Indeed. The reason it's bought is because other currencies devalue faster, that's why the UK and EU even sell negative rate bonds.
Plus, bonds are the only way to store massive amount of cash while paying very less with a guarantee that you will be able take money out of it come what may come. Think of pension funds and insurance companies. How will they store all the money they collect from you while paying as little as possible with an option to liquidate whenever they want? Bonds is the answer. This is why govt. bonds can afford to have a negative rate of interest. Its the certainty that they bring in.
I think you are talking about Sovereign Guarantee (certainty), once you "cancel" any debt unilaterally, China will be well within in right to confiscate any asset US have in China, including US mega Companies like Apple and US embassy land.
Yes, they can lodge a case, Maharashtra police will bring them in, for people outside India it will be tough but when they come here they can arrest but its not big offence, people will get bail easily.
No, I am talking about ability to print dollars if it comes to that. Thats a unique ability of US government.
They can feel free. If they can find 1 trillion dollars worth of assets. BTW, US will do the same. Not just that, Huwei et all will find their foreign bank accounts suddenly disappear. Not to mention billions of dollars that private Chinese citizens have invested in US real estate in LA and beyond.
Who are the top three rating agencies? Moody, S&P and Fitch. All three are headquartered in New York. As far as trusting them go, here is the kicker : The same rating agencies assigned a AAA rating to mortgage backed securities in 2008 and they STOOD by that even as the actual mortgages kept on failing. In their mind, those MBS were as trustworthy as US or European govts. The total market of MBS back then was 1 trillion plus. We still use these ratings without batting an eyelid. Welcome to the world of high finance. If it looks crooked, then thats by design.
The number of posts on U. Thackrey and RG I am seeing on twitter are massive. Same on whats app. Wonder if they are indeed serious about enforcing it. If not, then they have made it even more popular.
How does printing more dollars "cancel" Chinese debt? You were talking about not paying Chinese (atleast that's what cancelling means), now if you pivot to paying Chinese by printing more dollars I don't know where to even start.
Assigning wrong rating to something because of poor research or work practise and thinking everyone will trust them once state of US didn't honor the debt obligations is comparable anyhow? Forget rating agencies, they will be least of worries once this magical wand is waived.
Sure, printing dollars at will definitely looks high finance.
UP Government does that regularly, Mamta started it, Yogi tolerated it for sometime but once people started going way beyond vulgarity they were booked.
It does not. It does gives certainty to US bonds. Which is why they are irreplaceable EVEN if US government cancels debt owned by China. Remember, I was talking why US bonds are held in the first place and why this won't hurt US government in any meaningful way.
Ever wonder what "quantitative easing" means?
Here it is how :
Quantitative easing definitely don't mean printing more dollars mindlessly. It's increase in money supply but not by printing dollars because they own the press. They create liabilities if they are buying Government securities and it still comes with load of problems like inflation and depreciation of currency.
Frozen is different from cancellation, you can't confiscate someone's assets because you don't want to pay.
*Ahem* Changing CRR does not introduce NEW money in financial system. It merely allows less deposit to be held by banks and more available to be lended.
