China and Japan are the biggest foreign holders of United States debt. They both own more than $1 trillion each, and, while they are purchasing Treasuries, they are doing so at a sluggish pace – in some months, they actually slash their holdings by small percentages.
With the U.S. entrenched in a bitter trade dispute with the world’s second-largest economy, many believe that Beijing might fight back by unloading some of its Treasury holdings, something that would send the greenback tumbling.
Does Treasury Secretary Steven Mnuchin think this could happen? He isn’t sweating it because China isn’t the only buyer of American bonds.
Speaking with reporters in Indonesia for the annual International Monetary Fund (IMF) meetings, Mnuchin conceded that he doesn’t lose “any sleep over this issue.”
“I am not losing any sleep over this issue. The Treasuries market is very liquid, this has never come up in any of our discussions whatsoever,” he said. “We have plenty of buyers for Treasuries, so China is free to do what they want.”
It is true that U.S. officials can be exceptionally confident in the greenback because it has rallied throughout the trade war. However, the good times cannot last forever, especially when it is being propped up by foreign nations and the Federal Reserve.
The next meeting between President Donald Trump and Chinese President Xi Jinping in November should be fascinating.
The money printing scheme will continue for years. The FED will always step in with money created out of thin air and float the debt bubble of the US Government, until the world financial system collapses, sometime around 2035.