American-Chinese Debt Loop

[@pearljameric]

Dude your handwriting is awesome

[@RTukka]

Thanks, Sal. I think I enjoy your videos on finance and economics more than any other subject. It's nice to have some sort of solid understanding about what's going on and why when I hear someone offhandedly mention on the news that "Chinese is devaluing its currency" or "buying up American debt."

[@Tucktasticationister]

Wow.... this all made total sense... not even joking. You are my hero Mr. Khan! Thank you.

[@superfly19751]

So this is how we got in debt!! Thanks for the detailed video. I finally understood the reason. Well, about 65% of Americans are paycheck to paycheck. It’s not that we don’t make enough $. It’s bc we spend more $ than we make. It’s a trickle down effect. Obviously it starts from the top down. We have got to change this culture. Live below your means, ppl.

[@RedWinePlease]

"Live below your means, ppl." Sounds sensible. However, does that mean you can't buy a house until you've accumulated enough savings to buy that house with cash? Not possible. Therefore, the need for credit and finance. In other words it's ok to go into debt as long as you can make the payments to enjoy the fruits of financing some purchases.

[@DrummerCam]

When you pay interest on monopoly money, the game is setup against you... Fractional Reserve Banking, making you are paying interest on the money they loaned you... except that money was made out of thin air, just digital 1s and 0s.

[@DrummerCam]

If everyone in the USA tried to pull out all their money, there wouldn't be enough money. READ THAT AGAIN!

[@NClee_offical]

Ok so this is what make sense to me.. hear me out.. Money is just a controlling mechanism. And your right money is just “1s and 0s” but if we were to continue with “living below means” they will raise taxes, or find some way to make money off the poor or the ones “living below means”.. They’ve done it before.. especially if no one buys their debt.. so living below or above means would still play into societies money game.

[@mikedrop3812]

The bond has a Price you idiot yield goes down in price of bond . Yeild goes down because the price to buy the bond is high

[@TreachMarkets]

So is it possible to buy yuan, get yuan free? (couldnt help myself)

[@invalidusername_5101]

Underrated 😂😂

[@jcorrea6515]

Omfg 😂😂😂😂😂😂

[@jcorrea6515]

How doesn’t this comment have more likes 🤣

[@KingVikram]

@lianghaochen Yes, that's correct. Korean money is called Won. Chinese money is called Renminbi and measured in units of Yuan (and some others like Jiao, Fen etc.). Renminbi is most widely distributed in terms of Yuan hence Chinese money is effectively called Yuan. And I believe Sal is saying Yuan even if the pronunciation is being heard as Won. He even wrote down Yuan on the screen if you notice it.

[@texasray5237]

He may have written yuan, but he never said yuan.

[@TorySlusher]

It's just an international credit default swap. The military becomes the insurance company.

[@scorpion12369]

Insurance company combined with a collections agency. You see it in organized crime as well. They can't use the judicial system to collect debts, so they must create their own methods.

[@daveconrad6562]

​@@scorpion12369it's basically land pirates

[@Naffy2011]

Wouldnt printing of Yuan lead to inflation? All countries can do this, print and buy USD.

[@sourabhmane8122]

Yes it will cause inflation in china at normal but as china is self sufficient as there domestic production easily meet there needs.

[@samsonsoturian6013]

China deliberately devalues their currency to encourage exports. I.E. Chinese factories would rather sell to the US and allies where inflation is lower than take Chinese Yuan.

[@0ejmusik0]

He's a good teacher, just wish he didn't repeat himself so much (e.g. "print yuan... print yuan... print... ... yuan"). I personally find it hard to listen through a whole tutorial when he continuously speaks in this manner. But like I typed previously, he's a good teacher. Also, he is very generous to provide this service. Just some constructive feedback from the peanut gallery.

[@ojd3708]

Great video, how high demand for US dollar lowers interest rates for US government and US citizens

[@郑诚-l8u]

I think one important thing of why China can do this: keep current account surplus without incurring domestic inflation and appreciation of yuan is Chinese private sector has a relatively high saving rate. People are not using money to buy consume food, car, luxury etc....so not much inflation in core CPI. But instead people buy real estate, so the price just rocketed. that's kinda side effect.

[@dominikb12]

+ one more effect - buying more 10 year bonds "flattens" the yield curve an thus depletes the difference between short term borrowing(for the bank) and long term lending(for the bank) an being so the banks are not so "willing" to lend because they don't reap the profit they usually could on "bigger" short-long term difference.

