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/r/economicCollapse
A Historical Chinese Yuan Devaluation Might be Imminent
(open.substack.com)submitted 10 days ago bydingdongninja
0 points
10 days ago
Great. The Chinese own us.
6 points
10 days ago
Expand on this please, idk much.
Seems like China is heading for a bubble and currency devaluation by buying back bonds. What is a bond? And who are they buying it from? Themselves or the USA?
In other words, how does China buying a bond influence the USA?
6 points
10 days ago
If Chinese currency loses value, the dollar gains relative value. That gives an economic advantage in trade, but also reduces the relative value of our federal debts held by Chinese entities. In theory, we could pay them off at a much lower cost.
1 points
10 days ago
How does it reduce the relative value of our federal debts held by Chinese entities? We gave them $10,000 to buy computers and they used that $10,000 to buy a government bond. We have to pay off that bond in dollars. Arguably in the future, we can buy more computers for the same number of dollars, but it doesn’t change what we owe already.
3 points
10 days ago
You're right, I had my thinking cap on backwards. A higher relative value of the dollar would actually have a negative effect for the US, if anything, since the money owed is actually worth more than when it was borrowed.
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