Please consider the following pair of Bloomberg articles.

China Weighs Slowing or Halting Purchases of U.S. Treasuries

Chinese Caution on U.S. Debt Clouds Financing for Trump’s Tax Cut

The amount of mistaken hype over the years on this subject has simply been staggering.

Here are some Tweets from today.

Historic Headline Not

Mathematical Certainty

The US runs a trade deficit. As a mathematical certainty nations who perpetually run surpluses with the US accumulate US assets. Foreign countries do not hold dollars they hold treasuries.

From time to time countries may use those dollars for things like halting capital flight to prop up the Renminbi.


Countries may also buy other US assets. China would probably love to buy Boeing for example, but Congress would surely block such an attempt.

Meanwhile, as long as the US runs a deficit with China and Japan, China and Japan are going to keep buying US treasuries or other US assets. It's a mathematical certainty.

The Vise

Any alleged "vise" is a two-way street. The US gets cheap goods from China and China accumulates US treasuries. If, as some claim, "China is dumping below cost goods into the US", then as a matter of mathematical certainty the US consumer has benefited at the expense of China.

Some might argue that China will or should "dump treasuries." To whom? How? Let's see the math.

Someone must hold every treasury issued 100% of the time, and creditors mathematically must accumulate US assets of some sort as a result of trade surpluses.

For political purposes Chinese officials may make any statements they like. Bloomberg ought to point out the fallacies in them, but instead hypes them up, and people retweet them as if they are accurate.

Mike "Mish" Shedlock​

More Sideline Cash Nonsense From Bloomberg and Merrill Lynch

Bank of America analysts claim to have discovered a new source of corporate bond buying: High net worth individuals holding piles of cash. The analysts say there is "plenty of pent-up demand". In reality, neither the Bloomberg writer nor the BoA analysts understand how markets function.

Tracking the Amazing Junk Bond Bubbles in the US and Europe

In response to Bubblicious Debate: Greenspan Says “Bond Bubble About to Break”, No Stock Market Bubble, reader AC wants to know how to track it.

China Halts All US Ag Imports, Trump Accuses China of Currency Manipulation

It didn't take long for China to retaliate against Trump's trade war escalation. It did so by halting all US ag imports.

The Name is Bond, Long Bond

Stories about the death of the bond market have been circulating since 1992. Every one of them has been wrong.

China's Alleged "Victory Plan" Over the US Dollar

Every few months someone promotes complete silliness regarding China displacing the US. Here we go again.

50 Million Empty Homes In China, Third-Home Purchases Soar

There are more than 50 million vacant homes in China. An amazing 69% of recent purchases are second or third homes.

China Grinds to a Halt as Coronavirus Death Toll Tops 1,000

The official official death toll just topped the 1K mark but it's likely 10 times that as China grinds to a halt.

Spotlight on Emerging Markets and US Treasuries: Are Bonds Sending a Signal?

The emerging market trade has blown up. An "everything bubble" disaster awaits. Meanwhile, what about treasuries?

Bloomberg Running for President to Rebuild America

Michael Bloomberg officially announced his intention today to run for President as a Democrat.