Fredkc
12-21-2009, 10:16 AM
CHINA: 'The world does not have Money to buy more US Treasuries'
http://www.shanghaidaily.com/sp/article/2009/200912/20091218/article_423054.htm
IT is getting harder for governments to buy United States Treasuries because the US's shrinking current-account gap is reducing supply of dollars overseas, a Chinese central bank official said yesterday.
The comments by Zhu Min, deputy governor of the People's Bank of China, referred to the overall situation globally, not specifically to China, the biggest foreign holder of US government bonds.
Chinese officials generally are very careful about commenting on the dollar and Treasuries, given that so much of its US$2.3 trillion reserves are tied to their value, and markets always watch any such comments closely for signs of any shift in how it manages its assets.
China's State Administration of Foreign Exchange reaffirmed this month that the dollar stands secure as the anchor of the currency reserves it manages, even as the country seeks to diversify its investments.
In a discussion on the global role of the dollar, Zhu told an academic audience that it was inevitable that the dollar would continue to fall in value because Washington continued to issue more Treasuries to finance its deficit spending.
He then addressed where demand for that debt would come from.
"The United States cannot force foreign governments to increase their holdings of Treasuries," Zhu said, according to an audio recording of his remarks. "Double the holdings? It is definitely impossible."
"The US current account deficit is falling as residents' savings increase, so its trade turnover is falling, which means the US is supplying fewer dollars to the rest of the world," he added. "The world does not have so much money to buy more US Treasuries."
China continues to see its foreign exchange reserves grow, albeit at a slower pace than in past years, due to a large trade surplus and inflows of foreign investment. They stood at US$2.3 trillion at the end of September.
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That said, I saw a great comment to this story on another forum:
We have become the world's "deadbeat" blowhard big spender who's paying all the checks and living large by hitting up everyone who will for a loan.
Obviously beyond our ability to repay all the tabs we have run up, we are quickly running out of both friends and patsies whose largess we thought was endless.
It would seem we may well run out of cash or anyone who will accept our FRN's as money long before we have any opportunity to fail politically.'
It would seem our own American citizens will arrive tardy, bewildered and unprepared to their own revolution, which will be painfully already underway by the time they wake up.
That last sentence really said a lot, for me.
Fred
http://www.shanghaidaily.com/sp/article/2009/200912/20091218/article_423054.htm
IT is getting harder for governments to buy United States Treasuries because the US's shrinking current-account gap is reducing supply of dollars overseas, a Chinese central bank official said yesterday.
The comments by Zhu Min, deputy governor of the People's Bank of China, referred to the overall situation globally, not specifically to China, the biggest foreign holder of US government bonds.
Chinese officials generally are very careful about commenting on the dollar and Treasuries, given that so much of its US$2.3 trillion reserves are tied to their value, and markets always watch any such comments closely for signs of any shift in how it manages its assets.
China's State Administration of Foreign Exchange reaffirmed this month that the dollar stands secure as the anchor of the currency reserves it manages, even as the country seeks to diversify its investments.
In a discussion on the global role of the dollar, Zhu told an academic audience that it was inevitable that the dollar would continue to fall in value because Washington continued to issue more Treasuries to finance its deficit spending.
He then addressed where demand for that debt would come from.
"The United States cannot force foreign governments to increase their holdings of Treasuries," Zhu said, according to an audio recording of his remarks. "Double the holdings? It is definitely impossible."
"The US current account deficit is falling as residents' savings increase, so its trade turnover is falling, which means the US is supplying fewer dollars to the rest of the world," he added. "The world does not have so much money to buy more US Treasuries."
China continues to see its foreign exchange reserves grow, albeit at a slower pace than in past years, due to a large trade surplus and inflows of foreign investment. They stood at US$2.3 trillion at the end of September.
__________________________________________
That said, I saw a great comment to this story on another forum:
We have become the world's "deadbeat" blowhard big spender who's paying all the checks and living large by hitting up everyone who will for a loan.
Obviously beyond our ability to repay all the tabs we have run up, we are quickly running out of both friends and patsies whose largess we thought was endless.
It would seem we may well run out of cash or anyone who will accept our FRN's as money long before we have any opportunity to fail politically.'
It would seem our own American citizens will arrive tardy, bewildered and unprepared to their own revolution, which will be painfully already underway by the time they wake up.
That last sentence really said a lot, for me.
Fred