[@ryani.7027]

You didn't explain the role of the US Federal Reseve and why they print money to oblivion

[@MrNaufan]

outstanding move

[@5astelija75]

I think this video doesnt really focus on the important bit. In economics, money is just a tool. What a nation should seek is not (loaned) money but productivity, jobs and growth. The important *net effect* here is that undervalued yan boosts chinese exports, which essentially moves unemployment from China to the US and other nations with a floating currency.

[@jorjiang1]

if you think one step further, employment is just a "tool" as well, what we need is just productivity

[@MahendraSingh-te3fm]

If you observe closely this cycle you will notice 2 things:- 1. China is printing more money without creating inflation in its economy. 2. China is getting repetative customers for its products which in turn increasing its foreign reserves with the same rotational US dollars.

[@fredericp64]

Very nicely explained thanks!

[@PhilipK100]

I hope you've more videos on this topic on the way... I've been looking for this sort of thing since 2008 - well done Sal... I wonder does the US Government ever pay some or a proportion of their debts back at certain intervals and what effect that has on money supply from both China and USA? Again thanks for educating me :)

[@martindinov932]

T-bonds, T-notes and T-bills pay interest at differing times, and they mature at different times. When one of these securities matures, the issuer needs to pay back the principal. Along the way, the issuer (US treasury) is paying interest to the buyer (e.g. China).

[@CaravaggioRoma]

Excellent basis to understand better Richard Duncan's The dollar crisis.

[@amoxintubeu]

Basicly, the US sells the paper a.k.a. US dollars in exchange for goods from other countries. Most countries are very happy to sell cheap stuffs to the US. So, it causes the US burden with trade deficit, and the US is no longer competitive in terms of manufacturing and price. American people still enjoy consumption while the trade deficit is tremendously widening. I don't know what will happen at the end of the day if China, S. Korea, Taiwan, Japan, Singapore stop valuing the dollars.

[@universityofknowledge5848]

If Ai learns how to walk then what happens ,if Ai is taught to trade in an inflated economy??????

[@jccarbunkle]

c'mon the chances of that happening are yuan in a million

[@leonardolage7061]

They actually inflate the supply of yuan to devalue it. Inflation is expansion of money supply, not rising prices. Rising prices is a consequence of the devaluation of maney through inflation

[@theinvestor5601]

It is a nice basic level video but stops when it starts getting really interesting. The question becomes which situation is better to be in. China might be contributing to low interest rates and the video states that China lends to the US to buy Chinese products. There is a flip to that though. The US produces its own currency. They owe dollars, not gold, Yuan, etc. The US can print dollars. This does not lead to inflation getting out of control since there is an increase in goods and services. So the US is giving China a currency which it produces and getting all the real stuff in return. China is getting bits of paper. What happens in the event that China dumps their treasuries? They probably can't. What would be the consequences for China if they did? Even if they did, those treasuries would then get bought by someone else, Germans, Japanese etc. Which situation would you rather be in? Shame the video stopped when it did. I would love to hear his opinion taking these thoughts into account.

[@elac1256]

I've always wondered about the "What if the Chinese try to dump their Treasuries?" scenario. Can't remember where, but I heard that the Treasury or President (can't recall which) can actually bar them, or anyone for that matter, from selling. Of course, were that to happen, the question then becomes how other market participants would respond.

[@TribuneAquila]

These “idiots” who keep buying treasury bonds do so because they are pretty much guaranteed return on investment, as long as confidence in these bonds remains high, and it will as long as the as us GDP keeps growing, then people will keep buying treasury bonds. China is trying to keep its currency’s value low so the us will buy more of its product, incidentally it’s also helping the us economy as well. A win win for everybody. We’ll see if it all implodes, but, and I’m making an assumption here, seeing that China is still a developing nation it likely still has room to expand its industry and diversify its industry as well. This all is boosting their growth by allowing them to hire and educate more workers. So I don’t think China will “wake up” because they’re already making a good move. I know credit seems very scary but it’s not only the currency of the present but also the currency of the future.

[@inklingboiyee6975]

China CAN'T stop. If they do, then the currency gets appreciated too much for their liking, then the economy may fall apart. But from a US perspective, everyone will have a higher interest rate and less money in their pockets, so it's probably not popular in the US either.

[@alenpaul2523]

Good video

[@jchien]

let's not forget the dollars the chinese central bank buys with the yuan they print are also printed freely at will by the U.S. central bank - the fed.

[@jorjiang1]

but the product it sells to americans for printed usd are nice and real

[@mr.p3567]

I buy Chinese products, very often. I really like Chinese style food also. To each their own, I guess.

