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US of A foreign Debt.?
Over 50% of US of A foreign debt is with Asian (mounting to trillion), What will the outcome be, if they decided to call back?
Will US of A ever going to fulfill their promise to return the money?
How will it affect the world economy?
(No hate message please).
Cindy, we are dealing with USA problem, not mine.
Kmin, it is national debt, not about purchase.
BTW, are you 2 American? Do you ever read newspaper? :)
Bob, I like your perspective. If no one give a better one, you shall have the 10 points. Thanks.
1 Answer
- 1 decade agoFavorite Answer
If they would decide to sell a major portion of the debt then the value of existing Treasuries would crash. New debt being issued would need to be offered at much higher interest rates. The US budget would go even further out of wack potentially driving the US into a position like Greece but unlike Greece - we are too big for Germany and the IMF to bail us out.
The rest of the US economy would have a huge crisis. With interest rates rapidly going up , inflation would go nuts and lending would freeze up. Bottom line - the US economy could look like Germany in the early 1920's. Hyperinflation and massive unemployment.
The good news is that the Chinese gov't and other gov'ts holding US debt know this and know that the US crashing would affect the entire world so they will not do any thing rapid. They may slowly sell off US Treasuries - which puts the US into a long term malaise perhaps but not a crash.
