
China Sells U.S. Treasuries to Support Yuan - randomname2
http://www.bloomberg.com/news/articles/2015-08-27/china-said-to-sell-treasuries-as-dollars-needed-for-yuan-support
======
roymurdock
Summary & Speculation:

China sells US treasuries in order to appreciate Yuan relative to USD.

Supply of US treasuries on the market increases.

Demand for US treasuries decreases due to concerns over a large enough Chinese
sell-off. Demand for US treasuries increases due to uncertainty over the stock
market. Net effect on demand is uncertain.

Assuming worst-case scenario (for the US) in which supply of US treasuries
increases and demand decreases: Yields on US treasuries increase as investors
with less demand must be compensated for taking on a riskier and more
plentiful asset.

Yields rise, and the US government must now service a higher level of debt,
pushing the deficit higher. US is forced to re balance spending, stifling
growth and economic activity in order to keep debt in line.

Bottom line: This probably won't have an effect on US economy as investors
need somewhere to park their money that is not the stock market. Also, the
scale at which China is selling off treasuries is assumed to be pretty small
($40bn/mo compared to $3.65tn total holdings).

Now if China initiated a mass sell-off of all of its US treasuries, there
would be huge ramifications. But in its current form, this seems to just be
one more way for China to slowly unravel its position in US treasuries while
playing with the value of the RMB.

~~~
strasser
"US is forced to re balance spending, stifling growth and economic activity in
order to keep debt in line."

How does the American governments NOT spending money stifle growth?

~~~
logfromblammo
You typically have to be a Keynesian (or related school of economics) to
believe that.

Governments get their spending cash from taxation and political control of the
monetary authority. In order to exert economic influence, they first have to
take some away from the actual producers of marketable goods and services.
Thanks to the way money works, if they don't expand the amount of currency in
circulation by spending what they created by fiat, the value remains with the
producers, who continue measuring their prices by the smaller amount in
circulation. In metaphorical terms, no one can listen to what you want to say
if you do not speak.

The one and only way that government spending can produce more growth than
ordinary individual spending is by ordering construction or repair of capital
infrastructure that benefits multiple businesses who would individually be
unable to justify the expense of the improvement.

Business A and business B are competitors, and they would both benefit from
roads that connect them to a highway network. A is unwilling to assume the
expense of building a road to the highway unless A could exclude B from it. B
feels the same way about A. If either notices the other building a road, they
know that money is not available for other purposes, so whoever makes the
first move could lose market share thanks to a strategic counter-move.
Instead, government G takes somewhat less than the full amount needed for one
road from each, to build a single public road that serves both equally. Both
businesses get their road to the highway, but neither had to pay the full
expense individually. Growth occurs by breaking the Nash equilibrium that was
preventing it.

That's the ideal case. Usually, government spending is no smarter than handing
a wad of cash to the village idiot, so it has no greater effect on growth than
ordinary consumer spending, minus the deadweight loss. Also, if G takes a full
road's worth of economic influence or more from both A and B, and builds only
one complete road or just a partial road with it, neither A nor B is any
better off. In order to promote growth, the government spending has to buy
something of actual value to the public, at a lower cost than the sum of costs
that individuals would pay for the bits of the "something" that benefit each
of them most.

