What is "debt" in terms of countries borrowing money?

[Sugar Adam Ali]

Yes,,,


China buys up t-bonds, because a fast majority of their gdp is dependent on the US dollar, so they need to convert yen into dollars as quickly as possible to keep trade and economy alive.
Hence why they buy t-bonds, and that coupon provides them a source of USD

Pretty sure that some commodities are or about to be priced in Yuan

They're certainly pushing for it anyway

Could be..


I just know that China has a huge need for USD for banks to convert into yen.

Our economies are very intertwined.


That’s why I never get worried about another world war.

America, China and even Russia, the economies are so connected, world war is a losing proposition for everyone.

Nobody is gonna **** up the cash cow which is the global economy

Let me clarify all of this..


Chinese are huge manufactures/exporters, especially to the US.

Chinese manufacturers export their goods in exchange for dollars.

The Chinese companies need to convert these dollars into yuan to pay the bills and employees.

The central bank of China, buys these dollars and provides the companies with yuan.

This makes the dollar scarce, and strong against a weak yuan, which leads to Chinese advantages with export/labor. Keeps it cheap to keep doing business there.


This leads to the central bank of China to have a huge forex reserve of dollars..

They spend these dollars by buying up our debt..

That’s the reason why they buy our debt, to help make them competitive and liquid in exports/manufacturing

[Tomjas]

Let me clarify all of this..


Chinese are huge manufactures/exporters, especially to the US.

Chinese manufacturers export their goods in exchange for dollars.

The Chinese companies need to convert these dollars into yuan to pay the bills and employees.

The central bank of China, buys these dollars and provides the companies with yuan.

This makes the dollar scarce, and strong against a weak yuan, which leads to Chinese advantages with export/labor. Keeps it cheap to keep doing business there.


This leads to the central bank of China to have a huge forex reserve of dollars..

They spend these dollars by buying up our debt..

That’s the reason why they buy our debt, to help make them competitive and liquid in exports/manufacturing

China also need the $ to pay for its own imports as much are transacted in USD

As it is the 3rd largest importing country in the world at about $1.5 trillion p.a. so they need a shed load of dollars to pay for it

[megas30]

I've never understood why America is in so much debt, and who too? How can one of the biggest countries in the world be in so much debt? And how the hell do you even borrow that much, is some other country just killing it, and able to throw trillions of dollars at us for no reason?

Debt, in terms of American debt, is basically a secured asset for investors. People are banking on America's stability to put away their investment in a vault that no one can touch. The problem with this is that American economy is very sensitive and any disruptions can cause financial paranoia around the world. Therefore, there is always that need to balance the economy, protect American interest at all cost. Monetary and fiscal policy are a keystone to America's survival. In a nutshell, America sells their "might" to world.