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The same thing goes for international relations. If Mozambique owes the US 10 billion dollars, Mozambique has a big problem. If the US owes Japan10 billion dollars, then Japan has a problem, because there’s no way it can force the US to do anything it doesn’t want to.
Or even France: in 1971 when Charles de Gaulle tried to call in his US debt in gold, which he was legally entitled to do, Nixon just shrugged his shoulders said “fine, then I’ll go off the gold standard.” What was France going to do? Nuke us?
Actually, most of those countries that own all those T-bonds know they are losing money by sitting on them (the yields are less than inflation), and they’ll never get all their money back. But most of them – Japan, South Korea, the Gulf States – are regimes under US military protection, in fact, with huge US military bases sitting right on top of them, so really we’re talking about protection money—in whatever sense of the term.
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