“U.S. Treasury: China Has Decreased Its Holdings of U.S. Debt

Friday, April 29, 2011
By Terence P. Jeffrey

(CNSNews.com) – Mainland China has decreased its holdings of U.S. Treasury securities since last October, according to a report updated today by the U.S. Treasury Department.

Since September 2008, when they eclipsed Japan, entities in mainland China have been the largest foreign owners of U.S. government debt. But, as indicated by the Treasury Department chart linked here, Chinese ownership of U.S. Treasury securities peaked in October 2010 and has declined in each of the four most recent months reported by the Treasury Department.

At the end of October 2010, China owned 1.1753 trillion in U.S. Treasury securities. That dropped to $1.1641 trillion by the end of November, $1.1601 trillion by the end of December, $1.1547 trillion by the end of January, and $1.1541 trillion and $1.1541 trillion by the end of February 2011.

…

“So far in fiscal 2011—which began on Oct. 1, 2010—the U.S. Treasury has needed to redeem $4.176308 trillion in maturing Treasury securities and sell $4.769522 in new Treasury securities.

At the end of February, according to the Treasury, the total U.S. debt was $14.194764 trillion of which $9.565541 trillion was publicly traded Treasury securities. Of those $9.565541 trillion in public Treasury securities, foreigners owned $4.4743 trillion—or almost 47 percent.

The $1.1541 trillion in U.S. debt owned by the mainland Chinese as of the end of February equaled about 12 percent of the publicly held portion of the U.S. debt and almost 26 percent of the publicly held portion of the U.S. debt that was owned by foreign interests.”

http://www.cnsnews.com/news/article/us-treasury-china-has-decreased-its-hold

WHAT is that giant sucking sound, Brad, or you Dr. T ???? What is that?

That my friends IS foreigners cashing in their chips, not playing another round in the Casino, and buying WHATEVER hard asset is even sensed in a 10,000 mile radius with those US Treasuries sold. THAT is YOUR “omg these overseas markets have so many US dollars at work because they are working so very hard and now, suddenly they are so prosperous that they want to buy our U.S. goods!!!!”

Is that really what you peg all the CURRENT real life inflation upon???? You act like it’s still some futuristic event and you are such a jackass about your imagined economic prowess and your imagined Cassandra-like tragedy economic foresight that you totalfail anything close to resembling economics.

None of that has anything to do with foreign nations dramatically decreasing their purchases of US T-bills. China has already announced that they may cut their purchases by 2/3. Japan (suffering from the devastating earthquake) is actually using their own central bank to release money into the economy instead of the longstanding crucial US Treasury buying.

So that $4T+ foreign debt reliance and steady decrease in participation… this has -nothing- to do with those foreign “using dollars to buy (US)goods” ?

I would ask you, what do YOU think the basis of Quantitative Easing was? Do you simply think it was our central bank thinking we needed a good old fashioned Keynesian money-injection to make sure that we are over this “recession”?

Sorry man but I think you may have causes and effects muddled. And I would ask you now if you consider yourself a Keynesian, Austrian, or other-than kind of Friedman offshoot.

Now that I reread your criticism, I think you’re a bit off base. These other nations don’t hold $11T in US debt — they hold about $4.4T of US debt and $6.7T of US currency.

The debt may take time to unwind — it has to be sold off to someone or simply retire.

But that $6.7T is money that has nothing to do with the Fed or the Treasury. It’s money those nations are holding as reserves — as cash. That money can be spent at any time the holders want.

The key is that everyone’s focusing on the small-run impact of the Fed & Congress’ actions, but the waterfall of foreign divestment in dollars and dollar-denominated securities is far larger than the Fed’s immediate impact of interest rates or QE. They think they can manage it, but it can spiral out of their control in an instant if the world gets too spooked.

But what if I told you that there was another $11T of outstanding US dollars* out there in the world, and that everyone except the US has a say in whether they are circulated. In fact, that those dollars are sitting on foreign soil is a very good thing for the US and has been for decades, but it’s not assured it will last forever.”

Both phenomena are dependent upon the other. You are trying to treat one as though it had nothing to do with the other. It’s simply not the case.