Posted by WARREN MOSLER on February 23rd, 2009
We don’t need China or anyone else to buy our securities to finance our stimulus plan. And acting like we do and going on the defensive like this is radically counterproductive at best.
And isn’t she pledged on record to helping US jobs rather than increasing exports? Yet here she’s pushing the notion that China should buy our bonds to help us resume buying their imports?
The informed position is to first recognize that imports are real benefits and exports real costs, and therefore we benefit by foreigners net saving $US financial assets of any type, as it allows us the benefit of more imports and improved real terms of trade.
And this is what happens when you are hopelessly out of paradigm:
by Indira A.R. Lakshmanan
Feb 22 (Bloomberg) — Secretary of State Hillary Clinton urged China to continue buying U.S. Treasury bonds to help finance President Barack Obama’s stimulus plan, saying “we are truly going to rise or fall together.”
“Our economies are so intertwined,” Clinton said in an interview today in Beijing with Shanghai-based Dragon Television. “It would not be in China’s interest” if the U.S. were unable to finance deficit spending to stimulate its stalled economy.
The U.S. is the single largest buyer of the exports that drive growth in China, the world’s third-largest economy. China in turn invests surplus earnings from shipments of goods such as toys, clothing and steel primarily in Treasury securities, making it the world’s largest holder of U.S. government debt at the end of last year with $696.2 billion.
China’s leaders understand that “the United States has to take some very drastic measures with the stimulus package, which means we have to incur debt,” Clinton said. The Chinese are “making a very smart decision by continuing to invest in Treasury bonds,” which she called a “safe investment,” because a speedy U.S. recovery will fuel China’s growth as well.