China Has Divested 97 Percent of Its Holdings in U.S. Treasury Bills

(CNSNews.com) - China has dropped 97 percent of its holdings in U.S. Treasury bills, decreasing its ownership of the short-term U.S. government securities from a peak of $210.4 billion in May 2009 to $5.69 billion in March 2011, the most recent month reported by the U.S. Treasury.

China is making big moves in the bond market. It may be wise for the government to watch these developments because they may put themselves in a bind if they don't. If they allow this, that will also affect the taxpayers. Pay attention to this.

Update:

After thinking about this for the last half hour or so, this is beginning to look like a huge story. Why? The significance of what the Chinese have done is that it forces the government to start buying at later maturities along the yield curve. It will flatten the curve, but that's not the main point. The main point is that the government will start assuming more and more of its own debt. If no country nor anyone else is willing to buy US Treasuries at any maturity, which may become more and more evident as time goes by, support for the dollar may evaporate. The significance of this is the end of quantitative easing is around the corner- if not, there is an increasing risk of a dollar collapse and hyperinflation.





Update:

I am a bit amazed at the lack of attention this has gotten. It was a story with a time line of yesterday, so I must have missed it. Nevertheless, nobody else is on this story. Here's the best of them that I've found so far.