{"id":46255,"date":"2019-05-21T06:57:49","date_gmt":"2019-05-21T11:57:49","guid":{"rendered":"https:\/\/olduvai.ca\/?p=46255"},"modified":"2019-05-21T06:57:51","modified_gmt":"2019-05-21T11:57:51","slug":"chinas-nuclear-option-to-sell-us-treasurys-report-19-may","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=46255","title":{"rendered":"China\u2019s Nuclear Option to Sell US Treasurys, Report 19 May"},"content":{"rendered":"\n

China\u2019s Nuclear Option to Sell US Treasurys, Report 19 May\t<\/a><\/h3>\n\n\n\n
\"\"\/<\/a><\/figure>\n\n\n\n

There is a drumbeat pounding on a monetary issue, which is now rising into a crescendo. The issue is: China might sell its holdings of Treasury bonds\u2014well over $1 trillion\u2014and crash the Treasury bond market. Since the interest rate is inverse to the bond price, a crash of the price would be a skyrocket of the rate. The US government would face spiraling costs of servicing its debt, and quickly collapse into bankruptcy. America could follow the path taken by Venezuela or Zimbabwe.<\/p>\n\n\n\n

How serious is this threat?<\/p>\n\n\n\n

The Independent Institute wrote<\/a> (replete with a graphic purportedly showing a \u201cnuclear bomb\u201d) about it:<\/p>\n\n\n\n

What would happen if the Chinese government were to weaponize its holdings of U.S. Treasury bonds by suddenly selling off all of them?
That\u2019s an option that has been suggested<\/a> by Hu Xijin, the editor of the government-controlled Global Times<\/em>.
Dumping its U.S. national debt holdings is considered to be China\u2019s \u201cnuclear option\u201d for retaliating against the U.S. government in the trade war\u2026<\/p>\n\n\n\n

The Financial Time headline<\/a> says it all: \u201cChina dumps US Treasuries at fastest pace in two years\u201d. The body of the article uses that word \u201cweaponise\u201d (British spelling).<\/p>\n\n\n\n

Bloomberg warns<\/a> that, \u201cTrade Feud Has Treasury Investors Eyeing China\u2019s Holdings at Fed\u201d. At least their article does not reiterate \u201cweaponized\u201d.<\/p>\n\n\n\n

CNBC adds a new element<\/a>, that in killing America, China would be destroying itself too. The article uses the word \u201cweapon\u201d, as well as calling it the \u201cnuclear option.\u201d<\/p>\n\n\n\n

Capital Outflows<\/strong><\/p>\n\n\n\n

Ambrose Evans-Pritchard at the Telegraph<\/a>\u00a0is one of the few voices looking at the \u201caccelerating pace of capital outflows from China\u201d. He provides lots of good analysis that we would say is common sense, except it is presently uncommon (yes, yes, we know that common, here, refers to base logic not ubiquity). <\/p>\n\n\n\n

 \u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

China\u2019s Nuclear Option to Sell US Treasurys, Report 19 May There is a drumbeat pounding on a monetary issue, which is now rising into a crescendo. The issue is: China might sell its holdings of Treasury bonds\u2014well over $1 trillion\u2014and crash the Treasury bond market. Since the interest rate is inverse to the bond price, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,5],"tags":[130,7957,3222,2721],"class_list":["post-46255","post","type-post","status-publish","format-standard","hentry","category-economics","category-geopolitics","tag-china","tag-keith-weiner","tag-trade-war","tag-us-treasuries"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/46255","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=46255"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/46255\/revisions"}],"predecessor-version":[{"id":46256,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/46255\/revisions\/46256"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=46255"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=46255"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=46255"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}