1. Dave Holden says
    1. Tom Hickey says


  2. Tom Hickey says

    China is still going to continue to have reserves at the Fed as long as it continues net exporting to the US. If it wants to save in USD and is not happy with the IOR, then it has to switch those assets in its Fed deposit account to a Fed savings account, i.e., tsys.

    If China would choose not to continue to finance the capital account to offset the current account, then its export share to the US will drop. Therefore, if China no longer wishes to save in USD, it needs to open its markets to US exports and it also needs more FDI in the US. Or else China needs to find markets and trading partners other than the US. This is not rocket science. The problem is not US finances. It is China’s own trade policy that it is causing it financial heartburn.

    1. David Lazarus says

      It could buy US real estate, particularly farms. It could then export all its produce back to China. That will create problems for the US.

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