Q&A: Why do foreign governments buy US Treasury Bonds?

Q: Why do foreign governments buy US Treasury Bonds?

Saudis, Chinese, Japanese, etc. own billions of US bonds. Why do they put so much money into one single investment when the payout is so little and the US dollar is on shaky ground with all the furious money creation by the Federal Reserve? Why not buy bonds from 50 different nations or just buy gold and silver? Is the US pressuring these nations to buy our bonds?

Goldsenze Answer:

The pressure applies only up to a point. What you have to remember is that all currencies are locked in a perpetual battle where the smallest fluctuations (for you and I) actually represent millions or billions of dollars for the big spenders. If I was worth 100 trillion Yen, I would happily trade 1/2 of that for 1bn dollars or 600mn UK sterling. If any one of those economies fails, I would only have lost a max of 50% of my money. If I had stayed with the Yen and the Yen had crashed, I would have lost a whole lot more. The dollar isn’t really worth any more than any other currency but it’s a good hedge bet against other currencies…

‘They’ play different rules to us, my friend.

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