Re: Are you shilling for the Communist Party of China?
This is mostly incorrect.
"China does not "hold US Debt". Rather it has a lot of US Dollars in interest-bearing accounts in the United States, called "Treasuries"."
Treasuries are bonds issued by the U.S. government, specifically the federal reserve, in order to borrow money to pay for government spending. That is otherwise known as debt. Also, it's not U.S. accounts, it's accounts anywhere, mostly China, holding U.S.-issued bonds.
"The only thing it can do with that money is spend it in the United States."
That's wrong on a few levels. First, it's not money in there, it's bonds. Eventually, the bonds mature and they have money they need to reinvest, but the accounts concerned contain bonds that haven't matured. So they can't spend it because it's not money. What they can do is sell them.
"If it decides to withdraw that money from those accounts, then it would have a lot of USD sitting in NON-interest bearing accounts, and why would it do that?"
As stated, it would "withdraw money" by selling the bonds it currently has and also stop buying new ones. It doesn't do that now because U.S. bonds are generally seen as safe and it wants money more than it wants to annoy the U.S. If it did, the bonds would sell at their face value at least, meaning that China would get the interest they already earned and also push up the supply of U.S. debt on the market. Supply goes up, the price goes down, so now the U.S. has to pay a higher interest rate on new debt they issue. That might not be a problem if other countries and investors see U.S. debt as still safe, but if they don't, then it could be a bigger problem. Investors do that all the time. They decide they want to invest in something that will pay better than their bonds, so they sell their bonds. China might even do that without wanting to hurt the U.S. if they decide there's a better place to invest the money.
"As economist Warren Mosler put it, 'All we owe China is a bank statement.'"
And he's correct, but it's not the kind of bank statement which can be erased quickly if the U.S. decides to delete China's money. It's not a killswitch on the American economy, but it is something they can manipulate for leverage if they want to.
"The US Federal Government never borrows money. It doesn't need to."
They don't need to, but they do borrow. They have the systems to make as much money out of thin air as they want, but they don't use them to simply increase their account balance when they want to spend more money than they have. They issue bonds, paying interest to people who lend them money now, in order not to print as much new money. I don't understand how you're missing the point that, when they accept money now and promise to return it with interest later, they're borrowing money.
