The Long Reign of King Dollar

(Stock photo from Getty Images.)

It has been almost a decade and a half since Chinese banker Luo Ping described the hate-hug joining Chinese financial interests to U.S. financial interests: “We hate you guys.” Why? Washington’s profligacy in the issuance of government debt, which, as fundamental economics would have it, must eventually lead to a reduction in the value of the dollar—something of keen interest in China, where much of the savings, both private and government, is in dollars and dollar-denominated assets. As Luo observed, those investments could be expected to start losing value “once you start issuing $1 trillion to $2 trillion” in debt a year. 


In 2022, new U.S. government debt totaled about $1.4 trillion, or 5.5 percent of GDP, a deficit that was about 40 percent more in GDP terms than the 50-year average. The deficit is projected to hit $1.4 trillion again this year and then get worse, averaging $2 trillion from 2024 to 2033, according to the Congressional Budget Office, right where Beijing was afraid it would be. “So,” Luo said in 2009, “we hate you guys. But there is nothing much we can do.” 

Why was that? 

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