15 January 2011

The End of a Myth

I am getting tired of the canard that China is a serious threat to American dominance.  They don’t even own the bulk of government debt:

I keep hearing people erroneously claim that China is funding US deficit spending. It seems that every eejit with a fundamental misunderstanding of mathematics (and access to animated talking bears) has been pushing this concept.
It turns out to be only partially true — and by partially, I mean 7.5% true. But that means the statement is 92.5% false.
The biggest holders of US debt are American individuals, institutions, and Social Security. We own more than 2 out of every 3 dollars of US debt — about over 67%. Hence, we depend far less on the kindness of strangers than you might imagine if your listen to the intertubes.

Actually, America owns approximately 68.2% of all government debt.  China owns 7.5%.  Think about that for a moment.

Also, consider that China is experiencing population decline, a housing bubble, and a currency on the verge of free-fall.  In fact, their currency has grown stronger, to the point where some American businesses have found it more profitable to bring manufacturing back to America.  They are not an economic threat.  They are in the same boat on the same sea facing the same storm.  If America is sunk, so is China.

Can we move on to something else now?

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