Krugman: Slap Tariffs On China, And Let Them Stop Buying Our Debt

Just as I got done writing about increasing popularity of beggar thy neighbor policies, a headline suggesting the U.S. could slap tariffs on China. Words like global savings glut, and the marginalizing of Chinese buying of our debt makes it seem as if such actions would not generate adverse consequences for the United States. Capital, driven by secular trends, continues flow from West to East regardless of the old paradigm or words suggesting otherwise.

As for China not buying our debt, well... they're already paring back their holdings, but between our Fed, and the global savings boom, it just hasn't been much of an issue. Yields are very close to their all time lows despite China clearly losing its appetite for USTs. And to the extent that Chinese selling of bonds would hurt the dollar then, well, obviously to Krugman that'd be a good thing.

Source: finance.yahoo.com