It’s instructive to see who holds most of America’s Trillions of debt. In fact it’s the very nations that it’s in an economic war with. This is not an accident. If you have a very large trade surplus then your currency appreciates relative to your trading partner’s, all else being equal. One way to keep the currency stable is to buy your trading partner’s debt effectively using your stronger currency to prop up your partner’s currency, artificially. It’s converting a surplus on the current account into an entry on the capital account. This way you maintain a competitive exchange rate which is very important if you are a net exporter of good and services If you play this out to infinity then China will eventually own America without a shot being fired. Some war!
A new war

Herman
- April 5, 2020
- , 8:04 am
- , Opinion
It's instructive to see who holds most of America's debt