The Chinese Bond Meme That Refuses to Die

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Robert Solow had an op-ed in the New York Times yesterday “emphasizing six facts about the debt that many Americans may not be aware of.” For example, half our debt is owned by foreigners; it’s owed in dollars, which is our own currency; and while this debt could spark inflation and soak up private savings that would otherwise go into useful investment, that’s not going to happen in a weak economy like the one we have now. CFR president Richard Haass tweets that Solow isn’t pessimistic enough about rising interest rates and the “ability of a hostile foreign govt to pressure US,” but Dan Drezner thinks that, if anything, Solow is painting too grim a picture:

As for Haass, I’m not exactly sure what “rising rates” he’s talking about, as just about any chart you can throw up shows historically low borrowing rates for the United States government. Indeed, the U.S. Treasury is exploiting this fact by locking in U.S. long-term debt at these rates. As for foreign governments pressuring the United States, the fear of foreign financial statecraft has been overly hyped by the foreign policy community. And by “overly hyped,” I mean “wildly, massively overblown.”

The bias in foreign policy circles and DC punditry is to bemoan staggering levels of U.S. debt. This bias does percolate down into the perceptions of ordinary Americans, which leads to wild misperceptions about the actual state of the U.S. economy and U.S. economic power. I’d like to see a lot more op-eds by Solow et al that puncture these myths more effectively.

This claim that China will be able to blackmail or extort America because of all the U.S. debt it owns is a zombie idea that just won’t die. The truth is that China’s holdings of U.S. treasuries give it no leverage to speak of; pose no danger to America; and China’s recent actions demonstrate pretty conclusively that they know this perfectly well. Hell, China’s share of U.S. debt has gone down for the past two years. This whole meme really needs to die.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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