A naive question: Does China get our debt as a pile of $ bills and/or gold, or is it virtual money?

[thereismore]

By virtual money I mean just a number in some ledger. Sorry, I don't mean to offend any knowledgeable people. How do they collect?

[liberal N proud]

1. We live in a digital world

There is no gold backing anyones money.

[csziggy]

2. It's the same IOUs in treasury bills as Social Security holds, I believe

I could be wrong, though.

[PoliticAverse]

13. You're wrong. (it's a common misconception).

Social Security holds "special issue securities" that can only be held by the trust fund and not sold to the public.

http://www.ssa.gov/oact/progdata/specialissues.html

[csziggy]

14. OK, thanks for that information. I was not sure and that's why I qualified it n/t

[AlabamaLibrul]

3. Virtual money, more or less.

They own our bonds, for which they might have a piece of paper to show ownership, but essentially all they own is a CUSIP (identification) number, that is attached to a Treasury bond, which is just regular ol' debt like you or me could have.

[TheWraith]

4. They get treasury bonds, which are essentially IOUs.

Imagine it as the equivalent of a Certificate of Deposit that you get from a bank. It says "you're entitled to X money after Y period of time." And it can be treated like money, bought or sold according to the desire of the holder.

[Cali_Democrat]

5. Dollars are not backed by gold

No major currency is. The exchange of funds through interest payments to the bond holder is reflected in the balance of payments as numbers across a computer screen.

Fiat currency is one of the biggest frauds perpetrated on mankind.

[Demeter]

6. While I am Sure There Is Some US Currency in China

most of its dollars are in T-bills, T-bonds, etc. China had a lot of mortgage backed securities from Fannie Mae and Freddie Mac, but it made Ben Bernanke buy them back when the fraud became exposed back in 2008. believe he exchanged them for Treasury bonds. There may be $ cash accounts in banks waiting to be invested, as well, which would be electronic in nature, as is most money these days.

The US doesn't redeem its dollars in gold. China has some gold mining in its country, and buys its gold on the global market. Whether China holds paper gold (IOUs) or the actual metal, I don't know, but I suspect they prefer the metal.

I hope that answers your question--if not, ask further.


As to how they collect--to what are you referring? The dollars? Same as anybody.

[Gaedel]

8. China can't call in our markers

Because the mint can just dash off a few trillion dollar bills for them in a short time with the old printing press.


It is sort of like:

If you owe the bank ten thousand dollars, you worry.

If you owe the bank ten million dollars, the bank worries.

[T Wolf]

7. The replacement of actual currency and gold with "virtual" money has greatly enabled

the national and international manipulation of finances.

This is the way they structure schemes and make money on the transfer of these electrical impulses. Nothing of value actually changes hands.

It all is done with computers/mirrors to take advantage of massive information to avoid regulation, minute differences in temporary ratings/values, and the like to skim their vig while no one is watching.

[JoePhilly]

9. GIve it to them in WALMART gift cards ... let them buy their crap back.

[glinda]

10. Nice one! lol!

[Cali_Democrat]

15. LOL

Golden

[Johonny]

21. I like this idea.

As Sanders pointed out we just have those Wallmart heirs 35 billion in tax breaks, we want them to pay that back in worthless gift cards you always forget to redeem.

[Ezlivin]

11. They get fortune cookies

It's been that way for centuries.

:)

[woo me with science]

12. All money is virtual money now.

We are all enslaved because of some digits in a computer.

[Gin]

16. what if they call the loan/cash in the bonds...etc.????

[AlabamaLibrul]

17. They "can't", in that the bonds aren't set up to be able to. Whether or not we would be in a

position to enforce that - another matter entirely.

Most likely scenario: Treasury prints a ton of money (eta: probably literally), and goes ahead and pays it. We do this to some degree constantly, with every new run of bonds going to pay interest on previous bonds.

[Gin]

18. so deficits don't matter because we can print our way out of any

debt to other countries...?

[AlabamaLibrul]

22. Defecits matter because if we print out way out of any debt to other countries

not only will we face a debt crisis - people won't want to buy our bonds and interest rates will go insanely high - but we'll be looking at massive inflation.

[DemocratSinceBirth]

19. When You Owe The Bank One Hundred Dollars You Have A Problem

When you owe the bank one trillion dollars they have a problem.

[Hannah Bell]

20. they take their trade surplus & recycle it into us debt. win-win.