Who owns the american economy

These policies were vindicated post, when Asian economies boasted a relatively speedy recovery. From a national perspective, China buys U. The central bank must purchase U. Treasuries and other foreign assets to keep cash inflows from causing inflation. In the case of China, this phenomenon is unusual.

A country like China, which saves more than it invests domestically, is typically an international lender. To avoid inflation, the Chinese central bank removes this incoming foreign currency by purchasing foreign assets—including U. Around 70 percent of U. Treasuries represent a convenient, liquid, low-risk store of value. These qualities make it attractive to diverse financial actors, from central banks looking to hold money in reserve to private investors seeking a low-risk asset in a portfolio.

Of all U. Treasury securities. The secretary of the treasury is legally required to invest Social Security tax revenues in U. The Federal Reserve holds the second-largest share of U. Treasuries, about 13 percent of total U. Treasury bills. Why would a country buy its own debt? As the U. The central bank performs this function via open market operations—buying and selling financial assets, like Treasury bills, to add or remove money from the economy.

By buying assets from banks, the Federal Reserve places new money in circulation in order to allow banks to lend more, spur business, and help economic recovery. These financial actors include state and local governments, mutual funds, insurance companies, public and private pensions, and U. Generally speaking, they will hold U.

Treasury securities as a low-risk asset. These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Whether you're an American retiree or a Chinese bank, American debt is considered a sound investment. The Chinese yuan, like the currencies of many nations, is tied to the U.

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Partner Links. The USD is the abbreviation for the U. Managed Currency A managed currency is one whose value and exchange rate are affected by the intervention of a central bank.

By providing your email, you agree to the Quartz Privacy Policy. Skip to navigation Skip to content. Discover Membership. Editions Quartz. More from Quartz About Quartz. Follow Quartz. These are some of our most ambitious editorial projects. From our Obsession. China is striving for global leadership, and has the economic clout to realize its vision. By Annabelle Timsit Geopolitics reporter.