[@ITILII]

@insanemagicguy spend more and more wars, though the US has not declared war since 1941 (and a declaration of war voted by the Congress is required under the Constitution), but taxes are on the way up

[@Franklin8491]

I'll try to answer my own questions: "Why are they piling up all those dollars?"- Initially, their goal was to build up their industries by increasing low priced exports so as to drive out competition - but now I think the reason is mostly political. - China is a nuclear power and we owe it a lot of money - making it less likely that we will try to impose our way of running the world on China - As to final question re interest rates, google "sterilization bonds" and "china"

[@texasray5237]

When China decides the time is right (feng shi and all that) we'll see a sudden surprising assertiveness. No direct military aggression but firm insistence concerning Taiwan, the South China Sea, and other geopolitical issues. A sort of Chinese version of the Monroe Doctrine; The US will be politely invited to get out of Asia. And the US government and military will have by then been already fully bought out by China. Israel with its measly 3 billion dollars per year of bribe money (furnished by the generous US taxpayers) will not be able to compete. It will be out of their league.

[@deniskatashkentskiy]

the chinese control the world xD Thanks a lot Sal!

[@thejaroop1678]

Demand & Supply Markets!

[@steve19745]

supply and demand combined with value of the dollar depicts whom has control over the past 30 years nafta and bill clinton sunk the usa now we demand a fair playing field everybody calls the president a scumbag cause they like sending our jobs to china and giving everything away

[@mahendraomg]

After 10 year, we are back to situation same

[@aakashkrsinh]

I have a question--- he said that china prints Yuan and the use it to buy US Dollars in open market operation. Why don't developing countries with current account deficit/crisis print their currency and use it to buy in open market operation to buy USD. But they can't/don't do that. WHY NOT ?????? anyone.

[@东皇太一-k7y]

let's not forget the dollars the chinese central bank buys with the yuan they print are also printed freely at will by the U.S. central bank

[@TribuneAquila]

Yeah every country that has its own currency has a central bank that can freely print money at will, that’s modern economics. This is also why central banks closely track how much currency they have in circulation, and it’s why central banks are usually in charge of instituting monetary policy so they can control inflation by changing the money supply.

[@samsonsoturian6013]

Not exactly. Both sides only print as much as they think will keep currency stable and hit inflation targets. China deliberately sets their inflation higher than the US to encourage exports to the US. I.E. China's factories would rather take payment in dollars than yuan. The US, on the other hand, targets 1-2% inflation to encourage people to invest or spend rather than hoard cash.

[@willstatmen9591]

a hat and mustache! he sures know how to make learning fun! huge love from china! 🇨🇳

[@philkeyouz2157]

The question is what happen if they continue to buy US $ but stop buying US bonds ?

[@tinajackson3709]

My confusion is the problems for China and America are not solved. Whether America would pay off with Yuan? If not, How will China resolve foreign reserve problem? And for another thing, America needs to pay extra money for the US dollar debts .So, it means America is trapped into debts

[@Franklin8491]

@daynvattah But what do the Chinese expect to do with more than a trillion dollars which they have already accumulated and continue to accumulate with no end in sight? - If the U.S. government raised taxes so that we were running a surplus, and invested the surplus in Chinese bonds, people would think we were nuts.

[@texasray5237]

Think what you like. The Chinese are not nuts. They know exactly what they're doing. But the US doesn't have a clue. It's still pursuing the utterly failed PNAC plan.

[@HolloMatlala1]

Oneday they'll understand the bigger picture....And effects of the great firewall in an A.I/ 4th Industrial World comming up on the Next Episode

[@44Mat]

With Time at least This year's Davos made an Impact.

[@Franklin8491]

This long winded repetitious explanation, leaves out some very important things, such as: Why are the Chinese doing this? - Why are they piling up all those dollars and letting the U.S. government spend them rather than spend them, themselves? and What is the effect of the printing of vast quantities of their own currency by the Chinese. (Its inflationary, so the Chinese borrow some of the printed currency back using "sterilization bonds" - which increases Chinese interest rates.

[@pearljameric]

He explained that they are doing it to keep Americans buying their cheap products.

[@S0up3rD0up3r99]

debt > actual money the monetary system is bound to collapse.

[@samsonsoturian6013]

Vhut? Hoarding bonds is better than hoarding cash, but that has nothing to do with this.

[@leoneo]

@Franklin8491 one more thing: if you have been poor for most of your live, then suddenly better days are coming, you could either spend all the money or saving them because of your past experience. And China is clearly doing the latter.

[@dhavalgada2171]

Video is too slow paced. Could have been a slide.

[@johnybravo5667]

The only problem with this is that US debt is growing.

