if the U.S. is the strongest economy in the world, why do we owe so much money to china?

Answer 1

It is *because* the U.S. is the strongest economy in the world that we owe so much to China. The government sells bonds to finance its spending (the war, and just spending in general since we cut taxes but didn't cut spending). Since China has a huge savings surplus they are looking for a place to put all their money and the U.S. is a safe place to put it because we likely aren't going anywhere for a while.

Answer 2

Because they invest in U.S. government securities. When our government spends more money then they collect in taxes, we have to borrow funds from willing investors. Plenty of American folks lend money to the U.S. government. They do this every time they purchase any type of "bond", T-Bill, etc. These are debt instruments of the U.S. Other countries also buy these securities because they see them as a wise and safe investment. Because other countries can buy our securities, we don't have a massive crisis for loanable funds. Just imagine if only Americans could buy securities. We would be doomed. I wish the entire debt could be financed with homeland investors, but that is not the case.

Answer 3

What makes you think that we are the strongest economy in the world? According to the Cato Institute, an economic think tank, the world strongest economy is Hong Kong, they actually practice free markets...

Answer 4

It´s because China is one the few countries in the world that doesn´t have a floating exchange rate, so the chinese yuan is tied to the dollar 32-1, which makes it impossible for the yuan to appreciate against the American currency, so because of treaties America has to import a huge amount of Chinese good, which makes our trade deficit grow all the time

Answer 5

In brief, strong economy is always dependent on manpower and cheap labor. As we know China has both these advantages, they have always upper hand in terms to manipulating the economy....there is where the story begins.

Answer 6

Because they invest their money in the U.S "T-bill's", they own 70% of them, they are funding the war in Iraq. The "dollar" fluctuates but, U.S. Banks are still the SAFEST in the world !

Answer 7

Because everything is made in China nowadays.

Answer 8

I have heard that they are lending us money to finance the war in Iraq. Yikes.

Answer 9

Perhaps that claim along with much else you've been programmed to believe is completely bogus? :))

Answer 10

Because we are so cool that we don't pay any debt back...now that is being strong.