Friends + Interlocutors:

Just the other day, Trump 47 bragged about an upcoming one trillion dollar defense budget. That’s crazy in the extreme, and I imagine it is targeted at China (or Gaza and Iran?). Who do you think is going to pay for it, or finance it? China and Japan. 

But there could be a problem if China or Japan stop buying U.S. Treasury debt, like the 10 year bond. One wonders why should China help finance a military buildup aimed at itself? 

The easy solution would be for Washington to have friendly relations with China, a country which supplies Americans will all sorts of useful and necessary products. Then perhaps Washington would not feel obliged to spend one trillion dollars on “defense” and China would be happy to continue to buy U.S. Treasury bonds. Everybody wins. Or at least World War III might be avoided. 

Patrick

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