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Comment by dogma1138 | Hacker News Reader

They don’t have a choice, they sell they get back dollars. What are they going to swap 8 trillion dollars into? And an even better question how?

$8 trillion is about half the M3 of the Euro.

In fact there are only about 20 trillion dollars right now, there isn’t even enough liquidity to cash out.

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You definitely cannot do it all at once, all you can do is what China and India are doing, which is to slowly sell US treasuries over many years. China used to hold $1.3T of US treasuries but they now only hold just under $0.7T, thus about half has been sold. India similarly has reduced their holdings from $240B to $190 over the last year. It can be done, just not quickly.

Stocks generally survive currency devaluations, but treasuries do not. So I am not a fan of treasuries in this environment, but US stocks should be fairly resistant except for their dependency on the US economy, which could be disrupted in a currency devaluation.

Both of them are doing it under pressure from the US to reduce how much debt they owe.

Many of these securities do not have a secondary market that isn’t in the US. Push comes to shove the US can block a lot of these trades.

> Push comes to shove the US can block a lot of these trades.

If you really want to see a re-run of 1929 that would be the way to get it.

> Both of them are doing it under pressure from the US to reduce how much debt they owe

Citation please?

For one, they can stop feeding Microsoft and other American conglomerates and develop Free Software alternatives.

Ok, but that doesn’t answer the question how do you cash out on $8 trillion dollars and convert them into another currency.

India and China are buying gold: https://www.msn.com/en-us/money/markets/india-and-china-move.... Good time to be a gold bug.

There's literally not enough gold in the world to make a difference at those scales. And while gold can serve as a (relatively) safe store of value, ultimately investors need to earn returns and holding gold has negative cash flow.

You sell into the market and buy a replacement asset. Easy peasy. No need to sell all at once, you simply change your strategy to invest new capital elsewhere and slowly roll off existing debt ownership.

Over time, the US will need to find someone willing to buy new US debt as existing buyers and holders invest elsewhere.

> What are they going to swap 8 trillion dollars into?

For African raw materials, Chinese commodities and components, etc - like everybody else with lots of $$. If you're paying attention, that also means higher inflation in the US.

Thanks, GOP geniuses... of course the rich, of which the admin is full of, love inflation because it makes them richer. If you complain about something, they'd blame China and Maduro, mission accomplished!

Those are thin markets, and not necessarily even open to most EU investors. Also, good luck getting your investment back when there's another coup or civil war in the target country.

Major investors have always had some level of international diversification and that will continue. But this recent EU move won't have any significant impact.

> Those are thin markets, and not necessarily even open to most EU investors... coup or civil war in the target country.

I didn't say anything about "investing" in any closed markets or target countries. This isn't complicated but I'm sensing some entrenched and overly optimistic preconceptions getting in the way.

It becomes complicated pretty quickly if you're trying to deploy large amounts of capital into small, unsophisticated markets regardless of whether you label it "investing" or something else. But you seem to be confused about how this stuff works in the real world.

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