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.
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.
And how did his audience react? Were they all sufficiently indoctrinated and ready to believe the pronouncements of straight-faced government officials?
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.
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