INDEBTED TO CHINA
Blanche DuBois, in the dramatic final scene of A Streetcar Named Desire, says, “I have always depended on the kindness of strangers,” as she gets taken away to be institutionalized. She’s touched in the head, you see. Why else would she rely on strangers?
And that is how many Americans regard America. We’re in debt—huge debt—and it’s terrible! (It really isn’t—see Bunk 45.) But worse—our debt is owned by—eek!—foreigners! Scary foreigners! Worse, mostly the Chinese!
The story goes: The Chinese (and to a lesser extent, other foreigners) prop up our profligate, overspending ways—purely out of kindness. A charity, really. They only do it so we’ll keep buying their stuff, giving them the advantage of a trade surplus and us the disadvantage of a trade deficit that will keep piling on and blow up on us later. (No, it won’t—see why just ahead in Bunk 48.) The view is: They hold our huge debt like a pistol to our head with their twitchy trigger fingers. And what if they decide, cruelly, to pull the trigger—i.e., stop buying our debt and instead dump it all? In effect saying, “We’re done with being nice to you, America! We’re not going to, selflessly and for no other reason, buy your dumb debt anymore!” Well, then we’d be sunk. Wouldn’t we?
This argument was particularly potent throughout 2009. As the US sold more debt during the wave of global fiscal stimulus aimed at halting the recession, there was endless talk of the world shifting away from the dollar to another ...