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A comment on China Sells U.S. Treasuries to Support Yuan. Parent comment

Re:China Sells U.S. Treasuries to Support Yuan by jazzyk on Thursday August 27, 2015 @10:40AM (#10129686)
This could have serious implications for the US. Here is why:

With a lot of supply, the price of treasuries will go down, so the US government will be forced to offer higher yields for the newly issued debt to sell. This will:

- increase the servicing cost of the $19T debt (will cause the debt to increase even faster).

- cause a drop in the stock market, as more cautious investors (retirees, etc), enticed by increased yields, reduce their stock market exposure

It all depends on how many treasuries China wants to sell.

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Re:China Sells U.S. Treasuries to Support Yuan by forgetsusername on Thursday August 27, 2015 @11:18AM (#10129928)
>cause a drop in the stock market, as more cautious investors (retirees, etc), enticed by increased yields, reduce their stock market exposure

You've committed a fallacy: the overall stock market exposure cannot be reduced because those more cautious investors, moving their dollars to treasuries, have to sell the stock to someone else.

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Re:China Sells U.S. Treasuries to Support Yuan by jazzyk on Thursday August 27, 2015 @11:48AM (#10130108)
I said "THEIR market exposure".

Please read carefully before you comment.

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Re:China Sells U.S. Treasuries to Support Yuan by forgetsusername on Thursday August 27, 2015 @12:16PM (#10130302)
>"Please read carefully before you comment."

I'm saying THEIR market exposure is irrelevant. It's one stock owner or another.

The idea that "cautious" stock owners are going to dump shares at a loss to obtain a marginal increase in treasury rates is ludicrous.

Maybe you should understand before you comment (and down vote).

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Re:China Sells U.S. Treasuries to Support Yuan by toomuchtodo on Thursday August 27, 2015 @10:49AM (#10129730)
You could also see it as a way for the US government to justify additional tax revenue or decreased spending to pay down outstanding debt.
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