Paulson Says Foreign Treasuries Holdings Not Threat

The US holds more than $4 trillion in debt – almost $15,000 for every man, woman and child – and foreign investors hold more than half the notes. In response to congressional critics who question the strength of the US economy, Treasury Secretary Hank Paulson reports seeing no problem with foreign investors lending funds to the US. Even though US Congress controls spending appropriations, some congressional critics suggest that the debt makes the US vulnerable to shifts in foreign markets and possible interest-rate hikes if foreign nations were to suddenly sell off notes. Paulson counters that the foreign investments signal international confidence in the US economy. Japan leads with its holdings of US treasury debt, followed by China. But as Shakespeare once warned, “Neither borrower nor lender be,” because both parties face risks. – YaleGlobal