Dumping Treasuries Not an Option

ZH: The "Nuclear Option" In Global Trade Wars: Dumping US Treasuries... But Will They?
That said, foreigners don't need to liquidate everything or even a majority of their holdings: all they need to do is engage in a sharp, acute selloff which sends yields sharply higher which - as events in early February showed - would also likely led to a stock market crash. And with Trump increasingly grading his performance by the daily moves in the S&P, a sharp market drop may be all foreigners need to accomplish to force Trump to reverse.
1. The United States runs a large trade deficit because it is the issuer of global reserve currency. The deficit rises when the global economy expands because there is increased demand for reserve currency
2. A large portion of the U.S. electorate no longer wants to bear the cost of issuing reserve currency while benefits accrue to Washington and Wall Street
3. The best solution is reform of the global financial system and allow the dollar to slowly shed its role as sole global currency
4. Unless this is done, the U.S. will increasingly focus on symptoms such as trade deficits with tariffs and anti-trade measures
5. Weakening the currency works similarly to a broad tariff on imports
6. Dumping treasuries and sending the U.S. dollar lower would allow the U.S. to competitively devalue its currency

Surplus nations cannot win an economic war by hitting the U.S. currency. They cannot win with tit-for-tat retaliation unless they have a trade deficit with the United States, and those countries tend to be small fish. They can retaliate hard by hitting major exporters such as aviation and agriculture, but those are also heavily subsidized by U.S. policy. It's unclear if they can win politically. Trade wars might generate heightened patriotism/nationalism. If trade is reversed, malinvestment has accrued in the surplus nations. The more intense the war, the more intense the pain for export nations. Finally, U.S. consumption of cars (one example) is financed by unsustainable debt growth. If U.S. car consumption declines overall, but U.S. production increases, it's hard to predict how that would shake out politically.

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