if china desides to sell one trillion in us dollars it has for pesos is there a plan in place?
if this happens what would be the plan
- 1 decade agoFavorite Answer
Don't worry about it, I've got it all under control!
- 1 decade ago
I heard about this recently and did some research. As best I can figure, China holds about 1/3 trillion in US Treasury bills while Japan holds about 2/3 trillion. People buy T Bills as an investment and expect to be paid a return. It's kind of interesting that the Chinese government has chosen to invest in the United States government when they could have invested their money in their own people and economy. Getting back to your question, there is no plan in place because the United States does not operate on a planned economy, it operates as a free market economy. The current plan is actually to acquire huge amounts of debt and ignore the fundamental changes to our planet's climate that are occuring due to our energy practices.
So, if the Chinese were to sell their 1/3 trillion dollars, they would have to have a buyer, by necessity. Someone else would buy them, and the value of the dollar would go down. This would make it difficult for Chinese factories to unload their wares at American seaports, so it will probably not be something the Chinese government does on purpose.
The value of the dollar should go down, as it has been going down for some time. The irresponsible fiscal and economic policies of the United States government are largely to blame for the dollar's decrease due to the increasing current account balance, which is the combination of the national debt and the trade imbalance. Just like a household budget, if you borrow way too much, your interest payments eat you alive. One day, it will be time to pay the fiddler, so to speak.
- BryanLv 71 decade ago
China is not going to attempt to bankrupt the United States. This is not in their best interests. The economy of China is emerging and largely dependent on US consumerism. These arguments about China are fear tactics and they are the same as what we heard in the 80's when Japan held a large portion of our debt. As much as I don't like foreign debt it is serving a purpose. By creating stable economies in the world you actually reduce the chances for war. The plan is simple though. While a country like China could possibly collapse the US economy they would not escape unscathed. As the United States economy goes, so goes the world economy. Fear mongers understand this, but it does not fit their purpose, therefore they will not report it along with the more irrational rhetoric they spout because it does not serve the agenda.
- 1 decade ago
More what if's, to keep you distracted from all the corruption. There is a plan though- sell more oil! There's still about 60+ trillinon dollars to be made in oil. Don't worry.
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- Jomtien CLv 41 decade ago
why pesos? Its better to keep the money in their own currency