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Comment by daemonize | Hacker News Reader

What about China bailing. How bad does it need to get before they decide to pull out?

Old joke: If you owe the bank a thousand dollars and you can't pay it back, then you have a problem. If you owe the bank a billion dollars and you can't pay it back, then the bank has a problem.

I think the original joke was a million dollars not a billion dollars, but I guess with inflation...

It'd have to get very bad for China to pull out. If China pulls out and damages our economy, our imports will dry up, their exports will dry up and their economy will dry up. I understand that China and the US might not be the best of friends right now, but their interests are generally aligned on US debt.

They would do that without hesitation. The problem (at the moment) is they have nowhere else to put that much money.

China could either put it back in their coffers or invest in Brazil. Consider that they have Sino-Brazilian trade and technology agreement.

That and Congress keeps banning all collaboration with them in space and energy technologies.

Its really not. If what you say was true they wouldn't still be actively buying U.S. Debt.

Their hesitation is they wouldn't get all their money back. If China pulled even 25% of its investments out of the U.S. the dollar would free fall. They wouldn't be able to cash out before most of the dollars value was inflated away.

China continues to buy our debt because they don't want the value of their current investment to collapse

that's not the only reason, they also need to keep buying it for as long as we're a sizable portion of their export market. We still are, for now..

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