Actually it doesn’t bother me all that much, people have survived worse. It just made me wonder if the richest people could reverse the current trend.
Whatever else is being said, this is a good time to remind everyone that there isn’t actually that much U.S. debt being held in foreign hands. Even if China dumped every U.S. dollar it had, it would be a small fraction of the total supply of U.S. dollars.
This is also as good a time as any to point out that the yen is worth a miniscule fraction of the dollar and always has been, but nobody ever thought the Japanese economy was in trouble.
A currency going up or down ten percent causes a lot of headlines but simply isn’t a portent of catastrophe.
Note: the link below is to a pdf file.
Foreigners own 44% of all U.S. Treasuries, according to the Congressional Budget Office, which I would call a rather substantial holding. The CBO doesn’t give the percentage of agency and GSE* securities owned by foreigners, but does note that those holdings more than doubled between 2001 and 2006.
*Federal Home Loan Bank, Fannie Mae, Freddie Mac, etc.
I’m not certain what defines “trouble,” but as of 2006 Japan had experienced seven straight years of falling prices that led to two recessions along the way.