I am hereby calling Socrates a socialist.

Lending the US money is a profitable venture for China, why would they end it? Investing in each other is a good way to help keep interests aligned.

@Frank thank you and I completely agree with you on every one of those subjects other than he saved the economy for the time being. He did not by any measure save our economy and i have a different opinion on gun control but thats another story

Socialists....

@ Lando it is if you can pay that investment back which we cant

Do you also live in Texas, Sbyvl?

If there was a risk you couldn't pay it back, China would have priced that into the interest rate. Frank pointed out that the interest rate is at an all time low. Therefore, China believes that the USA will be solvent for a long time to come.

China doesn't go about investing money if it doesn't expect to earn a return. greece might do that, but China wouldn't be where they are currently if they did.

Nope. Sunny South Florida.

@draug: I'm not sure you understand how bonds work. In theory, if China sold a bunch of US bonds at once, that could raise American borrowing costs but I'm not sure what incentive they'd have to do that. And in any case, American borrowing costs have rarely been so low. Otherwise, bondholders (and the chinese hold a relatively small portion of the debt) don't have a ton of ways to "manipulate our economy". Also, how would we have a dependence on their influx of cash? They are bondholders -- i.e., we pay them an influx of cash, not the other way around. I don't mind you not understanding anything, but please don't make such confident statements like you did earlier in this thread. I dont post confidently about software engineering because I understand nothing about that field.

again Lando has danced around all my arguments so therefore i have to assume he agrees with me

Obama has appointed two justices to SCOTUS. One of whom is a racist sexist bitch. She believes everything should be blamed on white males and they are never right. Don't believe me, google her numerous decision before he appointed her to SCOTUS.

"All it has to do is say that it wants all of its money today, we wouldnt be able to pay, and that would be the end of our economy"

This is a popular idiocy spouted by people who think that many zeros in a row are somehow important. Meanwhile in the real world, the government bonds have certain maturity so the creditor have jack shit right to get the money back earlier. This idiocy is usually accompanied by "zomg 95% of all money in the world is debt what if everyone wants the money back right now we're fucked". Same principle. I wonder why those people aren't afraid that every single Mexican crosses the border at the same time. Or that everyone drives cars at the same time. Or everyone shops at the same time. Or every army in the world orchestrates military maneuvres at the same time.

and yes they would invest in us @Lando so they can have leverage on us and therefore leverage on the world

I agree with Draugnar completely. Finally, an intelligent human being...

Texas, them owning your debt does not give them nearly the "power" you believe it does.

But if Woody had gone to the police, none of this would have happened.

(Woody Woodpecker: Bunko Busters)

Sorry Draug, should be more specific when I make my comments, I was including you in my ad hominem because whilst I disagree with your views I think you are intelligent, the socialist response was not to you, and was said by someone besides you.

And sbyvl, yes, well done, I'm a socialist (and a more extreme one then the rest of you who are, probably, to some extent socialist even if you won't admit it).

Ulytau is right, bondholders can't demand all their money today, that isn't how bonds work. The US pays back their bonds when they mature. Which they will, because they are at essentially zero risk of defaulting. You don't have to take my word for it, you can just look at interest rate on 30 year treasuries.

Again, its okay if you guys don't understand bonds but please stop making such confident assertions about them.

@Texas, I'm glad we agree on so many things. I think helping the auto industry, health care, and gay rights, while simultaneously ending a war that was turning into Vietnam II & slowly turning around the economy is very impressive given the hand he was dealt and given how obstinate the Republican controlled congress has been

@Frank - Here is what I understand. If it is debt, that means we borrowed money at some point. It may be a fraction of what we owe back as bonds do have a maturity date and are bought reduced from their eventual value (I get that). So that influx from China *buying* the bonds is the influx of cash to which I refer.

But again, I'm not an expert and will let you explain how it works.

@Lando,

China is not "lending" money to the US, they're buying US debt, there is a big difference.

There is no "saving" the economy, it was designed to fail. An economy CANNOT be maintained when EVERY penny in the economy is DEBT owed to a private, for profit banking cartel. Our Republic has been fighting against what is effectively the Bank of England since it broke away in 1776.

Every "improvement" that we see in our economy is the result of the Fed printing money. It is analogous to giving a addict going through withdrawal another fix and saying, "gee look, they seem to be improving." It's been 100 years, and the US Dollar has lost nearly 99% of its true buying power. It doesn't appear that way to us as there is so much more crap to buy than there was 100 years ago, even 10 years ago. But, make no mistake about it, it will soon be 100%, and then the Federal Reserve will, by design, OWN EVERYTHING.

Once Again, MichiganMan is adding something completely true that no one will admit

@Draug: Yes, China participates at Treasury auctions, which is how the US sells debt. If they for some reason chose to stop buying debt at those auctions, presumably the cost of borrowing would rise for the US. This would also hurt China because the value of their US holdings would decrease and the value of their currency would rise vs. the US$ (which China doesn't want because they enjoy exporting). But none of this at all infers that the US is any way dependent on China, except that I guess most large economies are dependent on each other because everything is pretty global these days. It is a huge stretch to say that the US is somehow dependent on Chinese cash. Does this make sense?

Frank is doing a very good job of explaining complicated topics in an easy to understand way. Everyone should take this opportunity to learn so that they do not keep propagating this weird nonsense forever.

Oh, I am reading and learning a lot from Frank and I appreciate his input. I didn't even know the Chinese debt was bind purchases from an auction.

@Draug: the Chinese could also buy US debt on the secondary markets; Treasuries are some of the most liquid assets in the world. But a lot of it is probably bought in the primary market, at auctions.

Draug and Texastough, check out this link: http://www.cnbc.com/id/29880401
It is a slideshow, which is annoying, but it shows that foreign countries are not the largest holders of US debt. It is an interesting read and can maybe show how China's holdings are not particularly extreme or threatening.

@Texas

"The wealthy who have worked hard for there money shouldn't have to bail out the lazy."

Which is the Republican hardline. The Dems would prefer to keep most of the programs currently in place, and not cut much. One of these groups is willing to meet halfway by offering a little of both. Hence, it's the right that is unwilling to compromise.

Having a black president really pisses off the white racists and seeing him re-elected was brilliant. Also he has a brain, something that has been sadly missing in previous Presidents.

That's funny, Nigee. haha

Fact is I wish Colin Powell would have run on the Republican ticket some time back. I would have voted for him in a heartbeat. Guess what? He's <*gasp*> BLACK! And I would actually put money on krellin being willing to consider him as a candidate. It's not about race. It's about abuse of power, the same thing the libs complained that GWB did.