China to trade U.S. Debt for Equity

Am I the only one that thinks this could be a really big problem in the future?

If China starts amassing U.S. debt then selling it off for Equity in the U.S. then theoretically they could buy off the entire country if the states keep printing money. It would be economic conquest.

I won’t even bother to read the article.

The US debt is paid off with more US debt.
Nobody got nothing in previous instances when the government defaulted (example: 1971).
China government is not the only one that is owed stuff by the bankrupt US government.

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Ah the old head in the sand routine eh?

Except when those owed the debt come calling for the U.S. to pay up. Remember China is one of the BRICS nations and is backing it’s money with gold not debt. And it’s refusing to issue more debt to the states. It wans to be paid in equity.

Your point? Circumstances change. Life goes on.

Again what’s your point? How does the fact that China isn’t the only one that is owed stuff by the bankrupt U.S. government affect the fact that China wants the U.S. to pay up? Just because you have multiple debts doesn’t stop one of your creditors from sending you a bill.

The Fed can print all the money the US Treasury needs. Where have you spent the past 40 years?
The US government cannot default on its debt because they can print at will. Which part of this point you do not understand?

  • The US government is effectively bankrupt, but it’s debt is in denominated in the dollar which it can print at will
  • There can’t ever be a single creditor to demand something. If debt by some case can’t be paid the the government declares bankrupcy for which there are established procedures. In no case one creditor can come out and ask for something that other creditors don’t get. You’re astonishingly clueless.

In your fantasy the US government issued a bond which can’t be paid, and the creditors solve that problem by sending them another bill.
How much of Greece was occupied by her creditors in recent years?

You may want to spend some time on Wikipedia before you post again.

Yeah, seems like bad article. It would go to straight printing money first. The US systems slight inflation bias is there to create credit and recycle the currency. People as they age go to a more stable but encumbered currency under the currency. This strategy by the US is just to keep the money cycling and to keep people from sitting on it. Otherwise it would just pay itself and print the money. In a real bind it floats a new currency or new denomination or both and cuts off conversion or favorable conversion at some point.

Okay and if they print money like crazy what will that do to the value of the USD? If the U.S. converted their entire military budget to paying the debt to the Chinese all they could manage would be a token gesture. Are you suggesting they just print money until one can paper their walls with greenbacks? Combine this with the fact more and more nations are abandoning he petrodollar as a national reserve currency and adopting the Rubble and Yuan more and more.

Scenario 1: You’re right and China accepts USD and he banks just print the dollars. The resulting hyperinflation would make the USD worthless.

Scenario 2: The U.S. Simply refuses to pay. In which case China could sell the U.S. debt at a loss and again the state’s economy would plummet as their dollar’s value would be worthless.

Scenario 3: China refuses to accept USD and wants equity instead, or the U.S. prefers to pay them in equity instead. China gets a foothold in the states. If the states then continue asking for loans from China then China has a clear means to economically take over he U.S.

We’ve already established the fact that China no longer wants to loan any more money to he U.S. without them paying up.

No the creditors solve that problem by refusing to lend the debtor more money and possibly threatening to sell the debt thus sending the debtor into further devaluation.