I watch CNBC for financial news every day. Everyday they ask the experts what will happen if China and Japan stop buying our Bonds and Treasury Notes. Everyday the experts say it will cause interest rates to go through the roof. Why do they lie?
If the purpose is to mislead the American people, I can understand what they are doing. But most of the people who watch Financial News are not so dumb that they can't understand how the Federal Reserve System and the Treasury Department of the Federal Government work with hands in each others pockets. Even if the average investor might be "Snowed", the experts who voice these opinions, certainly understand that we can finance almost unlimited debt at any interest we choose without a single dime of money from China or Japan or any other nation. We encourage them to invest their surplus dollars here in order to stabilize international currency.
If they suddenly decided to dump their dollars all at once it would destroy the worth of all Nations currencies and make their assets worthless. There are only four things that can be done with dollars or any currency. 1. Invest at interest. 2. Buy property 3. Buy commodities 4. Buy products and Services. China does all of those things with surplus dollars now.
If China became afraid of US dollars, they would start selling off their Bonds and Notes slowly so as not to take a beating in their value. The Federal Reserve Banks have the power to create money to buy from the Treasure all of the Bonds and notes held by others at any interest rate they wish to set. The foreign countries would then be forced to use their now free dollars to invest in 1.Property 2.commodities 3.Good & Services The effect would be to create a boom in the US economy and drastically change our Balance of Emport/Exports. It would also wreck havoc in world economies. And that is why it will not happen. The only reason I can see for this daily "song of Panic" is to force interest rates higher and make a lot more money for Bankers and less for owners of Stocks.
At least once before this occurred in our country. During the Civil War the big Banks in New York tried to force President Lincoln and the US Treasury to pay interest of 15% to 20% to finance the Civil War We did not have a Federal Reserve System then. Lincoln just had the Treasury to print Greenback Dollars at no interest. Industry produce war goods and made money and the banks failed in their Greed. What we do now will depend on who owns the Government. Follow the Money to see if Democracy Survives or the Banks take it all.