Smarty_Pants

Savings, Debt and the Global Economy

"Some of that new savings will go to pay down debt"

Well then, it's not really savings, is it? What's the actual rate of savings once personal debt re-payment is excluded?


"Theoretically [reduced Chinese demand for our debt] could make it harder for the U.S. to borrow money and thereby push up the interest rates on our debt (now at extremely low levels)."

Let's not get the cart before the horse. Maybe it's the incredibly irresponsible policies of the US Congress to borrow trillions and spend them on wasteful projects, often with adverse consequences, that is reducing the Chinese demand for our debt.

Or perhaps its the unavoidable conclusion that is rapidly becoming apparent, the US won't EVER make good on its debt which causes them to search for other places to park their excess reserves.

Whatever the reason, the eventual reluctance by the world at large to continue funding the spendthrift American political system is what will leave the USTreasury with bids for its debt few and far between until and unless rates are increased to attract sucke, ... errr ..., uh ..., investors.