International Event (ex: Syria war) May Precipitate AfterShock Economy
A Wiedemer Aftershock can be precipitated via an international event. An international event can persuade our foreign creditors to stop buying our Treasury debt and dump 100’s of $billions over one day. The reasons may be political or economic or both. Purchasing US debt while a new US war begins means that the US will need more debt, will encounter slower GDP growth, thus be in a poor position to repay debt. Hence that would be a poor investment.
Politically, if the US agitates two of main creditors China and Russia over their strategic interests (such as Syria), China and Russia may for political and economic immediately dump our debt and additional $billions of US denominated securities (yes – stocks too).
Therefore please join me in tweeting and contacting our COngressiona representatives to vote NO for any military action against Syria.
As @Economics501 I tweeting yesterday to many Congressmen:
#NoSyriaWar $ will collapse. China will no longer buy US debt.
For great details please visit:
here is snippet
So what would happen if China, Russia and other foreign buyers of our debt all of a sudden quit purchasing our debt and instead started dumping the debt that they already own back on to the market?
In a word, it would be disastrous. The U.S. government will borrow about 4 trillion dollars this year.
Close to a trillion of that is new borrowing, and about three trillion of that is rolling over existing debt. If China and other big foreign lenders quit buying our debt and started dumping what they already hold, that would send yields on U.S. Treasuries absolutely soaring. And we have already seen bond yields rise dramatically in recent weeks. In fact, on Thursday the yield on 10 year U.S. Treasuries briefly broke the 3 percent barrier
For details about what an Aftershock may be please read – https://economics501.wordpress.com/2011/11/25/aftershock-economy-book-review/