Monday, August 15, 2011

Fareed Zakaria: The US and China have a pact of mutually assured financial destruction

Yesterday, Fareed Zakaria, on his Global Public Square (GPS) program on CNN, said that China, despite complaints about American debt, is not likely to stop lending us money, as Tea Party conservatives have warned. He says that the US and China have a deal of the financial equivalent of the Cold War, of “mutually assured financial destruction”, as explained in China Digital Times here

China owns about 1.2 trillion dollars of the 14.3 trillion federal debt.  But most federal debt is owned by Americans in the Social Security trust fund, pension trusts (public and private employers), and the Federal Reserve. 

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