Just got this and have no other info.
<http://fellowshipofminds.wordpress.com/author/eowyn2/> Red Alert!
China Dumps 97% of Its U.S. Treasury
Holdings<http://fellowshipofminds.wordpress.com/2011/06/03/red-alert-china-dumps-97-of-its-u-s-treasury-holdings/>
*Eowyn <http://fellowshipofminds.wordpress.com/author/eowyn2/>* | June 3,
2011 at 6:28 pm | Categories:
Economy<http://fellowshipofminds.wordpress.com/?cat=17656840>,
United States <http://fellowshipofminds.wordpress.com/?cat=5850> | URL:
http://wp.me/pKuKY-7jN
Friends, this is what we've been dreading. The killer punch is dealt to the
U.S. economy. China -- the country that purchased most of America's debt in
the form of U.S. Treasury notes and bonds -- has divested 97% of its
holdings.
The U.S. government has been operating by borrowing and borrowing and
borrowing. Now it is faced with two stark choices:
1. Either raise the artificially low interest rates on those Treasuries
so as to entice buyers, which means certain inflation, if not
hyperinflation; or
2. Continue to keep interest rates depressed, which will result in even
more dumping of those Treasuries by big holders such as China. With no one
buying those Treasuries, the U.S. government can no longer function as
before.
Why this isn't headline news in every newspaper and TV channel is beyond my
comprehension.
*~Eowyn*
<http://fellowshipofminds.files.wordpress.com/2011/06/apocalypseradio_-_30330ludd_w.jpg>
*Terence P. Jeffrey <http://cnsnews.com/source/74693> of CNSNews.com reports
today<http://cnsnews.com/news/article/china-has-divested-97-percent-its-holdin>,
June 3, 2011: *
China has dropped 97 percent of its holdings in U.S. Treasury bills,
decreasing its ownership of the short-term U.S. government securities from a
peak of $210.4 billion in May 2009 to $5.69 billion in March 2011, the most
recent month reported by the U.S. Treasury.
Treasury bills are securities that mature in one year or less that are sold
by the U.S. Treasury Department to fund the nation’s debt.
Mainland Chinese holdings of U.S. Treasury bills are reported in column 9 of
the Treasury report linked
here<http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/lb_41408.txt>
.
Until October, the Chinese were generally making up for their decreasing
holdings in Treasury bills by increasing their holdings of longer-term U.S.
Treasury securities. Thus, until October, China’s overall holdings of U.S.
debt
continued to increase.
Since October, however, China has also started to divest from longer-term
U.S. Treasury securities. Thus, as reported by the Treasury
Department<http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt>,
China’s ownership of the U.S. national debt has decreased in each of the
last five months on record, including November, December, January, February
and March....
As of March 2011, overall Chinese holdings of U.S. debt had decreased to
1.1449 trillion.
Most of the U.S. national debt is made up of publicly marketable securities
sold by the Treasury Department and I.O.U.s called “intragovernmental” bonds
that the Treasury has given to so-called government trust funds—such as the
Social Security trust funds—when it has spent the trust funds’ money on
other government expenses.
The publicly marketable segment of the national debt includes Treasury
bills, which (as defined by the
Treasury<http://www.treasurydirect.gov/indiv/products/products.htm>)
mature in terms of one-year or less; Treasury notes, which mature in terms
of 2 to 10 years; Treasury Inflation-Protected Securities (TIPS), which
mature in terms of 5, 10 and 30 years; and Treasury bonds, which mature in
terms of 30 years.
At the end of August 2008, before the financial bailout and the stimulus,
the publicly marketable segment of the U.S. national debt was 4.88 trillion.
Of that, $2.56 trillion was in the intermediate-term Treasury notes, $1.22
trillion was in short-term Treasury bills, $582.8 billion was in long-term
Treasury bonds, and $521.3 billion was in TIPS.
At the end of March 2011, by which time the Chinese had dropped their
Treasury bill holdings 97 percent from their peak, the publicly marketable
segment of the U.S. national debt had almost doubled from August 2008,
hitting $9.11 trillion. Of that $9.11 trillion, $5.8 trillion was in
intermediate-term Treasury notes, $1.7 trillion was in short-term Treasury
bills; $931.5 billion was in long-term Treasury bonds, and $640.7 billion
was in TIPS.
Before the end of March 2012, the Treasury must redeem all of the $1.7
trillion in Treasury bills that were extant as of March 2011 and find new or
old buyers who will continue to invest in U.S. debt. But, for now, the
Chinese at least do not appear to be bullish customers of short-term U.S.
debt.
Treasury bills carry lower interest rates than longer-term Treasury notes
and bonds, but the longer term notes and bonds are exposed to a greater risk
of losing their value to inflation. To the degree that the $1.7 trillion in
short-term U.S. Treasury bills extant as of March must be converted into
longer-term U.S. Treasury securities, the U.S. government will be forced to
pay a higher annual interest rate on the national debt.
As of the close of business on Thursday, the total U.S. debt was $14.34
trillion, according to the Daily Treasury
Statement<https://www.fms.treas.gov/fmsweb/viewDTSFiles?dir=w&fname=11060200.txt>.
Of that, approximately $9.74 trillion was debt held by the public and
approximately $4.61 trillion was “intragovernmental” debt.
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