Contrary to what the NYT says, the U.S. does not need China to buy its debt. The Interest rate on 10-year treasury bonds is under 4.0 percent. Suppose that China stopped buying bonds altogether, maybe it would rise by 0.2-0.3 percentage points. So what? Does the NYT have an economic model that shows that this sort of increase in interest rates would be disastrous to the U.S. economy? If so, they should share that model with its readers. If not, the paper should stop making assertions for which it has no evidence. USA Today also gets it wrong.
--Dean Baker
