Implausible Deniability on Nostr: China is Issuing Dollar denominated debt Bonds. This is genius and significant for a ...
China is Issuing Dollar denominated debt Bonds. This is genius and significant for a few reasons but to make it short, China has become a second line of US dollars while giving countries options on how to pay those debts back.
There’s a lot of misunderstanding about China’s new US dollar bonds issued in Saudi Arabia though.
Here’s what it will and will not do:
🔹It’s NOT going to dent the dollar hegemony. Whoever gets the dollar, still must deposit them in U.S. banks.
🔹What it will do is help poor countries escape the neoliberal tyranny (“reforms”) of IMF and USA.
Example: Say, Nigeria has run out of U.S. dollar in its forex, but must pay back $1 billion this year to Wall Street.
Now, China can come and say, “Here’s $1 billion we raised thru dollar bonds. You can pay us back with oil.”
This saves Nigeria from the Vulture Capitalists of the West.
So, dollar recycling still happens, dollar is still in demand… but the predatory nature of US gets neutralized a bit.
To be effective, China must raise the issuance to a few tens of billions of dollars every year. But if’s too effective, the US will threaten with sanctions.
There’s a lot of misunderstanding about China’s new US dollar bonds issued in Saudi Arabia though.
Here’s what it will and will not do:
🔹It’s NOT going to dent the dollar hegemony. Whoever gets the dollar, still must deposit them in U.S. banks.
🔹What it will do is help poor countries escape the neoliberal tyranny (“reforms”) of IMF and USA.
Example: Say, Nigeria has run out of U.S. dollar in its forex, but must pay back $1 billion this year to Wall Street.
Now, China can come and say, “Here’s $1 billion we raised thru dollar bonds. You can pay us back with oil.”
This saves Nigeria from the Vulture Capitalists of the West.
So, dollar recycling still happens, dollar is still in demand… but the predatory nature of US gets neutralized a bit.
To be effective, China must raise the issuance to a few tens of billions of dollars every year. But if’s too effective, the US will threaten with sanctions.