BEIJING (Reuters) – U.S. Vice President Joe Biden on Friday said China had “nothing to worry about” concerning the safety of its vast holdings of Treasury debt, while China’s Premier Wen Jiabao gave a ringing endorsement of the resilience of the debt-ridden U.S. economy…
So, I was trying to explain the US debt crisis to young David, and remarked that the Chinese were upset with us because they hold about a trillion dollars of our debt. In simple terms I just said there was not enough money to pay them.
David replied that we should just print more money.
Reaching back to my college economics classes, I tried to explain why we can’t just print more money–and when we do why that would make the Chinese even more upset because it can devalue the dollars they are holding.
He thought… “Dad, I have the solution! Let’s just print more money and not tell the Chinese.”
Sounds silly, but then I read Joe Biden’s comments to China that they had “nothing to worry about.” I think I like David’s plan better.