Sunday, August 7, 2011

China 'the largest Creditor"

I've seen this written umpteenth times recently, but it's not exactly true. The Federal Reserve is the largest holder of US treasuries at the moment, at least officially. And they could double the size of their holdings without blinking an eyelash. Just showing the U.S. is not going to default as long as it has a shred of governability left, which it may not. And if China is worried about their dollar denominated assets, they shouldn't have pursued the Asian export model in a country of 1.4 billion. Their leadership still seems vaguely naive about what capitalism is, which is winners and losers and the violence necessary to sort out or perpetuate that order. Holding a bunch of 'dollars' on a computer screen doesn't do much for the winning side of the ledger when you come down to it.

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