Pretty stupid qustion to ask really,have you not heard about the very fast growth of china over the last 20 years?Today China has more US$1 trillion foreign reserve and already surpass Japan. Rank world top.
How come they can made so much money?
you cannot. because you bankrupt them you will also go down with them.It's a deterence that China can use to bancrupt the US of A.
M8, if you try to sell off your bonds to banqrupt US, you will lose most of your FOREX. The more you sell the more the dollar goes down killing your returns. Your dollar holdings are trapped unless you want to go banqrupt yourself. Not to mention the collapse of the dollar leads to the collapse of the yuan which leads to rampant inflation in China.It's a deterence that China can use to bancrupt the US of A.
If China only sells a small portion of T-bills, the only thing you do is drive down the value of the dollar which is exactly what they want. It increases their export potential and increases GDP. All they have to do is a little manipulation to close the inflationary gap and wallah, higher GDP growth.of course, it is feasible for China to sell some of its owned USA's T-bill ,as a way to "tap" yankees and make yankees make some concessions
It has a similar principal to Mutual Assured Destruction and nuclear weapons. It serves as a deterrent.M8, if you try to sell off your bonds to banqrupt US, you will lose most of your FOREX. The more you sell the more the dollar goes down killing your returns. Your dollar holdings are trapped unless you want to go banqrupt yourself. Not to mention the collapse of the dollar leads to the collapse of the yuan which leads to rampant inflation in China.