Yuan Oil Contract, page-59

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timber1956

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10/04/18

18:49

Post #: 32356627
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Originally posted by aldo ↑

If China were to sell, read "dump" their bonds on the open market at discounted rates then it is unlikely the US government would be able to fully subscribe their current bond issues therefore depriving them of much needed cash to finance their activities. Why would anyone pay full price when they could get an effectively better yield through buying a resale. The only option would then be for the Federal Reserve to buy the bonds with money printed out of thin air. The interest would accumulate and the extra printed money should theoretically be highly inflationary to the US economy. This is why the Chinese capacity to dump bonds is called the "Nuclear Option".

On a more realistic note though, I believe the Chinese are far more pragmatic and would be more inclined to use their Dollars to pay for oil, while building up the petro yuan trading accounts and habituate their oil suppliers with using Yuan.

Any time the hegemony of the petro dollar is challenged the the US comes out with all guns blazing.

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@aldo

"If China were to sell, read "dump" their bonds on the open market at discounted rates..."

...the US government would probably regard it as an act of war, seize their Treasury holdings and freeze all movements on their US dollar accounts.

Little known fact: the Chinese government banks with the US Federal Reserve (as do all other foreign governments transacting in US dollars).

Source: https://www.federalreserve.gov/releases/h41/current/
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0 Great analysis

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Yuan Oil Contract, page-59

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ASX Today: XJO shrugs off oil price surge for moderate Tuesday gains; RBA holds rates

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