Will China Dump Massive Amounts of U.S. Dollars?
Some people are concerned that China, since it holds so much U.S. debt, might start dumping dollars on a wholesale basis. Most economists think that this scenario is rather unlikely. The fact is that if China started to dump our dollars, the dollar would go into a precipitous fall. With China holding so much in dollar-denominated assets, their national wealth and treasury would also plunge. For this reason, many economists are not overly worried about this kind of economic Armageddon. We are at a standoff with China. It all goes back to the old saying that if you owe a bank a relatively small amount of money, then bank “owns” you. However, if you owe a bank a substantial amount of money, you “own” the bank. This is similar to our situation with China. We owe them too much money for them to become heavy-handed with us. However, I do think that there is a silver lining. There is a way out of our current dilemma. First of all — and I see no reason why this won’t happen — we must keep ou
