Brahmason's Blog

With the confrontations on protectionist attitudes recently displayed by mayor countries , some analysts have warned on the possibility of chinese putting in the market a significant part of american issued debt as a retaliation move .
That sounds unrealistic because if chinese would do so the dolar rate would fall quicker yet than it is currently doing and a dollar accelerating its fall would clearly deteriorate the present balance in the external commerce between both countries .

Indeed nothing would please the U.S.A. more than that type of move by chinese because that would help their goal without apparently being responsable for it .

On the other hand the possibility of chinese not renewing their purchasses of american debt in the future , might in principle sound somewhat dramatic for the american administration but once the Federal Reserve has decided to start buying american debt themselves , it would not matter much howmuch of that debt the FR wpould actually buy to compensate for other potential buyers failure to do so . Besides that would endorse an attitude of austerity so much proposed by a wide sector of american opinion .

Brahmason