It seems to be understood we owe China x amount of dollars that total into the billions . Well I wonder what the US promised them , for example if I take out a loan I have to give collateral , I wonder what the US put down as collateral . Anyone know or have a guess ?
2007-11-02 08:43:45 · 9 answers · asked by Anonymous in Politics & Government ➔ Government
Well, it's not a loan as one would take out from a bank. The U.S. government has accumulated nearly a $9 trillion budget deficit that it has been using to, among other things, fund the wars it fights all over the world. Japan, China and others buy large chunks of this debt in the form of Treasury bills to collect interest and allow the U.S. to continue its spending spree. Without this funding, and barring a monumental tax hike on its citizens, America would be hard pressed to pay for its domestic and military commitments and other objectives.
A T-bill is a short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations of $1,000 up to a maximum purchase of $5 million and commonly have maturities of one month (four weeks), three months (13 weeks) or six months (26 weeks).
For example, let's say you buy a 13-week T-bill priced at $9,800. Essentially, the U.S. government writes you an IOU for $10,000 that it agrees to pay back in three months. You will not receive regular payments. Instead, the appreciation - and, therefore, the value to you - comes from the difference between the discounted value you originally paid ($9800) and the amount you receive back ($10,000). In this case, the T-bill pays a 2.04% interest rate ($200/$9,800 = 2.04%) over a three-month period.
2007-11-02 09:03:42 · answer #1 · answered by David C 2 · 1⤊ 0⤋
You and I could guess about many things and still may be way off course with the underhanded deals that go down behind closed doors. We have already give them business and commerce which has helped them tremendously. So maybe that WAS the collateral. Question is what happens if the US doesn't make good on the loan. It's not like China will take the collateral because they already own it. As broke as we seem to be according to national debt I wonder if the US will simply allow the economy to completely collapse to get out from under this huge debt. I just wonder what happens when China sends out the leg breakers.
2007-11-02 09:06:27 · answer #2 · answered by Enigma 6 · 2⤊ 0⤋
No collateral. Just interest. Every dollar you have is already attached with debt. People buy the debt. They're called over-seas investors.
Now, our money used to backed by the gold standard. Every dollar bill before the Federal Reserve Act was signed by Woodrow Wilson, was backed by gold. Now, if you look at a dollar bill today it says "legal tender". Basically your money is backed by imagination and we live in a nation of credit and debt.
To learn more, I urge you to do some research on the Federal Reserve. The movie Zeitgeist, in part 3, does a fantastic explaination.
http://video.google.com/videoplay?docid=5547481422995115331
2007-11-02 09:42:39 · answer #3 · answered by Mijnn 2 · 2⤊ 0⤋
There is no collateral beyond the assests in the federal reserve i.e. the gold in fort knox. The debt is now far outwayed by any physical collateral, the US has always paid it's debts, and that continued commitment to honour it's currency debts is the main source of "collateral".
2007-11-02 08:49:41 · answer #4 · answered by Andrew W 4 · 2⤊ 0⤋
US Treasury bonds. This is how our government finances its debt. They sell US Treasury Bonds and because they have a very high rating (we've never defaulted) foriegn countries buy them. Currently Japan and China hold the most US Treasury bonds.
I don't know tthe numbers involved but if yo look at our national debt you can get a generally accurate picture. Any nation that holds as much debt as China or Japan must have at least some sort of influence, especially since we will want to sell them more of our bonds to continue financing Bush's War in Iraq. He may be not be promising anything to China. He may be promising certain rights to Iraqi oil. He may have been an influence in getting the olympic games to China. He may be giving favorable trading terms.
I don't know - but I don't beleive that China is financing us for nothing but 3 to 7 percent interest.
2007-11-02 08:57:06 · answer #5 · answered by Larry A 5 · 2⤊ 1⤋
Remember that whole Dubai(sp?) ports thing. Everyone started freaking out cause Bush was more less selling off all our ports to Islam extremists, but it fell through. There's your collateral or least some of it.
2007-11-02 08:56:29 · answer #6 · answered by sammie 5 · 2⤊ 0⤋
US Government debt is backed by the "Full Faith and Credit of the Governement of the United States of America." In otherwords, nothing. Just like our currency.
Governement debt is also in the form of bonds, which have fixed interest payments and maturity dates, so those holding them could not, even in theory, 'call in' the debt.
2007-11-02 08:53:35 · answer #7 · answered by B.Kevorkian 7 · 2⤊ 0⤋
No it is an unsecured loan, maybe the governments should file bankruptcy
2007-11-02 09:08:31 · answer #8 · answered by Anonymous · 1⤊ 0⤋
Easy...our future! Kissing up to communists to finance a war is treason!
2007-11-02 08:49:39 · answer #9 · answered by Chuck P 3 · 1⤊ 0⤋