their currency where they want to and give them tremendous leverage on the US.

I find it ironic that while we are building a missile "shield" that in later stages is intended to counter China's ICBMs, that we seem to have no qualms about putting them in a position to inflict economic havoc on us. But then again no has accused the "neos" of thinking things through --- this seems to be against their religion!

[LionInWinter]

13. It's their "big stick" ...

for when they finally decide to do something about Taiwan.

If we make a move towards sending the US Navy into the Straits to stop an invasion, they'll threaten us with a complete collapse of our economy.

Thanks Republicans! Deficit spending sure does make the world a safer place.

[skypilot]

14. As dense as I am about the other stuff...

...I DID catch onto that. Weren't the Chinese making some cocky noises a few months ago regarding the US interfering in Taiwan?? This would explain it, if I'm remembering correctly. Or was it the US backing down, saying that we wouldn't interfere?

[NewJeffCT]

15. don't forget, when running for office, Shrub

When he was running for President, Shrub called China a 'strategic competitor'.

However, since they are now financing our deficit & debt, we love them and encourage our businesses to outsource there!

[madrchsod]

16. bob brinker-the radio econ guy-

said we are exporting our deflation and that neither side has yet come up with a workable plan to stop it..there are alot of good ideas but no political will to take on basic strutural changes....

[necso]

17. It is also good to be aware of the tenuous nature of China's own debt.

I have seen estimates that as much as 40% of the (business) debt that China has is bad. A crisis in that debt could result in China dumping US notes, dropping the dollar like a stone.

Personally I think that China is unlikely to intervene in debt that isn't "state" debt, but the important point is that the Chinese economy is potentially very unstable.

This is a real mess.