In recent years, almost all Russian American debts have been sold off, and China also has 1 trillion dollars of American debts. What will happen if we follow Russia's example and empty all the American debts in our hands?
There are so many American creditors in China mainly because of various trade surpluses. Our share of imports to the world is smaller than our share of exports, which leads to the trade system settled in US dollars and makes China have a large amount of foreign exchange.
Some of the foreign exchange reserves are mainly used to solve other international trade. Unfortunately, some foreign exchange is not used there, so most of it will be used to buy American debt. When the American debt matures, we can get rich profits again, which is much better than putting it there.
However, with the US economy becoming more and more inactive, the inflation rate rising and the fiscal deficit increasing, about 29 trillion US debts are about to expire. Many countries holding US debts are worried about the solvency of the United States and have chosen to sell US debts.
China's American debt is also decreasing, so what will happen in the end if China sells all its American debt, and will it affect the United States?
In fact, most of American debt is owned by American enterprises and people, while Russian and China only account for a small part of the total share of American debt.
That is to say, even if China sells all its American debts, the impact on the United States is actually very small, and the United States will soon absorb its adverse effects. The sold US debt will naturally be taken over by the new target, and those investors, financial institutions and the US Federal Reserve may still take over, which will not have much impact on them. If all the American debts are sold, it may also have some adverse effects on its own interests.
Selling American debt and converting it into money can be used to buy other assets, such as gold. However, the timing of selling is wrong, which will also bring adverse effects to China. Because the dollar index is falling, it is very uneconomical to sell American debt at this time, and it is not a lot of losses to gain income.
With the rebound of the US dollar index, it will be more favorable to sell US debt at that time. Therefore, if you want to reduce your holdings of US debt, you can't empty it all at once, but wait until the right time.
Moreover, the credibility of American debt is still very high, and there is no possibility of default. If the American debt really defaults, then the international credit of the United States will be lost, and no country will trust them again, and no country will want to borrow money again. Moreover, the yield of American debt is still quite high, which is why many countries buy American debt. If all US debts are cleared and the US dollar index is not high, it is better to continue to reduce US debts and bring us some benefits.
Although the selling of American debt by countries around the world will have an impact on the United States, most of the holders of American debt are financial institutions within the United States and the Federal Reserve. Selling American debt by other countries will not put the United States in a desperate situation.
If there is a problem with the internal debt of the United States, it will lead to more complicated problems, which may eventually lead to a deeper quagmire of the American economy. Therefore, no matter whether Russian or China pays off American debts, the impact on the United States will not be fatal. If the contradictions in the United States are not resolved, it will be an important factor affecting its collapse.