[@AlbertoGarcia-qd3wz]

Thanks a lot for your very clear videos ... can you pls explain the US - China debt situation ...we in our house and our friends can not understand this matter ... Why If USA owns a bigger amount of Chinas debt .... than....the amount of US debt that Chinas owns ... why the """ ecuation """ has not being solve yet ... If You borrow 10$ from Me .... and I borrow 15$ from You .... in my mind ... only I am in debt with You ... for me the difference cancels inmediatly at the moment You lend me the 15$ we were talking about ...every body likes to have small debts ... apparently countries dont ... is it different with contries ... plus we hear rumors that the Chinese are not paying as they should ...pls if you can explain tihs Alberto

[@texasray5237]

US treasury bill are no safer or more secure than dollars. They are subject to the same inflation. And when the US defaults (as it certainly will) the bonds will be as worthless as the dollars.

[@samsonsoturian6013]

The bonds of any country is just as safe as the cash from that same country. the difference is the yield on government bonds is always slightly higher than the anticipated inflation of that country's currency simply because no one will buy them otherwise. And there's no sign the US is defaulting. Heck, we didn't default even during the Great Depression and the world wars, a time period so bad that all our economic data looks twice as good if you exclude it.

[@texasray5237]

@@samsonsoturian6013 The only reason the US has not already long ago defaulted is that there was always some sort of mechanism that allowed US debt to be dumped onto other economies. These involved the issuance of Federal Reserve Notes, the floating of the dollar, loans to poor countries that were tied to intentional inflation, debt vultures, and finally the imposition of the dollar as the worldwide reserve currency. None of these tricks work anymore so now the US wants a reset, (a pardon of all international debt and a new global currency). Ain't gonna happen.

[@jchien]

@aswayb why don't u just fast forward the parts where he repeats himself for the benefit of first time viewers on the subject like me.

[@curlygurl8377]

China is so smart

[@cmacctron7787]

Its a good vid ... I just can't listen to him repeat himself over and over again

[@WaSabii727]

The US dollar isn’t the US dollar?

[@etf42]

doesnt buying US debt increase the supply of dollars and further weaken the yuan?

[@SylentLight]

he said that like 10 times

[@deathless3518]

They print Juan

[@teqnkka4403]

What about inflation. What about other banks being back stocks gold and also treasuries. It's not just China, It's back and forwards the entire world no?

[@batroli5667]

China's Yuan is controlled by the government so the rate is constant which is 1:15 they do that by abusing a little clause in their constitution which states: "China Shall not be influenced by the any capitalist system" [not exact but pretty darn close]

[@rainydayx17]

The incorrect pronunciation is really distracting for people who understand Chinese. Yuan sounds more like yu (you) - en (like in the word end)...not "won."

[@joebauer9423]

It isn't that distracting

[@imalaughimacry480]

Is the yuan backed by gold or is it a fiat currency ?

[@moazim1993]

I'ma laugh I'ma cry fiat

[@wisdom1224]

The flim flam is real. Fascinating

[@dylanzhu7778]

So what does China central bank get out of this? i mean whats the point of doing so, buying a bunch of t-bills and lowering its yields, it just doesn't make sense. I can only guess its Chinese government doing US gov a favour in exchange of some trading benefit, and the Chinese might think US will increase its rate anyway and so is the USD/CNY, so that they can sell the bonds and earn a spread.

[@texasray5237]

Unlike most of the world China's central bank works for China, not for the Rothschild globalist vampire empire. What China gets for its patience is time to build itself up to superpower stature while the US dollar empire crumbles. The time will come when China takes over the world leadership role.

[@texasray5237]

China is playing master level chess. The US is playing checkers, and very badly at that.

[@elac1256]

"What does China central bank get out of this?" It allows the Chinese gov't the ability to manage its population. The 'money' (and jobs) is/are simply a tool(s) used to manage citizens' behavior.

[@steve19745]

they get zero cause the usa will never pay it the fed reserve is resonsible

[@TribuneAquila]

As it is stated above, China is doing this to keep the value of its currency low to cheapen their products on the global market. This helps them grow their economy and employ and educate more of its population into modern industries. As the video states it’s a win-win for everyone, and don’t pay attention to the doomsayers, the US dollar is still the base currency for the world and still has the largest GDP in the world. China’s not trying to cause the downfall of the us, it’s simply trying to help itself by contributing to the global market.

[@JoesMonkeyLand]

@ceresWar Why don't you just respect someones opinion? Not all people learn the same way.

[@seandonnelly7922]

the content is good but I can't get over all the repeating. video would be half the length without it.

[@staticbb]

what do they print?

