Canada increased holdings of U.S. debt by 27% last year (www.visualcapitalist.com)

submitted 17 hours ago by yogthos@lemmy.ml to c/canada@lemmy.ca

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[-] yogthos@lemmy.ml 2 points 13 hours ago

In what way, how could Canada practically threaten the US with this?

[-] theacharnian@lemmy.ca 5 points 13 hours ago

It gives us a "nuclear button" where we can threaten with massive sell-offs that could tank the value of US bonds. To counter it they would have to basically raise interest rates and/or print money. Sure it would hurt us too, but not before hurting them more. Now if you also place this in a context of coordination with other debt owners (Europeans, Chinese), we can really hurt them.

[-] yogthos@lemmy.ml 2 points 12 hours ago* (last edited 12 hours ago)

First question is, massive sell off to whom? Second, it's obviously going to have a have a huge impact on our own economy. It's not going to hurt them more because the US is a much bigger economy than us. Can you show me a historical instance of this sort of threat actually working in practice?

If this gave any actual leverage then China would be keeping their bonds instead of doing a fire sale right now. The only countries buying up US bonds are the ones that are under the US thumb right now.

[-] kent_eh@lemmy.ca 4 points 12 hours ago

First question is, massive sell off to whom?

Any bonds that are at their due date are required to be paid out by the US treasury.

Most holders of US bonds have a revolving collection of them, so some are coming due on a regular and continual basis.

Admittedly, that's not a mass sell-off, but it still puts pressure on the US if everyone starts doing it .

[-] yogthos@lemmy.ml 3 points 12 hours ago

Sure, if everybody started dumping US assets in a coordinated fashion that would hurt the US, we both know is not going to happen though. So, in reality Canada is simply making itself more dependent on the US. There's no need to do mental gymnastics to pretend that this is some 4D chess.

[-] theacharnian@lemmy.ca 1 points 11 hours ago

I don't pretend to know anything about international finance. I'm repeating what I've heard.

[-] yogthos@lemmy.ml 0 points 10 hours ago

It's also worth thinking about what you hear as well. People say all kinds of things, and a lot of time it's just nonsense. As I pointed out, if holding US debt gave any actual leverage, then China would be doing that instead of selling it off now.