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Home Publications Blogs Beat the Press It's Supposed to be Funny, but Do We Really Need to Bring China Into the Debt Ceiling Clown Show?

It's Supposed to be Funny, but Do We Really Need to Bring China Into the Debt Ceiling Clown Show?

Wednesday, 13 July 2011 16:25

That's what folks should be asking Jon Stewart. The United States as a country owes China money because it has a trade deficit. The trade deficit means that United States would be borrowing from China even if it had a balanced budget, as for example was the case in 1999 and 2000. The fact that China happens to hold a lot of Treasury bonds simply is the result of what U.S. assets they choose to hold. They could, and do, also buy private bonds, stock and other assets.

Of course the trade deficit is high due to the over-valued dollar. This in turn is partly the result of the fact that China and other countries have a policy of keeping the dollar high by buying up assets like U.S. Treasury bonds.

All of this may be way too much depth for a comedy show, but how about leaving China out of the story? We have a lot of China bashers in this country. There are reasons to object to many of China's policies (I certainly do), but do we need to throw China into the picture gratuitously? After all, John Boehner, Eric Cantor, and Barack Obama would seem to provide plenty of comedic material.

Comments (4)Add Comment
Glad you wrote about this...
written by Brett, July 13, 2011 6:20
Didn't know if you watched the Daily Show or not, but I thought that was rather dumb of Jon. It's always scary when he starts talking about economics because half the time he is wrong.

He should have used that segment to point out not that Obama was "being the adult" but that he was trying to cut Social Security and Medicare for no reason. The deficit is an entirely made up problem -- the markets are still lending to the U.S. Treasury at a rate of less 3% for 10 years. I would have focused on that, not making up things about how China wants to foreclose on us.
written by hapa, July 13, 2011 7:14
i forwarded this over twitter to the @thedailyshow. i believe they will read the message because they only get 1000 tweets a minute to that account. that's not many.
Stewart Reflects Americans' Knowledge of Economics
written by Paul, July 13, 2011 10:05
Most Americans are hopelessly confused about macro principles and have no idea how China's creditor status relates to our federal debt. I saw a similar skit on SNL get big laughs too.

Given the vast extent of confusion, Americans are easily manipulated on economic matters and fall back on what they know from personal experience which obviously has no relevance for macro.
written by Arch, July 14, 2011 3:50
Aw, come on Dean. Lighten up. It wasn't that bad.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.