International purchases of American financial assets
grew more slowly in April
as China, Japan and Russia pared demand for Treasuries
underscoring the danger of US reliance on foreigners
to finance its fiscal deficit
…Including short-term securities
…foreigners sold a net $53.2 billion of US financial assets
compared with net buying of $25 billion the previous month
If the US government dramatically increases Treasury debt issuance
while the rest of the world’s purchasing needs fall
as global economic growth declines
should US long term interest rates rise to attract investment?
What could happen if international financial transactions
become denominated in assets other than US dollars
and Federal Reserve Note supplies exceed demand?
Chinese, Brazilian and Russian officials have expressed an interest
in developing an alternative to the dollar
as the world’s main reserve currency
in part citing the record American budget gap
China, the biggest foreign holder of U.S. Treasuries
trimmed its holdings of government notes and bonds by $4.4 billion
Russia’s holdings slipped by $1.4 billion…and Brazil’s by $600 million
Japan, the second-biggest international investor
saw its total drop by $800 million
Foreign investments in US agency debt
slumped for the eighth time in 10 months
Waning demand for Treasuries may exacerbate a jump in yields
that threatens to make it harder for the US
to pull out of its deepest recession in at least half a century
International Demand for U.S. Assets Slowed in April
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