Who owns merica's debt? (And the chinese involvement)

[Sean Lynch]

On Mon, Jul 18, 2016 at 1:00 PM juan <juan.g71 at gmail.com> wrote:

> On Mon, 18 Jul 2016 14:11:01 +0300
> Georgi Guninski <guninski at guninski.com> wrote:
>
> > Who owns merica's debt? (And the chinese involvement)
> >
> > This was intended as reply to juan's reply, but deserves
> > another thread.
> >
> > juan claimed the chinese are against 'merica.
>
>
>         Not exactly. I am well aware that the chinese oligarchs are in
>         bed with western oligarchs to...various extents.
>
>         I said it would be a good thing if russia/china opposed the US,
>         but it's not something that's happening to any serious degree,
>         I'd say.
>

The Chinese are pro-China, but they recognize that the US is a very large
market for Chinese goods, and for now their economy is built on exports.
Whatever they may think of the US or Europe, our fortunes are tied together
by trade unless/until they decide to become "self-sufficient," which works
both ways. When this starts to happen, war may not be too far behind.


>
> >
> > i thought that the chinese are the main 'merica public debt
> > creditor,
>
>         Which means that the working chinese have been forced by their
>         own government to finance the americunt-wall-street financial
>         mafia. Good for goldman-sachs. Bad for Mr. Li.
>

Exactly. But yeah, 7%. They may be the largest FOREIGN debt holder, which
I'm pretty sure is what Trump actually means.


>
> > but can't find reference for this on the
> > interwebz.
> >
> > Partial results:
> >
> > CNN [sic]
> > http://money.cnn.com/2016/05/10/news/economy/us-debt-ownership/ | Who
> > owns America's debt?
> >
> > | Donald Trump says he can "make a deal" on America's debt.
> >
> > | Last week, he implied that he could negotiate with America's
> > creditors to get them to accept a lower rate of repayment, such as 85
> > cents for every dollar.
> >
> > | The top holder by far is U.S. citizens and American entities, such
> > as state and local governments, pension funds, mutual funds, and the
> > Federal Reserve. Together they own the vast majority -- 67.5% -- of
> > the debt.
>
>
>         Governments 'lending' money to themselves, which seems pretty
>         absurd, simply means that they keep printing billions out of
>         thin air.  Need money? Just print it! Isn't socialized banking
>         amazing.
>

Yep, just bookkeeping tricks. But yeah, didn't protect the banks back in
the days (1990s) when they weren't allowed to branch across state lines,
were required to hold a large fraction of their debt in their own state's
bonds, and states kept defaulting. And it means a US government "default"
will have interesting consequences.


>
> >
> > | China's share of the debt is sizable -- about 7% -- but it's hardly
> > the largest holder of U.S. government bonds.
> >
> > What do you expect from 'mericuns? They are creditors of
> > themselves, lol. And they "negotiate" paying less...
>
>
>         Yeah, all creditors are equal, but some creditors are more
>         equal than others. Some creditors are going to lose more than
>         others...
>

Yup.


>
> >
> > Though the chinese give mericuns virtual money, they don't mind
> > stealing from them:
> >
> >
> http://www.theregister.co.uk/2016/07/15/hacker_gets_46_months_cooler_time_for_shipping_f35_f22_secrets_to_pla/
> >
> > | Chinese national Su Bin has been sentenced to 46 months jail after
> > admitting his role in stealing information on the Lockheed F-22 and
> > F-35 aircraft, along with Boeing's C-17 cargo plane.
>
>         Stealing from the biggest thieves on the world? =)
>
>
> >
> > | The hacker admitted reports detailing the stolen data were sent to
> > the Chinese People’s Liberation Army General Staff Headquarters.
>
>
Not even really stealing. The Chinese people already paid for it by keeping
their goods cheap for us 'muricans. They're basically American taxpayers
for all intents and purposes.

It's hard to blame Trump for believing that the problem with the national
debt is that the US owes a bunch of people money, and therefore the
solution is to negotiate some sort of settlement whereby the US pays less
than face value on its debt. But not blaming him and thinking he's
qualified to be President with such a view are completely separate things.

The problem is not that the US has too much debt. The problem is that the
US is running out of credit. And by "credit" I mean generically *trust.* No
negotiated settlement can recover lost credit. Quite the contrary; if the
US is going to saber-rattle in order to avoid paying what it's promised to
pay despite having its debts denominated in its own currency, that can only
hurt the US's credit with other countries.

Debt is also not the only promise the US federal government, to say nothing
of state and local governments, have made that they are going to have
trouble keeping. There's a bunch of other mandatory spending that's growing
every year faster than GDP with no plan to reduce it: pension obligations,
social security, medicare, welfare. 2/3 of the Federal budget is mandatory
spending. Half of discretionary spending would have to be cut in order to
balance the budget. Half of discretionary spending goes to the military.
And of course, huge cuts like that will also cut into revenue, at least in
the short term, while doing nothing to actually reduce the governments'
unfunded liabilities.

That said, the US is actually in fantastic shape compared to most of the
"developed" world. So interest rates remain low for the US because it's the
nicest house in a really shitty neighborhood. Dark times are ahead for the
entire developed world unless economic growth rates come up quite a bit.
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