Question On China Answered
Posted: December 6, 2012
Joseph Price asked an important question: “Why do we borrow from China and owe China trillions of dollars?” (“If We Can Print Money Forever … ?,” Dec. 3)
Answer is, we buy more goods from China than they buy from us, so they accumulate dollars. They buy Treasury bonds at auctions because they want a safe place to put their dollars that pays interest.
To banks, insurance companies, retirement plans, and others, U.S. bonds are like the certificates of deposit we buy from our local banks. The main reason why the government sells bonds is that large investors want them, not because it needs the money.
Answer is, we buy more goods from China than they buy from us, so they accumulate dollars. They buy Treasury bonds at auctions because they want a safe place to put their dollars that pays interest.
To banks, insurance companies, retirement plans, and others, U.S. bonds are like the certificates of deposit we buy from our local banks. The main reason why the government sells bonds is that large investors want them, not because it needs the money.
Thornton Parker
Harrisonburg
Harrisonburg