by Mike ‘Mish’ Shedlock
The Street
Every 2-3 years we hear the same foolish talk about a major Chinese sell-off USD reserves and how it will be the death of the dollar.
It’s that time again.
And of course it never happens (and never will) says Michael Pettis in a Tweet Thread.
1. …government debt holdings” would somehow “spell trouble for the US government bond market at a time when Washington is significantly ramping up new issuance”. The idea that the US needs foreign buyers of its bonds is based on a misunderstanding of both the balance of payments.
2. …dynamics and the role of the Fed. The US economy would actually benefit if foreigners reduced their holdings of US assets. Second, and more importantly, the claim that the PBoC will reduce its holdings of USG bonds begs the question in exchange for what? No other developed…