Tied to expanding monetary base? yes. But no need to highlight China as a bad guy in rolling over debt here. This thing that China is doing with rolling over debt - is precisely what the US Treasury is doing, and has been doing since 2000.
Did you know the US Treasury continuously rolls $1Trn to $1.5Trn in terms of 1-9months Treasury Bills? (The cheapest rates available to minimise interest repayments of much less than 1%).
There is no bank involved - but somehow the Primary Dealers keep fronting up to 'flip' these onto the secondary market where the FedRes buys them. No doubt using the FedFunds Rate and the Discount Window so there is no cost to them.
Due to US deficit, none of it is paid down, so EVERY YEAR $1.1Trn gets added to existing Treasury Notes debt (1-10years).
I can tell you without any doubt that a 1% rise in the USTreasury yield curve will result in a downgrade.
So is all smoke and mirrors Loki. China is playing catch up. Going to open auction for Chinese debt is going to result in a surprise for someone.
CT has a good idea who. So it's going to remain interesting for some time to come. The race to the bottom continues.
