Mate the federal reserve is buying US treasuries as part of QE to extract net financial assets out of the system. They are swapping treasuries for cash, theres no fundamental difference except one pay's interest and one does not.
It result's in there being less net financial assets in the system that cash can be used to buy, therefor they sit as excess reserves or are spent elsewhere.
Now, China's game is this.
They import, they manufacture and they export, with the productivity of their nation being paid by way of net savings of other currencies.
The US posts huge trade deficits, and you think thats bad for the US? Are you kidding? They are getting all the goods and services they want, Cars, electronics, etc. etc. In exchange for giving USD which can't be all that effectively used by any other countries, except for sitting as reserves, or (as is alway's done) they buy treasuries which at least pay some interest.
The US is getting a SWEET deal.
China's game is this, they import, manufacture, export and with the amount they have left, the productivity of their nation, they are using to buy up anything they can for the future when this model is not as effective for them.
The problem with all you classical economists is that most if not all of the content is based on the gold standard. THIS IS NOT THE WORLD WE LIVE IN NOW.
Basic economics will take care of the US debt model in time?
Yes Mr. Greenspan, thank you for your input, now go and learn modern monetary theory and maybe you can understand that the world does not operate on the gold standard any more and you can throw away most of your classical economics BS about issuing bonds to fund spending.
Ok sorry, I get to worked up about this subject, I urge you all to dig a little deeper and not follow mainstream thinking, don't live in ignorance.
I'll leave you to it, ADIOS
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