Naval man to lose pay over conviction in Japan.

[Mushroom]

China Is Quietly Trying to Dethrone the Dollar

China is undermining the dollar’s global role - OMFIF

Through small steps and major developments, China is replacing the dollar

www.omfif.org

It's not going to end well for the next generations.

And how does that affect anything at all?

Does it make our assets worth less?

 

[pknopp]

And how does that affect anything at all?

Does it make our assets worth less?

It absolutely will.

 

[Mushroom]

Thirty one trillion dollars of debt. Over 40% is owned by five countries that we make interest payments to each and every year. I am not sure what your point is, but mine, quite simply is paying debt service on approximately 12 trillion dollars is absolute insanity. There should be no unsupported social programs until this debt is paid off.

Actually, the debt is almost all in the form of bonds. That have a fixed interest rate, and mature at a set date. And who actually holds them means absolutely nothing. It could be your neighbors as part of their 401K. It can be another country as part of their own assets to support their own currency. It really does not matter worth a hill of beans who holds them. All they can do with them is hold them until they mature, or sell them.

That's it. They can't "call them in", they can't use them to influence the country in any way. No more than your bank can call you up and order you to fix up your house because they hold the mortgage, or demand you get a better job because they think you should pay more. The US makes a bond, and then "sells" it, and whoever buys it buys it. And a hell of a lot of countries buy them simply because they are stable. The interest paid is not great, but they are 100% guaranteed. If you are a country, there is not much more you can invest your money in that is more secure.

Oh, and the interest is not all that much. You can go out and buy a T-bill right now yourself. An investment of $10,000 will see you collect about $500 a year for 30 years. Then at the end you can either roll it into a new T-bill, or cash it in (for the face value of $10k). Or you can invest in a T-bond. Those work a bit differently, as they do not actually pay interest, but at maturity have a fixed value. You can buy a $1,000 T-bond today, for only $100. And in thirty years when it matures you will get $1,000. Those are normally used as part of a portfolio that is secure and safe, and largely immune to inflation.

301K, money market, almost all of them are heavily invested in T-bonds and bills because they are safe investments. That way if another part of the portfolio takes a dump, the investors have not lost everything. Banks often invest in them, as it is a great way to hold assets without having to actually hold cash. And the government makes favorable considerations in taxes at the end of the year as that was a return on money loaned to the government, and not some other entity. Most interest on them is either exempt or deferred for tax purposes. And on almost all of them, they are exempt from all state and local taxes.

Invest in such and then cash them out and you live in California, you can literally laugh at the state as they try to take a chunk.

 

[Mushroom]

It absolutely will.

How?

You keep making these kinds of statements, now explain how that would possibly work.

 

[Concerned American]

All they can do with them is hold them until they mature, or sell them.

I think you misunderstand what "debt service" is. It seems to be a common American problem but not limited to Americans. If you are paying debt service, you are paying money that could be used for something productive. Do you rent a home? Lease a vehicle? If you do, you are paying money for NOTHING. Infinite Debt is a losing proposition and you can never be free if you owe anything.

 

[Concerned American]

They can't "call them in"

You are naive. The Chinese are calling them in as I type and our government is incompetent to stop them.

Oh, and the interest is not all that much. You can go out and buy a T-bill right now yourself. An investment of $10,000 will see you collect about $500 a year for 30 years.

I realize you are using a number you pulled out of your ass, but even if it was $500/yr. You DON'T collect $500--you owe a percentage of that back in taxes--to pay the debt service on more outstanding debt. I agree with many things you post, but you are totally WRONG in your understanding of the US national debt.

 

[Mushroom]

You are naive. The Chinese are calling them in as I type and our government is incompetent to stop them.

They can't be called in early. They are specifically known as "Non-callable", which means that they can not be cashed in at all before their maturity date. The only thing that can be done with them is that they can be sold to somebody else.

Period.

• Because of varying maturities dates, China would be unable to call in all its Treasury holdings at once.

How Much U.S. Debt Does China Own?

China owns more than $859.4 billion in U.S. debt. That's less than the U.S. debt owned by Japan but it only represents about 2.6% of the total U.S. debt.

www.investopedia.com

Now they can at the time the bond matures demand payment and not invest it in more Treasury Notes. No big deal, the Government just cashes them out, then sells a note to somebody else. That is literally what happens at maturity anyways. Except instead of giving them cash they give them a new note equal to the old one plus interest.

So to say it simply, that is a lie. And it does not matter, because if China cashes them out, there are other people waiting to buy the replacement bond. They are one of the most in demand bonds in the world because of their stability. The most they could do would be to decide to dump them. That would cause a small blip on the exchange market with that many coming available at one and reduce the price, but that is inconsequential as that only affects the amount they trade for, and has not a damned thing to do with the actual face value.

I realize you are using a number you pulled out of your ass, but even if it was $500/yr. You DON'T collect $500--you owe a percentage of that back in taxes--to pay the debt service on more outstanding debt. I agree with many things you post, but you are totally WRONG in your understanding of the US national debt.

Only as Federal Income Tax, not even Capital Gains taxes. And they are not taxed at all at the state or local level.

And the taxes can be deferred, which is what most investors do. So long as the interest is reinvested, no taxes are collected on them at all until they are finally withdrawn and not reinvested. That is why they are the backbone of most 401k programs. Let the money grow, and so long as the money remains invested no taxes are due on it.

I think you will find damned few that invest in Treasury Notes who simply invest once, then pull the money out at maturity and walk away. The closest to that I can think of that do that are Savings Bonds. But those are also very specific. Their maximum face value is no more than $10,000, an individual can purchase no more than $10,000 of them in a year, and they are non-transferable (except for the death of the holder). Those can not be bought or sold, period.

