Apparently the communists in control of CPC need a lesson in basic economics. With the $1.33T in US debt they hold, one wonders who exactly who they plan on selling it to.

Even if they could, the dollar would tank with the extra dollars floating around, making their imports even more expensive, thereby crippling the engine driving growth in China. And, even better, they risk devaluing their debt holdings as they are, after all, dollar denominated. The Federal Reserve isn't that naive- apparently the Chinese are?

As we learned with FDR in the 30's, economics is best left to economists and as far away from politicians as possible, including the US Congress.

Well said John. My response would be "go ahead." Sure our economy would likely take a hit, as would our largest trading partners....like the PRC. And their economy is far less robust than ours. We could weather a recession. One for them might cause a full scale revolution.

This would be the largest, and probably the most stupid financial move by a sovereign government since the Russians implemented central planning.

There very well could be a very strong political response to this: The US could end the policy of "ambiguity" on Taiwan and swear to defend it in case of war.

Nominal commuinists are indeed frustrated that they cannot control the world economy by edict the way they once ruled China.

A move like this could indeed precipitate another event like 6/4/89, and the way the bureaucrats think mowing down a few civilians in the street to maintain order and control isn't so bad.

I'm optimistic that it won't get so bad, but I do believe it could turn out that way... Probably not before the Olympics next year though.

Everyone go ahead and get mad at China but fact is, its OUR profligacy - doing things like spending $556 billion (and counting) to invade and occupy Iraq - that has put us into this situation.

WE are the ones trying to control the world (militarily), not them. The Chinese are only doing whats logical - why should they finance our deficit spending and then sit back and let our lawmakers slap them with ridiculous tariffs?

Our inability to see things through the world's eyes is our greatest achilles heel.

Yeah right, how could I have missed it, it's Bush's fault.

who is mad at china chad? everyone commented that it's a dumb move for them. the fact that the u.s. is doing the same thing militarily is a separate issue.

jk: fine maybe "mad" is too strong but I stand by my statement that our moronic spending priorities are putting the US in a situation where its vulnerable to this kind of thing. I guess you could argue that the Chinese economic phenomenon was going to give them a lot of capital in any case, but countries with strong balance sheets don't worry about their currency being attacked. And the US does not have its finances in order.

Anyway, the point here is that foreign investors have been financing a spending splurge by the US gov't and US private sector, and we all know thats coming to an end one way or another...

@Chad - I normally would not respond to ideological Blame-Bush myopia, but your comments are so wrong as to actually warrant a response.

Foreigners are not funding a spending splurge in this country. In fact, as the D/E ratio of the vast majority (>90%) of US-based companies is well below 20%, it is clear that funding for expansion and growth is driven by cash flow and equity returns, not debt. Indeed, corporate profitability of US companies far outstrips the meager savings of US citizens and even the so-called frugal Chinese. In other words, our funding sources are organic. Sure there has been some debt-funded stock buy-backs, but most of the excess capital is being rolled into productivity improvements and expansion. It is, in fact, this condition that allows the US to have a strongly positive net savings rate.

Secondly, China owns approximately 1T in dollar-denominated reserve assets, not T-Bills, amounting to a little over 10% of total aggregate debt (loosely defined). Not only is this immaterial, I still stand by my point that any attempt to devalue the dollar will cause massive real dollar losses to the CBC's portfolio of dollar-denominated assets. They only risk hurting themselves through such brash behavior, and in the end they know it.

Bonehead move. Reminds me of the Iranians with their idiotic rant to reprice oil in Euros...

Both are classic examples of politicians with zero understanding of economics trying to pander to constituencies that have an even deeper lack of economic understanding. Sounds good with all that "fire and brimstone" stuff. Try it and you better have the jet warmed up out on the ramp -- destination that private island you forgot to mention you owned.