Foreingers are dumping Treasuries

Many foreign countries are dumping US Treasuries, esp. China.

We want them to buy them. If they do not, we would expect higher interest rate. Higher interest rate means depression in housing market and that would spread to many sectors. It also means the possible switching of dividend stocks to other stocks. The Fed most likely is keeping interest rate to 1% or less hike this year. So nothing is really happening now.

China bought our Treasuries and became #1 (demoted to #2 now) to keep our economy going so our consumers can buy their products.

They do not want to kill the goose that lays the golden eggs. However, the goose is getting older with fewer meat and it could be the time to kill it before all meats are gone.

With about 3 trillion reserve, China is placing their money in One Belt, One Road infrastructure projects starting with neighboring countries via AIIB. It will benefit them and China in the very long term. When these countries are richer, they will buy Chinese consumer products and China can outsource some manufacturing to the low-wage countries. Investing is always better than consuming.