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IPFS News Link • Economy - International

Investigating the Claim "Countries Trying to Get Out of Treasuries"

• https://moneymaven.io, by Mish

Questions Abound

What countries are "trying" to get out of treasuries?

Is this something one has to "try" to do?

Why can't they just do it?

Why Can't They?

The chart in the claim provides the answer.

The US continually runs a trade deficit and one of the reasons is the fiscal deficit.

Mathematically, a perpetual trade deficit forces countries to accumulate US Dollar denominated assets.

Those assets do not have to be US treasuries, but imagine what would happen if China tried to buy Boeing or Apple.

Treasuries are the most liquid global asset and they do pay an interest rate, so treasuries it is.

From time to time China does sell Treasuries. But is not an attempt to get out of Treasuries . On the contrary, it has been a forced reaction to shore up a plunging Yuan.


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