Comments on: Myth #275: Could China dump their US treasuries and wreck the US economy? http://libertarianstandard.com/2012/09/12/myth-275-china-could-dump-their-us-treasuries-and-wreck-the-us-economy/ Property - Prosperity - Peace Mon, 20 May 2013 06:54:19 +0000 hourly 1 http://wordpress.org/?v=3.5.1 By: Vangelhttp://libertarianstandard.com/2012/09/12/myth-275-china-could-dump-their-us-treasuries-and-wreck-the-us-economy/#comment-2808 Vangel Fri, 14 Sep 2012 13:35:07 +0000 http://libertarianstandard.com/?p=11691#comment-2808 A few years back I had breakfast with a former Chinese government economist in Xi’an. He had been working for AVIC, which is how we met, but somehow wound up in African trade. During our conversation I asked how China would hedge its risks because it had way too many treasuries that could wind up going to zero if the fiat currency imploded as he had argued many times before. His answer was debt financed infrastructure and residential construction plus the acquisition of debt laden natural resource companies. The idea was that if the value of the UST holdings collapsed the debt used to build all those bridges and houses would become insignificant and all those new mines would wind up with capital that was no longer encumbered by debt.

He pointed out that in the real world things were not as they seemed and that one would need to be careful before accepting some superficial argument about how things will play out.

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