Why is nothing happening even though China is selling our debt?

[Stannis]

http://krugman.blogs.nytimes.com/201...gs&region=Body

Remember the dire threat posed by our financial dependence on China? A few years ago it was all over the media, generally stated not as a hypothesis but as a fact. Obviously, terrible things would happen if China stopped buying our debt, or worse yet, started to sell off its holdings. Interest rates would soar and the U.S economy would plunge, right? Indeed, that great monetary expert Admiral Mullen was widely quoted as declaring that debt was our biggest security threat. Anyone who suggested that we didn’t actually need to worry about a China selloff was considered weird and irresponsible.
Well, don’t tell anyone, but the much-feared event is happening now. As China tries to prop up the yuan in the face of capital flight, it’s selling lots of U.S. debt; so are other emerging markets. And the effect on U.S. interest rates so far has been … nothing.
Who could have predicted such a thing? Well, me. And not just me: anyone who seriously thought through the economics of the situation, with the world awash in excess saving and the U.S. in a liquidity trap, quickly realized that the whole China-debt scare story was nonsense. But as I said, this wasn’t even reported as a debate; the threat of Chinese debt holdings was reported as fact.

And of course those who got this completely wrong have learned nothing from the experience.

[dannno]

Who is buying it?

[Ronin Truth]

Our dollar is still the reserve currency of the world.

[CaptUSA]

Really? Krug?

[Madison320]

Macro economic trends take time. It hasn't even been a year. This reminds me of when QE3 ended and everyone was celebrating when nothing bad happened 3 weeks later.

[acptulsa]

Good boy, Krugman. I guess you didn't get the memo that this was a secret.

Now that you've let the cat out of the bag, let's see what happens...

[timosman]

Our dollar is still the reserve currency of the world.

and we have guns to prove it

[Zippyjuan]

Macro economic trends take time. It hasn't even been a year. This reminds me of when QE3 ended and everyone was celebrating when nothing bad happened 3 weeks later.

QE3 ended a year ago. Has something bad happened?

China sales of Treasuries have not been in any significant amounts. Prices of Treasuries have been pretty steady which means somebody else is buying them. India is now holding more for example.

[dannno]

India is now holding more for example.

Well I guess that explains why they are trying to get all their citizens to liquidate their gold..

[PierzStyx]

Because people are still buying it. American debt is still considered worth the purchase, which keeps it afloat whoever owns it. The problems will come when American credit is considered worthless and no one will monetize our debt for us.

[devil21]

Good boy, Krugman. I guess you didn't get the memo that this was a secret.

Now that you've let the cat out of the bag, let's see what happens...

The timing is interesting and probably coordinated to coincide with other events. I think things are about to get very hairy overall. China announced their yuan payment system is operational.....gold yuan announcement is probably not far behind. That would be not good for dollar and dollar denominated paper.