Republican presidential candidate John McCain has admitted in the past that economics is not his strong suit. In an interview with Reuters this week, he expressed a desire for a Treasury secretary who inspires confidence and trust if he should win the White House. McCain also aid he could balance the budget by 2013 if the economy gets going and if nothing is done to harm growth.Nothing worrying about any of that.
But the odd eyebrow may have been raised when the Arizona senator got onto the dollar, which he wants to bolster, and China. “The first step that has to be taken is obviously we have to stop mortgaging our economy to China … and asking them to finance our debt,” he said. This sounds like he wants China to stop buying U.S. Treasuries.
“That I think would have the most salutary effect in the short term,” McCain added.
China owned $518.7 billion of Treasuries at last count, or 19 percent of all foreign-owned U.S. government debt. Its purchases month after month have gone a long way to keep borrowing costs down for Americans and keeping the dollar up. Economics 101 would tell you that if China did stop, rates would soar and the dollar would dive.