Is it true that foreigners finance US debt?

[Hannah Bell]

The inexplicably high relative value of the US dollar, in the context of a badly-managed domestic economy that is now in recession - prompts the question...Who is actually purchasing the US Dollar and why?

...A huge portion of international trade could be more accurately described as NON-MARKET/NON-TRADE. Intra-corporate 'trade' between branches of the same (mostly US) transnational corporations. “In North America trade associated with U.S. parent multinationals or their foreign affiliates accounted for 54 percent of U.S. exports of goods and 36 percent of imports....

Enzio von Pfeil logically asks: “What is meant by "foreign ownership?...Are we talking about "pure" foreigners, or also about U.S. citizens as well as MNCs with overseas financial vehicles?

What, he says, do U.S. MNCs do with at least a portion of all of that money they are making in their fabulously successful overseas operations? Optically, there is an extremely good "fit" Between the overseas investments of U.S. MNCs and "foreign" ownership of America's federal debt.

This suggests that plenty of U.S. government debt is held legally by American MNCs in legitimate foreign tax havens.” <1>


http://econospeak.blogspot.com/2008/12/is-it-true-that-foreigners-finance.html


And since a decent chunk of the "Chinese miracle" was financed by FDI & joint venture, this throws an interesting light on the meme of "the Chinese owning our debt".

Hall of mirrors, "the economy".

[Captain Hilts]

1. Yes!

[Warren Stupidity]

2. If they own us are they 'foreigners'?

At what point in time do we merely accept that we are a province of China?

[jwirr]

3. China, Japan and the UK are owed the most with many other countries

owed a small amount each. One very interesting debt is to Oil exporters - we owe them 5.7%. I cannot give you the link to this because I do not know how but it was here on DU: 4063605 Who Owns Our Debt?

[Hannah Bell]

4. kick

[Hekate]

5. Welcome to the People's Republic of Capitalist China. nt

[pork medley]

6. It's all a racket, is what it is

Here's something you might find useful: Super Imperialism: The Economic Strategy of American Empire (free in PDF format, in case you don't feel like paying a small fortune to learn about US monetary policy)

Michael Hudson's in-depth and highly controversial study of U.S. financial diplomacy explores the faults built into the core of the World Bank and the IMF at their inception which -- he argues -- were intended to preserve the US's financial hegemony. Difficult to detect at the time, these problems have since become explicit as the failure of the international economic system has become apparent; the IMF and World Bank were set up to give aid to developing countries, but instead many of the world's poorest countries have been plunged into insurmountable debt crises.

Hudson's critique of the destructive course of the international economic system provides important insights into the real motivations at the heart of these institutions - and the increasing tide of opposition that they face around the world.

[Hannah Bell]

7. looks interesting, thanks.

[Hawkowl]

8. Look for more Chinese dollars

China has announced its intentions to "devalue" its currency. This means the yuan will be worth less value relative to the dollar. So given the opportunity, more Chinese will purchase (demand) dollars, pushing up the value of the dollar. The way to purchase dollars is by buying U.S. government bonds. Many other countries will seek to devalue their currencies, thus increasing the demand for dollars and the U.S. will have plenty of buyers for its bonds at 0% interest rates. Because 0% beats a negative interest rate which is what you get when you have a yuan and China just announces a decrease in value of 6% (negative 6% interest rate).