Comment by seferphier | Hacker News Reader

Comment by seferphier | Hacker News Reader

The title is incredibly political and biased.

US keep seeing themselves as the superpower - a superpower that is paying a rival (and developing) country instead of fighting against it. Why can't we move past that and think of win-win scenarios for both countries.

Taking this logic, the media in China should state: China is buying US debt - Yes, US. China is a significant holder in US debt and bought a lot when the economy turned sour in 2008. (Terrible investment since the US would just turn around and force the RMB to appreciate against the dollar). This in turn supported the US economy and the world's economy.

As I read the article, I see this as a win-win scenario. US gets bandwidth and China gets money. Cross border cooperation should be encouraged - not discouraged.

They didn't have much choice but to buy US debt. They get zillions of US dollars through the trade imbalance, that props up their economic growth and factories as Americans go into debt to buy things from China that they don't really need.

There's nothing else to do with a literal trillion dollars. You couldn't buy enough gold or oil without sending commodity prices parabolic and shooting yourself in the foot (since commodities are priced in dollars that's one use).

If they just held the dollars, they would do nothing but depreciate, even though the treasuries yield is low it's better than zero.

If they tried to dump the dollars, they'd find a market that couldn't absorb that scale and it would send the dollar plunging, which would in turn hurt the ability of Americans to buy Chinese goods, while boosting American export competitiveness.

And on the plus side, holding a trillion worth of US paper, is an ok leverage point (not great, because the Fed could wipe that out with a swipe of its hand).

There's no good scenario once you are accumulating hundreds of billions of dollars via a trade imbalance. Treasuries are the only market large enough to absorb it all.

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