Attack The Peg? Trump Administration Ponders Nuclear Option For Hong Kong Retaliation

Attack The Peg? Trump Administration Ponders Nuclear Option For Hong Kong Retaliation

In case anyone was curious to know whether the Trump administration is considering extreme measures for punishing Beijing in connection with the new national security law China imposed on Hong Kong, the answer would appear to be "yes". Sources familiar with discussions taking place between advisers to Mike Pompeo say some aides have floated the notion of undermining the Hong Kong dollar peg. Apparently, the idea isn't anywhere near the top of the list when it comes to the menu of options for r
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9 thoughts on “Attack The Peg? Trump Administration Ponders Nuclear Option For Hong Kong Retaliation

  1. In a world that is internalising many of the basic tenets of MMT, is it still fair to say that China wields a big stick vis-a-vis its hoard of Treasury holdings? What would stop the Fed from simply buying everything and more that China was looking to offload.

    1. To your first question: NO. Look it up. We the USA own more than half of the debt issued by the Treasury. If
      China needs to sell their holdings to raise US$, there are plenty of buyers, including the FED of course. There are things to worry about but China unloading their US treasury holding for a profit ain’t one of them.

    2. Absolutely nothing. China holds some real options like for example banning exports to the US. China would need to pivot hard to internal consumption but it would be a move. Imagine the US in 6 months with no consumer goods. Of course then China will be sitting next to an India who has absolutely no problem getting militarily involved because the US no longer cares what happens to Chinese manufacturing capacity.

  2. “Look, what happened with China with this virus, what they’ve done to this country and to the entire world is disgraceful.” What China did was indeed disgraceful: they bungled the chance to contain SARS-CoV-2 at the source in the crucial first days of the epidemic. But the last time I checked, the Commander in Chief of the United States military was in charge of protecting the country from external threats. He failed spectacularly. And this was not a fluke: His entire presidency has led up to this moment. A weakened, desperate, anti-scientific leader who has alienated his allies, is now presiding over a weakened country, unable to respond to a global rival. He probably doesn’t understand irony, but Donald Trump, the man who vilifies China, has succeeded in promoting China’s rise beyond Xi’s wildest dreams. Ban Tik-Tok in exchange for subduing Hong Kong? Sure. Declare victory.

  3. For anyone who has been around when Japan was the object of ire in the late 1980s, the specter of a large holder of Treasuries possibly dumping the market is nothing new. It is an empty threat because it is self defeating as it increases the value of the domestic currency which then causes competitiveness issues for export oriented parts of ones economy.

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