The public usefulness of a "something" is often a matter of opinion, so the
"growth" thing is almost pointless to argue about.

~~~
xenadu02
Yours is an extremely simplistic and naive view of how the real economy works.

Government spending can be a net gain or drag on an economy but it can be a
big boost in certain circumstances:

1) When the private market is retracting the government can offset that
somewhat and create a "softer" landing. This prevents over-shooting on the
underside (think the Great Depression). The lower interest rates are the
better the bang-for-the-buck you get from government spending. When the world
is clamoring to give you their money at negative interest rates (paying you to
take a loan!) you'd be a fool not to pull the trigger on every capital project
and bit of maintenance you can... which of course since we are so full of
Republicans in the US we have been fools and haven't taken nearly as much
advantage of the situation as we should have. As rates rise we'll end up doing
the same projects in the future but pay higher interest rates to do them.

2) In an environment of excess capital (e.g. where the top 1% have most of the
money) there is far too much cash looking for a productive place to invest and
too few good investments. Again in that environment the government can do a
lot of good by confiscating the capital (temporarily as you'll see) and giving
it to the bottom 95%, ideally as free money with no strings attached. The vast
majority of it will be spent, returning directly to the 1% who held it in the
first place. The overall velocity of money will increase. This is the exact
same thing as SF being dragged down by high rents writ large (if rent were
reasonable I would personally create a job by hiring a nanny; instead that
money goes to my landlord's retirement account where it chases all the other
dumb money looking for yield)

Government spending (and high taxes) can be a drain under different
circumstances:

1) If there is a deficit of capital to finance good ideas or productive
businesses, the economy can benefit from lowering taxes on the 1% to free up
capital. One could argue this was the case when income taxes were 90+% during
the supposed "golden post war era" that today's idiots fondly recall with
rose-colored glasses.

2) If spending is done via printing money or the overall debt load is too high
then you can cause high inflation which has its own negative effects. If your
debt is denominated in a currency you don't control (or in gold) then this can
be a double-whammy and cause hyperinflation.

Government in general can be well-run and more efficient then the market when
you are talking about absolute necessities and natural monopolies (like health
care or roads), assuming you were willing to pay good salaries and benefits to
attract the best workers and don't try to outsource everything. None of that
applies to today's US or state governments... we pay like crap and
purposefully use contractors for everything. It doesn't work well anywhere
else, why would that work for government?

~~~
logfromblammo
You opened with an ad hominem; that's rude and unproductive. Besides that, I
don't find what you say to be contradictory to my own views.

Boost 1 is an example of breaking Nash equilibria. In a contraction, the
individual optimal play is to turtle up, but the overall optimum is to keep
the spending going at a slightly lower rate. So the cartel enforcer takes from
its members the amount that should be spent and spends it. The error made in
practice is that most governments borrow from their central bank at interest
rather than raising the cash directly via a capitation with deductions for
actual consumer spending. Or they blow the cash on stupid purchases,
forgetting that how the money is spent is usually more important than the size
of the amount.

Boost 2 tends not to happen much in practice, thanks to government corruption
and prophylactic bribes by the rich, but when it does, it may trigger capital
flight. The Hollande 75% tax in France prompted a few celebrities to leave,
but the reality is that rich people have been fleeing high French taxes for
decades. Shuffling the currency around has little impact if it does not also
change the ownership distribution of _revenue-generating assets_. If the poor
people took their free money and bought shares of profitable businesses with
it, that would help. But they tend to buy food, utilities, consumer goods, and
rent instead. As such, this redistribution plan is a temporary improvement at
best.

Drain 1 is not quite the polar opposite of boost 2. When you give rich people
more disposable income, they tend to buy more revenue-generating assets,
rather than more consumer goods. Once you have one luxury yacht, there isn't
much of a reason to buy another. They don't charitably pay others to develop
their good ideas; they buy them outright, and reap most of the benefits for
themselves. They do very well, and that does not trickle down to the lower
classes in practice. Investment does not circulate the currency down in the
same way that spending does. Investment attaches burdens and obligations to
the money before handing it off to someone else. It slows the money down.
Think about how you might feel if someone handed you a $100 bill that was wet
and sticky, with strings attached worth -$50 to you, in comparison to someone
just handing you a clean, dry $50 bill, that you could use as you pleased.

Drain 2 is mostly accurate, except I would say that printing more of a fiat
currency is _always_ an absolute drain on the economy, when considered in
isolation from whatever is done with the new cash. If you do it at all, you
are starting in a hole and need to do a whole lot of good to even get back to
ground level. Politically, you often see someone touting the good done with
government spending, while if you pull back a bit, you see that it doesn't
even make up for a small fraction of the damage done by the currency
manipulations required to pay for it.

