The United States Will Suffer An Economic Catastrophe

The United States will suffer an economic catastrophe when China stops purchasing U.S. government bonds because the U.S. government will not be able to pay its bills. According to Morgan Housel of the investment community, â€Å"China has indeed been a prolific buyer of U.S. debt over the past decade; in 2000, Mainland China owned less than $60 billion of Treasury debt [and] by 2010, it owned more than $1 trillion, surpassing Japan as America s largest foreign creditor.† It is hard to imagine that such a world power like the United States needs any assistance from others. For years it has been speculated that without the help of China buying U.S debt, they will be in a huge deal of problems. That is extremely exaggerated being that the U.S. have many other investors but it is important to note that China is a very huge part of our economic success. Without the help of China we can truly look forward to higher interest rates, higher inflation and crowding out private investment . I do agree that the United States needs China in order to maintain a stable economy. With out the help of China’s investments the America’s economy will become weaken by the impending high interest rates, inflation, high unemployment rates, decrease in productivity, a decline in the stock market and a country where its citizens highly rely on their help of the government. Higher interest rates are never a good idea for a growing economy because it can directly impact it. Higher interest rates can affectShow MoreRelatedMexican Economy Essay1609 Words   |  7 Pagesmoney to save Mexico? Why not just let the Mexican economy and government collapse? To calm these shock waves United States President Bill Clinton, acting on his executive order, organized an approximately $49.5 billion aid package ($20B U.S., $17.5B International Monetary Fund, $10B BIS, $1B Consortium of Latin American countries, $1B Canada) to Mexico (Department of State Dispatch, 78). 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