and...if a foreign country won't buy the US's debt any longer where does the money come from if tax payers can't pay? We're seeing the answer to that already -- from the Fed. The Fed can also expand its balance sheet into infinity. That is another reason the Fed will never be audited or abolished. It's like carrying insurance for the government. The spending power is absolutely unlimited as long as the public can't see the numbers on the Fed balance sheet. All those zero's could get scary.
The day of reckoning is here... China Set to Buy $50 Billion in IMF Notes By MEENA THIRUVENGADAM WASHINGTON -- China is on track to become the first purchaser of notes issued by the International Monetary Fund, a move that would diversify its foreign asset holdings and could give the IMF's quasi-currency more clout. The IMF on Wednesday said China has signed an agreement to purchase approximately $50 billion in notes from the fund. The notes are denominated in Special Drawing Rights, a quasi-currency issued by the fund and promoted by China as a potential replacement for the dollar as the world's reserve currency. The agreement is the first of its kind for the fund and marks China's most visible step toward shifting its investment focus away from the U.S. Treasurys market. "The symbolism is very important here. It is no longer the U.S. dollar alone that the Chinese have access to," said Eswar Prasad, a senior fellow at the Brookings Institution and former head of the IMF's China division. Countries including Brazil, Russia and India also have expressed interest in purchasing IMF notes, whose issuance is meant to bolster the fund's lending capacity and help fulfill a Group of 20 pledge to strengthen the Fund's own capital position. Still, "For China this is particularly significant in the context of their strong desire to have an alternative to the dollar for parking their reserves," Mr. Prasad said. "Having a large stock of IMF bonds in circulation that are denominated in SDRs is definitely going to give a boost to the Chinese proposal of increasing the importance of the SDR." But with a limited market for IMF notes, Eurasia Group Associate Nicholas Consonery doesn't expect the agreement will spur sharp declines in China's purchases of Treasury securities. "At the margin they are trying to make efforts to diversity future asset purchases, but we have no expectation that this, in any immediate sense, will present a real viable alternative for China," he said. China in June held more than $776 billion worth of U.S. Treasury securities, several times the total amount of notes the IMF is expected to issue. China is the largest foreign holder of U.S. Treasury Securities. While Mr. Prasad expects the agreement won't have a significant short-term impact on the U.S. dollar, he notes the situation could change in the longer-term. "It is no longer a pipe dream for the SDR to become a serious reserve currency," he said. A Treasury spokesman had no comment
If I were reading this in a history book, I'd be laughing my ass off at this point. Poor China. A trillion or so in dollars from a debt junkie (the US) that is going over a cliff. What can she do? How about some IMF funny money? LOL. The only thing that would be funnier would be BRICnotes. I guess Euros would be funny too. Unfortunately, I'm living it instead of reading about it.