[@mikedrop3812]

That’s how our bond market works and lower interest rate means less money being paid back so us govt benefits by narrowing at low interest. Your dum govt bonds have a fixed yeild

[@dkkeyz8815]

And when china cashes in the bonds?

[@batroli5667]

[America economy go "boom kablaui kah ahhhh taaa"!]

[@batroli5667]

don't give them ideas

[@PhilipK100]

First comment! This makes more sense than ever... Thanks PhilipK100

[@aubriannescheldt8181]

SALMAN!! The last part of your video is wrong!!!!! The US is an Autonomous Currency Issuing nation. It can create dollars at any time. A debt is not a true debt if it is denominated in a currency you can create at any time. This is why US debt is default free!!!! This is why the Chinese are so willing to keep buying Treasuries!!! Modern Monetary Realism.

[@5astelija75]

Lol, no. Paying off debt by printing more money would cause hyperinflation.

[@NathanRyanAllen]

5astelija only if the economy is at full capacity. As long as each dollar created has a mean, inflation won't happen. Also important to realize that most money isn't "printed" but digital.

[@ThePeterDislikeShow]

DBCG Don't Buy Chinese Goods.

[@leoneo]

@Franklin8491 first people like horting money. why do all the rich people wanna become even richer when they already have 100 of millions or more? second there you go again, if US government would do that people would go nuts. Chinese wont because of the saving rather than spending mentality. Even though the living condition should be better than what it is right now, peoples lives are getting better day by day, BECAUSE of the currency policy taken by the Chinese government.

[@user-mc9649]

Who will take the Yuan & give them dollars? Everyone is holding dollars

[@texasray5237]

Yuan (yu an) not wan.

[@soul-shaman]

You print YUUAAAN

[@hitek5000]

this therefore ruins good paying us manufacturing jobs, giving us citizens less money to spend relying on more debt which they cant pay back, therefore creating more public debt that these same citizens eventually can't pay back bec tax revenues will also be diminished if good jobs are lost and not created, ultimately resulting in the collapse of modern civilization like we are currently witnessing given the volatility and acceleration in the devaluation of the global markets. Consumption is the fuel of this bullshit. Bec if westerners slow consuming the crazy wheel of capitalism stops and the whole thing is ruined. It doesn't help that wall st with the help of US bond holders such as the saudis the russians and the chinese hold our fates in their hands bec they are dumping us treasury bonds like crazy bec they are smart enough to know they've milked this puppy (U.S.) for all its worth. Every drip,

[@mikedrop3812]

USA has china’s money that we use in trade and is bussiness tat need CNY to pay manufacturer

[@KC-zn2no]

Is it just me or the way the guy says “woo-an” is annoying. It’s “Yuan”. 😂

[@boeing747200lr]

I like the third guy with a bucked tooth

[@leoneo]

@Franklin8491 chinese are spending them, themselves. they have been horting them for a long time because its just the asian mentality. you save rather than spend.

[@ITILII]

@TreachMarkets buy enough dollars, get USA for free

[@jatwangismyname900]

Pronunce yuan more better

[@TreachMarkets]

@60fft It's a joke (buy one, get one free... get it?)

[@rax7]

it is pronounced "Yee-an"

[@mcorleone77]

actually "yu uen" 元

[@SurfingMaster999]

Video is too long.

[@mrberry7950]

Don't get in the game if you aint bout that

[@jasoncavitt2043]

+SurfingMaster999 This video is too long? If spending 15 minutes of your life in order to grasp a tremendously important issue is too great a cost, I'd say the porn and video games have eroded the better parts of your brain. Talk about expensive... in the long run. But you are the majority now. You are ADHD America.

[@dkddkddkd007]

You don't need to repeat what you're writing while talking slowly; just write it.

[@MusicalAndTall]

@PhilipK100 You fail :)

[@good2goskee]

Not a wizard here, but when the Chinese hold so much US$, when do they determine the rate? Micro level.... if you owe too much debt to 'Sweet Lenny", he gets nervous... your credibility starts to drop. Perhaps China demands a higher rate. What if the USA devalues their $ for competative reseans? What if they decide to do business with India and Vietnam rather than China? What if they put tariffs on China to bolster their own econ? What if USA create a false flag and rip the Chinese debt up?

[@Deshammanideep]

Invest in India. We have values unlike China..!

[@thejaroop1678]

The guy in the video at 2:10 (wearing a hat) might be Arab Sheikh's..

[@daveconrad6562]

China has shorted the bonds

[@JohnRogersjunior]

They ought to at least Print 2 That's It

[@JohnRogersjunior]

Yuan or some Shit