Government's primary value is as a cartel enforcer to break Nash equilibria,
wherein the cartel members are forced to act in a way that is sub-optimal for
themselves, but which results in an overall better outcome for all
participants. Taxation always results in a deadweight loss, except when the
good in question has zero or infinite slope on the supply or demand curves.
Monetary inflation creates a value gradient in the currency that complicates
calculation, and generally enriches those closer to the monetary authority at
the expense of those further from it.

Government can also prevent tragedy of the commons, by restricting the
exclusionary uses of public goods.

These functions typically result in greatest efficiency during the reign of
the generation born to the revolutionaries. The true believers try to make the
government work correctly and efficiently for everyone. But then, some time
after, the rot sets in, and people start to use government as a means to
promote their own rent-seeking behavior. You simply can't create a tool that
only be used for good and never for evil. The dinner knife can spread shit
just as well as it spreads butter.

------
po
People seem to think this is a problem for the US (and I suppose it sort of
is) but may not realize that it's not rosey for China either. The article ends
by implying that they _want_ to be doing this to get rid of much of their
reserves, but I'm not sure it's that clear. The title here about China
'warning Washington' could be read either as a head's up or as a threat.

The problem for China is that by selling treasuries for USD and then using
that USD to buy yuan, they are effectively taking that money out of
circulation. This keeps the yuan from dropping and maintains the currency peg
but it also removes all of the liquidity in the market. This is not really a
great situation. It also makes US manufacturing more competitive.

In the past few days, they have been talking about playing with the reserve-
requirement ratio of banks to encourage them to dump money into the market to
maintain liquidity. If you tell banks that they can 'officially' lend out more
by lowering the required amount of money they must have on hand, they will and
then real money has been created.

I feel like they're really just trying to keep the whole thing on the road.

~~~
go1979
I am so confused ... don't the Chinese want a devalued Yuan? It helps their
economy, right?

Did they shift course in the past week???

~~~
po
Yeah it's confusing... You're right that a devalued Yuan helps their
exporters. Of course, too much is a bad thing too. They want to keep their
currency within a narrow range relative to the USD. They were recently making
a move to do that which sparked all of those 'currency war' headlines:

[http://www.wsj.com/articles/china-moves-to-devalue-the-
yuan-...](http://www.wsj.com/articles/china-moves-to-devalue-the-
yuan-1439258401)

They did that as a 'one-off thing' but it seems like everyone interpreted it
to mean their economy was actually really in bad shape so investors started to
get out before their assets dropped more. Then the stock market went to hell
and now they're surprised that everyone is spooked:

[http://www.reuters.com/article/2015/08/27/us-china-yuan-
idUS...](http://www.reuters.com/article/2015/08/27/us-china-yuan-
idUSKCN0QW09I20150827)

So basically they sparked a bit of a panic and have been throwing levers to
try to reassure everyone but each thing they try seems to just make it worse.

At least that's what I'm seeing. :-)

~~~
exelius
Yeah the general rule with currencies is that as long as they're not too
volatile, they can go up or down without huge implications to the economy.

The other thing to realize with the Chinese stock market is that even though
it dropped something like 50% in 2 months, it's basically flat since January.
If you look back to 1 year ago, it's still up 40%. You don't get 250% growth
in 6 months without an accompanying correction cycle. The biggest problem with
China right now is that it's high on potential, but nobody knows what the
right value should be. So it will continue to be volatile like this until
there's a better idea of if Chinese companies are creating real economic value
or not and to what degree.

------
Elrac
This article necessarily has a lot of business jargon content, and I'm having
trouble parsing it. Could somebody with subject knowledge please summarize the
article in terms a simple hacker can understand, and speculate a bit on the
possible ramifications?

~~~
jpollock
Interest rates are determined as the inverse of the bond rate. I have no idea
how accurate this is, but here's my thinking...

So:

1 selling bonds (treasuries) will lower the price of the bond (supply/demand).

2 This will increase the effective interest rate - (face value - price
paid)/face value / years for simple straight line rate.

