China Sends U.S. Treasuries a Christmas Note

Shanghai Daily reported today that it is getting harder for governments to buy United States Treasuries because the US’s shrinking current-account gap is reducing supply of dollars overseas.

Extra Christmas cheer was articulated:

“In a discussion on the global role of the dollar, Zhu told an academic audience that it was inevitable that the dollar would continue to fall in value because Washington continued to issue more Treasuries to finance its deficit spending.”

“The United States cannot force foreign governments to increase their holdings of Treasuries,” Zhu said, according to an audio recording of his remarks. “Double the holdings? It is definitely impossible.”

“The world does not have so much money to buy more US Treasuries.”

Does this story really need any commentary?  I don’t think so.