 

[Concerned American]

They can't be called in early. They are specifically known as "Non-callable", which means that they can not be cashed in at all before their maturity date. The only thing that can be done with them is that they can be sold to somebody else.

Period.

How Much U.S. Debt Does China Own?

China owns more than $859.4 billion in U.S. debt. That's less than the U.S. debt owned by Japan but it only represents about 2.6% of the total U.S. debt.

www.investopedia.com

Now they can at the time the bond matures demand payment and not invest it in more Treasury Notes. No big deal, the Government just cashes them out, then sells a note to somebody else. That is literally what happens at maturity anyways. Except instead of giving them cash they give them a new note equal to the old one plus interest.

So to say it simply, that is a lie. And it does not matter, because if China cashes them out, there are other people waiting to buy the replacement bond. They are one of the most in demand bonds in the world because of their stability. The most they could do would be to decide to dump them. That would cause a small blip on the exchange market with that many coming available at one and reduce the price, but that is inconsequential as that only affects the amount they trade for, and has not a damned thing to do with the actual face value.



Only as Federal Income Tax, not even Capital Gains taxes. And they are not taxed at all at the state or local level.

And the taxes can be deferred, which is what most investors do. So long as the interest is reinvested, no taxes are collected on them at all until they are finally withdrawn and not reinvested. That is why they are the backbone of most 401k programs. Let the money grow, and so long as the money remains invested no taxes are due on it.

I think you will find damned few that invest in Treasury Notes who simply invest once, then pull the money out at maturity and walk away. The closest to that I can think of that do that are Savings Bonds. But those are also very specific. Their maximum face value is no more than $10,000, an individual can purchase no more than $10,000 of them in a year, and they are non-transferable (except for the death of the holder). Those can not be bought or sold, period.

Is federal income TAX, a tax? Run along, you type without thinking and most of what you type is false.

 

[DudleySmith]

Yeah, that started during Reagan when they hired civilians to cook for the troops at bases in the US.

And Reagan was an idiot. Have any new facts?

 

[Moonglow]

And Reagan was an idiot. Have any new facts?

He did it to increase the rapid defense force capabilities and still feed the troops at US bases.

 

[DudleySmith]

And trust me, the last thing that the world would like to see would be a militarized Japan ever again. Of all the nations on the planet, that would scare me more than any other.

It's happening as we speak, as many of ou 'allies' are finding they can no longer count in us, thanks to policies like Obama's and Biden's and the popularity of the Isolationist fiction continues to be spouted by both left and right wing nutjobs here make it doubtful we will stand up to any international bullying. Japan is already building up.

 

[DudleySmith]

They can't be called in early. They are specifically known as "Non-callable", which means that they can not be cashed in at all before their maturity date. The only thing that can be done with them is that they can be sold to somebody else.

Period.

^^^ This. If they try to dump that much debt on the market, they will lose their shirts, as the price will fall significantly, as there isn't much of a market for bonds with essentially negative interest rates when the Fed is busy raising rates on their new issues. Nobody is going buy theirs when they can buy new ones at better rates.

 

[Mushroom]

This. If they try to dump that much debt on the market, they will lose their shirts, as the price will fall significantly, as there isn't much of a market for bonds with essentially negative interest rates when the Fed is busy raising rates on their new issues. Nobody is going buy theirs when they can buy new ones at better rates.

Oh, there is always a market for bonds. Even literally days before they mature. Many will still put money into them as once again it will allow them to defer federal taxes, and avoid state and local taxes.

U.S. Treasury Bonds

Market Data Center on The Wall Street Journal.

www.wsj.com

And they will not "fall significantly", as they each have a cash value no matter what the interest rate is. A 10 year $10,000 bond will never be worth less than $10,000 at maturity. Think of it as the newest silver coins the US mints. Think of the American Silver Eagle. One troy ounce of silver, it actually has a face value of $1. So even if for some reason silver dropped to 25 cents an ounce, those would still be worth $1. Hell, I jokingly told a friend who wanted to get into currency speculation that he should speculate on Disney Dollars.

But you can go out right now and buy bonds that mature on 15 January. Once again, of no real use at this point as an investment. But good if you want to sink in money with the plan on rolling it over to defer taxes. Or if you want one to say back up a 90 day loan or credit. It locks the money, and is secure. Several years ago I worked with a guy that flipped houses. And he used bonds (normally 6 to 9 month ones) to act as his security. And when they matured, he just flipped them into more 10 year bonds with 1 year left before they matured.

I knew an executive at Hughes that did that for his car insurance, and before that the guy that owned the pawn shop I worked with (which like any financial institution requires a financial liquidity bond). Both used US bonds as it saved them money, fulfilled the requirement for paying each month, and earned them interest.

 

[DudleySmith]

And they will not "fall significantly", as they each have a cash value no matter what the interest rate is. A 10 year $10,000 bond will never be worth less than $10,000 at maturity

Nah, they lose money on dumping them, especially if they dump billions of bucks worth at once. We've seen it before here.

 

[Mushroom]

Nah, they lose money on dumping them, especially if they dump billions of bucks worth at once. We've seen it before here.

The country that dumps them does. The actual "value" of the bond at maturity is completely unaffected. Which is why many would sit back and watch the street value plummet, then snatch them all up at a discount.

 

[DudleySmith]

The country that dumps them does.

Which was my point in the first place. Why you decided to snivel about it is something only you know.