US debt to China & WW3

[BoxingSpecialist2]

I was watching a documentary the other day that was talking about the trillions of dollars in debt the US is to China due to trade deficit and how many American jobs have been outsourced. Every year the amount owed increases and US gets further into the hole.

I had some questions; Is China eventually going to want to collect on what they're owed? What happens then and in what currency will the US make that payment? Could it be through infrastructure or ownership of assets within the US (because that is really the only thing of value they have to give)? What happens if USA can't pay?

Is a society living on credit and non existent monies like USA sustainable? And wont creditors eventually want to get paid?

What happens if US stops making interest payments to China or tries to default on the debt to China? Could this start WW3 or would WW3 start from an ideological perspective?

 

[Ambrose]

I thought you had a degree in commerce? A trade deficit is not a "debt". A trade deficit is an imbalance in trade between two corporations (there never is a balance). The corporation "China" holds F.R. "Dollars" in vast excess to what the corporation United States holds in "Yuan". T he deficit is just a record of how much more one corporation has sold compared to how much the other corporation has bought.

United States is a common law land. None but the men and women born there can ever have lawful claim to its territory or immovable assets.

 

[BoxingSpecialist2]

Thank you for the response. Economics is another subject altogether than general business or entrepreneurial studies.

Yes, well USA has both a trade deficit and is endebted to China. China as the principal creditor is happy to simply let USA keep paying interest. But will there ever be a point US is unable to pay the interest or would China ever demand the entire amount of what its owed?

Can a nation built on credit and no sort of means of self-production like USA sustain itself in the long run?

 

[Ambrose]

You may be confusing or conflating many different figures here. There is external debt, internal debt, national debt, public and private debt, A debt can be both a liability and an asset. This issue is not as simple as whatever T.V. show you watched. I explained trade deficits above; but, not foreign holdings of foreign currencies. As China has a very large trade surplus with United States, the goods sold "into" United States are paid in Federal Reserve Dollars (sometimes known as USDs). China, in accepting USDs as payment -they have no choice because the USD is the international reserve currency- China accepts "debt". But this doesn't mean China has any claim to anything other than the USD's held in the SWIFT (international accounting house) account. This "debt" accumulation from sales can build up until China buys something tangible with these USDs like gold, ships, oil, etc. There is no "repayment" to China Inc.. The US government is funded through the Federal Reserve not by "borrowing foreign currencies like the Yuan. And the assets of the American people are not collateral to the "debt" to the Federal Reserve.