AFP:

China, wary of the troubled US economy, has already "canceled America’s credit card" by cutting down purchases of debt, a US congressman said Thursday.

China has the world’s largest foreign reserves, believed to be mostly in dollars, along with around 800 billion dollars in US Treasury bonds, more than any other country.

But Treasury Department data shows that investors in China have sharply curtailed their purchases of bonds in January and February.

Representative Mark Kirk, a member of the House Appropriations Committee and co-chair of a group of lawmakers promoting relations with Beijing, said China had "very legitimate" concerns about its investments.

"It would appear, quietly and with deference and politeness, that China has canceled America’s credit card," Kirk told the Committee of 100, a Chinese-American group.

"I’m not sure too many people on Capitol Hill realize that this is now happening," he said.

My comment: Hardly anyone on Capital Hill or Main Street has figured this out. Most people, including our so called leaders, have no clue how economics or the capital markets work. They are finding out slowly but surely. The Chinese are long term thinkers and planners. They know that the structural imbalances in demographics and entitlements here in the US will eventually lead to the US government monetizing its debt. They are moving to divest themselves of the dollar before this happens.

John Polomny
The Real Deal