huangthomas

Chinese Bailout May Send U.S. Interest Rates Higher

It is almost a "requirement" for the exporting countries to use their trade surplus to purchase US treasuries. This has been an open secret for decades. As the US economy slumps, we import less from China, Chinese trade surplus decrease. There will be less money for China to purchase US treasuries, yet US needs for borrowing will undoubtedly increase to save our economy. Two trillion plus Chinese foreign exchange reserve are already loaded up with US treasuries. CNY 4 trillion stimulation package would undoubtedly be a deficit spending. Only Fed can decide the interest rate level. I don't think Fed will allow it to sky rocketing to shoot down US economy.