Last June Treasury Secretary Geithner went to China to reassure them about the American dollar.
A major goal of Geithner's maiden visit to China as Treasury chief [was] to allay concerns that Washington's bulging budget deficit and ultra-loose monetary policy will fan inflation, undermining both the dollar and U.S. bonds.And how did his audience react? Were they all sufficiently indoctrinated and ready to believe the pronouncements of straight-faced government officials?
China is the biggest foreign owner of U.S. Treasury bonds. U.S. data shows that it held $768 billion in Treasuries as of March, but some analysts believe China's total U.S. dollar-denominated investments could be twice as high.
"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.
His answer drew loud laughter from his student audience, reflecting skepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home.Here's to those who laughed loudest.