Sunday, March 9, 2014

The Threat of Dumping Bonds




When the British, French, and Israelis attacked in the 1957 Suez Crisis, America was able to put financial pressure on Britain. It held many British bonds and threatened to start selling them if the British did not stop the attack. From the Wikipedia article:

"Britain's then Chancellor of the Exchequer, Harold Macmillan, advised his Prime Minister Anthony Eden that the United States was fully prepared to carry out this threat. He also warned his Prime Minister that Britain's foreign exchange reserves simply could not sustain a devaluation of the pound that would come after the United States' actions; and that within weeks of such a move, the country would be unable to import the food and energy supplies needed simply to sustain the population on the islands."

Some say this marked the end of the British imperial power and the start of America as a "superpower".

Now Russia is threatening to dump US bonds if the US imposes sanctions on Russia for Crimea.  

Hum.

12 comments:

  1. Indeed, hum. The debt bomb ticks. Jim Rickards wrote on Twitter that Russian hackers could collapse the US stock markets and banks within the blink of an eye, even faster than the dumping of debt. More hum.

    ReplyDelete
  2. The Chinese own way more USTs than the Russians, and would not like to see the value go down. So they would probably buy. The Fed can print money and buy too.

    But, if you really want to wear adult diapers, read up on EMP bombs, electric magnetic pulse.

    Sounds like hobbyists could just about build an e-bomb, (instructions online), and it would take out electronic communications in the USA.

    See http://science.howstuffworks.com/e-bomb3.htm

    I wear size 36 adult diapers, btw.

    ReplyDelete
  3. @Benjamin

    The Chinese have bought massive amounts of physical gold to compensate for the losses on USTs.

    ReplyDelete
  4. Russians have maybe 2% of total U.S. bonds outstanding. This won't make a dent. (esp. considering that the Fed will buy it with new printed dollars)

    ReplyDelete
  5. @Technologov

    The Chinese, Indians (they support Putin) and Russians together can do the job.

    ReplyDelete
  6. How about the threat that can be made against Russia's oligarchs?
    http://onpoint.wbur.org/2014/03/12/kasparaov-putin-russia-oligarchs-ukraine

    ReplyDelete
  7. Vincent, a video of Sumner explaining the Great Depression. You might find it interesting:
    http://vimeo.com/11700175

    ReplyDelete
  8. Another article you might want to read and comment on:
    http://www.themoneyillusion.com/?p=26371

    ReplyDelete
    Replies
    1. Tried to mix it up on Noah's blog but nobody really seemed to take me on.

      http://noahpinionblog.blogspot.com/2014/03/the-finance-macro-canon.html#comment-form

      Delete
    2. I tried to take you on... but for some bizarre reason only one post I make there (not to you) would print. Oh well, I'm old news anyway... you were looking for some fresh meat. :D

      Delete
    3. Cullen comments on the same article BTW:
      http://pragcap.com/exonerating-milton-friedman

      Delete
    4. Cullen is not fresh meat either. Need fresh meat. :-)

      Delete

Looking for polite debate on ideas. Never attack a person. Be nice.