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Foreigners Sold U.S. Assets

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Foreign investors were net sellers of U.S. long-term portfolio assets in August as China reduced its holdings of Treasuries to a six-month low.

The net long-term portfolio investment outflow was $8.9 billion after a revised $31 billion inflow in July, the Treasury Department said in a statement today in Washington. Net sales of U.S. equities by official holders abroad were a record $3.1 billion, and China lowered its holdings of U.S. government debt for the second time in three months, the department said.

The Treasury data cover a period before the Federal Reserve opted against reducing its monthly bond buying at a Sept. 17-18 meeting. Since then, a 16-day, partial government shutdown slowed growth and created a pause in economic statistics releases that is expected to delay the Fed’s first tapering until March, according to a Bloomberg News survey of economists.

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Well, China does use it's investments in the US as a means to manipulate it's currency. There does come a point though where the risks outweigh the usefulness of that, however. I can see the world gravitate towards a new reserve currency if Congress keeps on its path of jerking around with the economy and debt.

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I can see the world gravitate towards a new reserve currency if Congress keeps on its path of jerking around with the economy and debt.

Saddam tried and we all know what happened there.

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Saddam tried and we all know what happened there.

Saddam only tried to not trade his oil in dollars.

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Well, China does use it's investments in the US as a means to manipulate it's currency. There does come a point though where the risks outweigh the usefulness of that, however. I can see the world gravitate towards a new reserve currency if Congress keeps on its path of jerking around with the economy and debt.

Haven't the BRIC countries already done that? Brazil, Russia, India and China?

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And so what do we conclude here? The trough the statists gleefully gorge themselves on is drying up. As standards of living among Chinese continue to rise, China will more and more have its own consumption to worry about. The US consumer and our low, low prices (our trinkets for cooperating with govt deficit/malfeasance) aren't going to be their priority.

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