National debt is the term assigned to the sum total of all money owed by the US government to its creditors, namely by way of US government bonds. The number one single buyer of US government bonds is China. A sustained devotion of a certain amount of Chinese investment to the purchase of US bonds has become integral to sustaining existing levels of US government spending.
Earlier this year, Chinese finance officials chastised the US for perceived risks to long-term fiscal solvency. Many economists of widely diverging views on best economic practice or theory have observed that a “symbiotic” relationship has emerged, in which cheap goods from China are sold in the US, where consumer spending is enabled by easy credit, funded by low interest rates, in part supported by the expanding market for US government bonds, funded by Chinese buyers, who are essentially closing the circuit, turning US consumer dollars into Chinese bond buys, which in turn facilitate consumer spending.
This may be an oversimplification, but the question is: has the US economy broadly become dependent on the continuing expansion of bond sales, i.e. national debt?
If you enjoyed this article, please consider sharing it!
The Hot Spring connects people to brainstorm, solve problems, and build a more just, more sustainable future.
Events
