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The Chinese are murmuring about switching their investments away from the US dollar into other currencies. What would happen to the US economy in this situation?

By Yanstari Asked Mar 30 2009 5:34AM
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by itinary on Aug 17, 2009 at 3:49 pm Permalink

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The best part is there is no country in the world China can go to comparing US. There is no country in the whole world consumes as much as US would. There is no market like US.

26% of resources of this world is consumed by our rich nation.

China will not go anywhere. Also US with it's might will make sure nobody will receive China too if they attempt to do it.

America has a combination of huge market with muscle power and civic citizens. This is the beauty of this nation. Today it is combination of lots of cool things a materialist superpower can have.
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Answer 2 out of 5

by halbhh on Apr 7, 2009 at 11:11 am Permalink

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Slightly higher interest rates, but not by a large amount. I'd guess about 0.5% higher in general, mortgages and treasuries. Note that these rates will rise some eventually (within years at the longest) even if China continued to by our bonds.
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Avatar halbhh Apr, 07 2009 at 11:21 AM
One reason rates will rise no matter what is that they are historically low and this cannot stay this way forever.
But the reason China doesn't decisively control rates past about 1/2 or 1% is simply that the entire world can and does buy US treasuries, not only one nation.
The US savings rate has changed from -1% to +5% in just a few months. Guess where this money is going. that's right, many Americans are now investing in US treasuries (and even the part that is in CDs for example, which can be partly put into US treasuries; there are many avenues for this investment).

Answer 3 out of 5

by Twisted Taco on Mar 30, 2009 at 6:12 am Permalink

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Considering the US is now owned by China, it wouldn't be a good thing. The entire country would go bankrupt and collapse like Latvia and Greenland have done
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Answer 4 out of 5

by Ron-T on Mar 30, 2009 at 5:48 am Permalink

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i believe they have around $2 billion in there vaults and the american goverment are running the printing press and churning out the dollars which i am sure will have a negative impact on the usd,this could be a reason the chinese are murmuring about switching.
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Answer 5 out of 5

by Anonymous on Apr 7, 2009 at 10:43 am Permalink

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Of course they are complaining.The problem is.Changing investments would lead to problems for them as well.How many countries could shoulder that kind of finacial burden without risk to themselves?....By doing that they would ruin the dollar.Making the investments they hold worth alot less than they are now.The tightly regulated Yuan might not appear to suffer,but,all thier dollar based investments sure would.Is My opinion.Doesnt make it right or wrong.Just mine.
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