3 The higher interest rate will cause more money to flow towards that currency
(USD)

4 That will result in the USD appreciating against all other currencies

5 China then uses the proceeds to buy Renminbi, driving it up against the USD

6 That USD->Renminbi sale might result in a drop in USD because there will be
more USD around?

7 If enough bonds are sold, this might have the same effect as a Fed increase?

8 An increase in the value of the USD will keep manufacturing jobs from coming
back to the US

9 Oil prices will drop in USD (?)

10 China might have a UK vs Sorros moment [1]

[1]
[https://en.wikipedia.org/wiki/Black_Wednesday](https://en.wikipedia.org/wiki/Black_Wednesday)

~~~
misja111
Point 1 is correct, the selling of bonds by China will have the effect that
their prices will drop. That's the law of supply and demand in action.

Point 2 will probably also happen; but only up to a limited amount, because:

Point 3, and the others, won't happen. There will not flow more money towards
the USD. What happens now is the opposite; China is selling USD's. Again
because of the law of supply and demand, this will lead to a drop of the USD
rate. If the drop will be too much for the FED's taste they will increase the
interest rate (point 2), but only so much that the depreciation will stop.

~~~
RaSoJo
>There will not flow more money towards the USD. What happens now is the
opposite; I guess it is an event in the chain. jpollock asks the question in
point 6 "That USD->Renminbi sale might result in a drop in USD because there
will be more USD around?"

------
JamesBarney
What happens to the dollar?

For years people railed against China for keeping the yuan artificially
lowered by buying U.S. Treasury Bonds. This led to Chinese manufacturing being
extra competitive, and a larger U.S. trade deficit.

Now China is doing the opposite. It is selling treasury bonds to buy yuan to
artificially increase the price the yuan and everyone is freaking out. It will
do the opposite of what is had been doing by causing the dollar to appreciate,
and the yuan to depreciate. This will make foreign goods relatively more
expensive for Americans, and American goods relatively cheaper for the
foreigners. This effect will be most pronounced when the foreigners are
Chinese. These will probably be small effects that won't effect anyone's life
enough to be noticed.

Whats happens to Treasuries?

Nothing. Short term treasury rates are pretty much determined by the FED. Now
even more so than usual because of the FED has it's pedal all the way down on
the accelerator at 0% interest. Long term treasury rates tend to be determined
what people think short terms rates will be over the long term. What primarily
determines the interest rate over the long term is U.S. growth and inflation.
So if people think this will cause more U.S. growth, long term treasury rates
might increase a little.

------
dageshi
Well pretty much the purpose of those reserves is to maintain their currency
peg so selling in order to do so is no surprise.

~~~
beauzero
They are not trying to maintain their currency peg. They are slowly devaluing
to eventually decouple (see IMF year delay comments). The treasury sales,
which no one other than China really knows why, are continuing at an extremely
rapid pace and the best guess is they are using it to inject liquidity into
their market in order to prop up their stock market bubble.

~~~
dageshi
The Chinese care more about the ability to "control" their peg than they do
anything else. What they don't want under any circumstances is a black market
exchange rate that differs substantially from the official rate. Because once
you have that the government no longer controls the exchange rate. So they
have devalued a relatively small amount and now they must maintain the peg at
the new level, if that means selling a boat load of treasuries to do so, so be
it, that's the purpose of holding the treasures.

To your point on selling USD denominated debt to prop up the stock market..
why? They Chinese stock market is denominated in Chinese Yuan, not USD, if
they wanted to prop up the market they could just print the yuan and buy
stocks, they don't need to sell Treasuries at all to do that.

------
jakozaur
Federal Bank already owns more USA debt than any other country:
[https://www.nationalpriorities.org/campaigns/us-federal-
debt...](https://www.nationalpriorities.org/campaigns/us-federal-debt-who/)

[http://qz.com/384232/guess-who-holds-even-more-us-debt-
than-...](http://qz.com/384232/guess-who-holds-even-more-us-debt-than-china-
or-japan/)

At worst Federal Bank will need to print more money (as know as quantitive
easing) and buy more treasuries from the government.

~~~
beauzero
yes...this. there is an argument that we are balanced on a knifes edge right
now. if the fed goes by their previous metrics, today's growth numbers would
indicate that a September hike is back on the table. if they are worried about
treasury sales from china increasing we may have another round of quantitative
easing. this is why the market is so sketchy right now. nobody knows what is
going to happen because they are almost exact opposite directions to take.

