China Is Dumping U.S. Government Debt at an Alarming Rate

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us dollar cash wikimedia

While our government’s debt has been a hot topic for many years, it’s the money that we owe China that has been frightening financial analysts, especially since the crash of 2008. The fact that we are indebted to one of our biggest competitors on the global stage, does not bode well for our future. The only question is, what happens if China decides to pull the rug out from under us by ditching these debts?

We may be about to find out, since lately, China has been dropping US government bonds like hot potatoes. After the Chinese government devalued the yuan in August, their currency experienced a massive sell-off by investors who feared that more devaluations were ahead. To contain the situation, China’s central bank has been buying up their own currency while selling their dollar reserves.

And China isn’t alone either. By July, Russia had sold $32.8 billion in US Treasury debt, and Brazil and Taiwan have been dumping the dollar as well. All of these countries used to be our biggest customers. India has actually increased its holdings, but it hasn’t been nearly enough to offset what we’ve lost. Foreign purchases of US treasury notes and bonds have been in the red throughout 2015, and peaked to about $123 billion in loses last summer; the largest decline since we started keeping track in 1978. While the trend is still young, it appears that the global dollar sell-off has begun in earnest.

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Contributed by Joshua Krause of The Daily Sheeple.

Joshua Krause is a reporter, writer and researcher at The Daily Sheeple. He was born and raised in the Bay Area and is a freelance writer and author. You can follow Joshua’s reports at Facebook or on his personal Twitter. Joshua’s website is Strange Danger .

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  • NonYo Business

    The gold standard is the only standard. Anything else is monopoly money.

  • Mr Reynard

    OMG !! NATO start bombing Beijing to protect the civilians !!

  • paulgilpin

    china is selling american fiat and buying gold bullion.

  • chris

    Oh please. Missed lots of gains listening to you doomers.
    “numbers show an outright increase in China’s holdings of U.S. securities, by $115 billion in the latest 12 months, to $1.726 trillion.”

    http://www.barrons.com/articles/SB50001424052748704097904577257030958775246

  • RobertFl

    32B, 123B is really nothing.

  • Nam Marine

    Regardless of your feelings towards China, they are NOT stupid !

  • Frank

    Is the writer, Joshua Krause, yet AGAIN yelling “Fire!” when someone only lit a match?
    In these volatile times, especially regarding national economies and the perceived “economic warfare,” the world’s largest trading nations struggle to compete and retain profitability in the current global recession. Even relatively minor moves can be “interpreted” by fear-mongering individuals (i.e.: Joshua Krause) in order to spread fear and make themselves, and their opinions, relevant in some way. Why didn’t he include a factual number-based graphic that shows the actual numbers over the referenced time period? I expect that it would demonstrate that China’s adjustment is hardly worth mentioning. China has been converting (not “dumping”) their foreign currency holdings and scooping up Gold for quite a while now – nothing new.
    If you’ve been paying attention for at least the past year, you will have already taken action to protect your finances over the long decline that the economy has been experiencing. Yes, there have been short-term gains to be had, but the volatility is just too great and convoluted for the average worker to concern themselves with. When many that are still working are putting in 8 to 12 hours a day to pay the bills, who has the time or motivation to fret over stocks? The best investment that a person can make is to be DEBT-FREE and stop paying interest. After that, any extra funds should be used to increase your independence – like installing solar, wind, or micro-hydro power generating systems or a greenhouse that will produce food year-round.

  • Alleged Comment

    And??? What has this to do with Chinese takeout?

  • ccambridge

    Why do you think William devain is selling gold. That same gold silver will be stolen right from under them. Obama and de vain are best friends. This government has totally screwed us. They fabricate the next crisis and steal from our 401ks and stock holdings. This government sucks. It’s time for people to stand up for what is theirs and tell these deadbeats in government to go to hell

  • Social_Conditioning

    Not only does the US own China lots of Debt and now China is Dumping that debt. China is buying up the US, and Australia! Eventually we will be their slaves and they will be our masters.