You are here

John Foley: America could actually shirk its debts to China

Section: Daily Dispatches

By John Foley
Reuters
Monday, May 4, 2020

NEW YORK -- With all the economic damage China wrought by covering up Covid-19's spread, why should Uncle Sam pay back the $1.1 trillion it owes the People's Republic?

To do otherwise would cause market chaos, potentially trash the dollar's status as a reserve currency and fail to slow the pandemic's course. But President Donald Trump would find it surprisingly easy to effectively renege on those obligations. And as he sets out on a re-election campaign themed on blaming China for all his troubles, it's only a matter of time before this bad idea gains wider traction.

... Dispatch continues below ...



ADVERTISEMENT

Transfer Assets and Own Gold and Silver Coins
and Bars in the Safest Way

GoldCore's mission statement since 2003 has been to protect and grow the wealth of our clients, and given growing monetary, cyber, and systemic risks, it is increasingly important to take delivery or have legal title and outright ownership of fully segregated coins and bars.

On all investment and pension purchases and gold and/or silver coin and bars transfers (from banks, ETFs, and digital gold providers) worth more than $10,000 stored in GoldCore Secure Storage in Zurich, Switzerland, we are now offering Secure Storage for free for six months and the gift of a silver bullion coin -- a beautiful, legal tender, 1-ounce Silver Eagle.

GoldCore does not report transactions to any authority, and safety, privacy, and confidentiality are paramount when we are entrusted with safekeeping of our clients' precious metals.

Please visit GoldCore here for more information about this offer:

https://info.goldcore.com/zurich-gold-silver-storage-goldcore-exclusive-...

Key information regarding GoldCore Secure Storage, our partner vaults and jurisdictions, and storage rates is here:

www.goldcore.com/us/services

For further information, please email the GoldCore team at info@goldcore.com or call our trading desk:

U.S.: +1-302-635-1160

U.K.: +44(0)203-086-9200

International: +353(0)1-632-5010



The bluntest way to void government borrowings from China is to default. That's the financial-markets equivalent of a nuclear war.

It's not easy. The Treasury can't easily see who holds individual securities, which are mostly parked in accounts at Federal Reserve banks. China buys through intermediaries, many abroad.

Defaulting would send the $18 trillion Treasuries market into conniptions, just as Washington needs to borrow heavily. Default is also technically forbidden by the Constitution.

Still, where there's a will there's a way. While America can't just refuse to pay its debts, it could instead create what amounts to a synthetic default that hits selected debtholders only. Trump could simply demand that banks halt any payments of interest or principal to any account held by a Chinese government counterparty.

Alternatively, he could freeze the assets. In extremis he could even demand they be seized. Think of it like sanctions, with China as the target. Trump could argue it's not a default, since other holders of U.S. government debt would be paid. ...

... For the remainder of the commentary:

https://www.reuters.com/article/us-united-states-china-debt-breakingview...

* * *

Toast to a free gold market
with great GATA-label wine

Wine carrying the label of the Gold Anti-Trust Action Committee, cases of which were awarded to three lucky donors in GATA's recent fundraising campaign, are now available for purchase by the case from Fay J Winery LLC in Texarkana, Texas. Each case has 12 bottles and the cost is $240, which includes shipping via Federal Express.

Here's what the bottles look like:

http://www.gata.org/files/GATA-4-wine-bottles.jpg

Buyers can compose their case by choosing as many as four varietals from the list here:

http://www.gata.org/files/FayJWineryVarietals.jpg

GATA will receive a commission on each case of GATA-label wine sold. So if you like wine and buy it anyway, why not buy it in a way that supports our work to achieve free and transparent markets in the monetary metals?

To order a case of GATA-label wine, please e-mail Fay J Winery at bagman1236@aol.com.

* * *

Support GATA by purchasing
Stuart Englert's "Rigged"

"Rigged" is a concise explanation of government's currency market rigging policy and extensively credits GATA's work exposing it. Ten percent of sales proceeds are contributed to GATA. Buy a copy for $14.99 through Amazon --

https://www.amazon.com/Rigged-Exposing-Largest-Financial-History/dp/1651...

-- or for an additional $3 and a penny buy an autographed copy from Englert himself by contacting him at srenglert@comcast.net.

* * *

Help keep GATA going:

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16