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OT-Why does the US owe China so much???

Discussion in 'Off Topic Threads' started by slick50, Jan 24, 2011.

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  1. slick50

    slick50 Member

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    I'm very stupid about world economics. So maybe someone can explain to me why we have so much negitive debt with china??? If I buy something made in China, I pay for it when I buy it. Where does all this debt come from?? How did it get so high?? Thanks for the economic lesson.... Bill
     
  2. tj303

    tj303 Member

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    The US government spends money. The money comes from taxes or if there is not enough money from taxes the government borrows money by selling Treasury Bills (T-Bills). The Chinese buy US T-Bills because they have lots of US dollars from selling stuff in America. The Chinese make money selling products and make money on the interest from T-Bills. It is in the Chinese self interest to buy those US T-Bills because it subsidizes (stimulates) the US economy therefore US citizens buy more Chinese junk. If taxes were high enough to cover the US government spending you (the taxpayer) would not have money left over to buy Chinese crap at Wal-Mart.
     
  3. SCL

    SCL Member

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    I think this was an awesome question as not everybody really studies this or gets educated past their favorite news outlet. It's just a fact. I've been through college economic courses and believe I have a pretty good grasp, but there are things I learn concerning world economics from time to time. tj put this in a pretty good explanation and perspective.

    Scott
     
  4. dmarbell

    dmarbell Active Member

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  5. Recoil Sissy

    Recoil Sissy Well-Known Member

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    Ok folks,

    Here's a major eye opener. Google: usdebtclock.org You'll find an absolutely astonishing amount of information about the U.S. debt, tax revenues, which programs are the big dog debt contributors and more. The numbers will scare the ever loving poop out of anyone with three or more brain cells.

    For starters, the national debt (right now) is a tad over 14 trillion. That's $45,107 for every single U.S. citizen and $127,102 for every U.S. tax payer.

    There's an option (top right corner of the screen) to look at previous levels or projected future levels. Take a look at some of the historical numbers to see what has happened under lib dem controlled congresses.

    sissy
     
  6. halfmile

    halfmile Well-Known Member

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    OK, let's do it the easy way. In a perfect world we would buy China's stuff, and they would take the dollars we give them and buy our stuff. This would result in an even balance of trade.

    Since we don't make diddly squat any more, China has our dollars coming out the wazoo. They want to keep selling us stuff, and don't want to use our dollars for TP in their funny little pagoda style outhouses, so they buy our interest bearing Treasury instruments. Our government keeps on spending way more than it takes in, so they have to create (Borrow) more and more of these Bonds and notes and other funny paper.

    This means that we owe them money. Oodles and oodles of money. Whch theoretically is going to have to be paid back. With interest.

    If you want to know where this is going to take us in the coming years, Google Iceland, Greece, and Ireland economic problems.

    There, feel better now?

    HM
     
  7. shot410ga

    shot410ga Well-Known Member

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    Countries invest their money in the safest place. So, who does China think is safe?
     
  8. porky

    porky TS Member

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    China is betting on gold and the assets of the US.
     
  9. quartering

    quartering Active Member

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    right, but on the other hand, the chinese are also big fans of slave labor. good luck with it
     
  10. capulona

    capulona TS Member

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    The USA is a consumer society. We're raised to be consumers. Buy this, buy that, the more the better, the cheaper the better, so we can posses more. How much stuff do you have in your house? Do you really need all that? Okay.

    Now as tj303 says, with the trade imbalance with China, they've a surplus of US$, trillions. they have to park that money somewhere, and earn interest. This is the safest place possible, because we're the only remaining Superpower in the world. Nobody's going to take over the USA - wacko nut rhetoric non-withstanding. So we'll pay interest for lending us the money collected and everyone's happy.
     
  11. halfmile

    halfmile Well-Known Member

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    Safe. Hmmmmm. depends on which knothole you look through.

    I we print more, we just put water in the soup. The 25 cent loaf of bread whan my kids were small is now the dollar loaf of bread, and the 2 thousand dollar car is now 16K or so.

    So I guess in some queer fashion you might call it safe because we can pay back the 75 cent dollars with 30 cent dollars at some time in the future.

    Which makes us the winner. Doesn't it?


    Or does it?

    HM
     
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