What Does This Mean?

[SAM_Hard8 50]

China Has Divested 97 Percent of Its Holdings in U.S. Treasury BillsSo unlike many of you here I have zero economic education and I do respect the opinions here.Was do you all think this news means for the US economy?

[hblask 1]

I think it means the cost of our debt is about to take a big jump. If people stop buying it, we have to raise the rate we pay. That makes our national debt problem worse.This is the scenario that Ron Paul and others have been warning about.

[brvheart 1,752]

China Has Divested 97 Percent of Its Holdings in U.S. Treasury BillsSo unlike many of you here I have zero economic education and I do respect the opinions here.Was do you all think this news means for the US economy?

That's just short term T-bills they are talking about though. China still holds like 900 billion in overall bonds/debt. It has been decreasing every month though, since they've been selling all of their short-term stuff. It's all bad, though.

[iguapo 0]

Its not good news but as brv said it's just short term, under one year of maturity, which almost the equivalent of cash. The concern is if they start dumping the 10 year treasury. That could be the signal that the dollar is no longer the currency of choice. That will be bad. Especially if oil stops trading in the dollar.

[ahosang 0]

As others said, it is short-term bills. This article from zero-hedge suggests the original article is flawed, and they describe it as 'clickbaiting'.http://www.zerohedge.com/article/china-dum...ts-clickbaiting

Chinese Bill holdings, which Zero Hedge reports on at every single monthly TIC update, are about 0.5% of total Chinese debt: in March the $5.7 billion in Bills was matched by $1139.2 billion in Long-Term Debt.

Echoing what brvheart said...

pointing out that total Chinese holdings have dropped by 2.5% from their peak has far less click-bait potential, than claiming that Chinese Bill holdings have declined by 97.5% from their peak.

Pointing out the sensationalist nature of the headline..

And the real concern, for those who enjoy speculating on "what if" scenarios, is what happens if and when QE 3 is announced, and the Fed becomes a greater holder of US Treasury securities than China, Japan, the UK and pretty much everyone else combined.

Suggesting that it is not China's action with Treasuries that should be a concern, but the fact that debt will continue to grow, and the internal(Fed) processing of debt(consumption/production) that should worry people...