~~~
debacle
Why would we counter inflation from China with QE?

------
myth_buster

      “Strategically, it probably has been China’s intention to find the right time 
      to lighten up its excessive accumulation of U.S. Treasuries,” he said.
    

I think that is the crux of it. They are itching to move away from dollar and
any excuse to do so is used. This has also been tied with AIIB & they
accumulating a large amount of gold to back up their currency to be the base
denomination for global trade.

~~~
blumkvist
You've been reading way too much "falling of the petrodollar" blogs.

~~~
myth_buster
Guilty as charged. I've Currency Wars [0] in my reading list.

[0] [http://www.amazon.com/Currency-Wars-Making-Global-
Crisis/dp/...](http://www.amazon.com/Currency-Wars-Making-Global-
Crisis/dp/1591845564)

~~~
mark_l_watson
James Rickard's Currency Wars, and The Death of the Dollar are interesting
reads. I have given copies to family members because even if Rickard's is not
totally correct, his analysis is interesting.

------
Bostonian
There is no upward trend in 10-year Treasury yields, which are currently low
at about 2.2% -- see
[http://finance.yahoo.com/q/hp?s=%5ETNX+Historical+Prices](http://finance.yahoo.com/q/hp?s=%5ETNX+Historical+Prices)
.

------
at-fates-hands
I guess the big story here is that people have been warning they would do this
_voluntarily_ in some attempt to punish the US and drive down the value of the
yuan and drive up the interests rates so they can continue to undercut US
businesses.

The fact they have been _forced_ to do this is another scenario all together.
This brings up an important question: What happens when the bidders who are
absorbing all this paper, stop bidding? Then what does the Fed with all this
paper in a highly liquid market?

Make no mistake though, this is the game the Chinese like to play with their
currency in order to keep the value of the dollar high and the yuan low. Back
in early 2015, they did the same thing:

[http://www.breitbart.com/national-
security/2015/02/19/trade-...](http://www.breitbart.com/national-
security/2015/02/19/trade-war-china-dumped-77b-in-us-bonds-to-devalue-yuan/)

 _Federal Reserve data published late on February 18 reveals China dumped
about $75 billion in US bonds in the last six months of 2014_

 _Breitbart broke the story last week that China’s real economic growth had
crashed to 1.7% in the fourth quarter of 2014. We also warned last August that
China appeared ready dump part of its $1.32 trillion holdings of US bonds in a
scheme to drive American interest rates up; thereby strengthening the dollar
and devaluing the Chinese currency._

------
dataker
For having an idea on numbers/countries, these are good references:

[http://www.treasury.gov/ticdata/Publish/mfh.txt](http://www.treasury.gov/ticdata/Publish/mfh.txt)

[http://www.treasury.gov/ticdata/Publish/mfhhis01.txt](http://www.treasury.gov/ticdata/Publish/mfhhis01.txt)

------
norea-armozel
Is there any economist blogging about this move yet? My question is what are
the possible outcomes of this sale for the economy as a whole?

~~~
001sky
lowering demand for us paper means higher interest rates. higher interest
rates in the us means devaluation of foreign (non us currency), all other
things equal.

us is going to slow gdp when interest rates go up (look at fed...they are
scared). so this is basically a stealth currency deval and a shot accross the
bow to obama (sitting admin will take the hit if gdp in us goes south).

typically, this is crytpic and below the radar type of stuff but almost
certainly is meant to broadcast a message.

just my $0.02.

~~~
norea-armozel
I don't think China has much of a choice to be honest. They're still not able
to get a Chinese middle class to buy goods made at home at the rate they want.
So, I think their economic program of being the world's factory floor has been
a failure so far. They (Chinese Community Party) really need to rethink their
strategy and look towards other methods of improving the living standard
because it just doesn't look like their brand of market socialism is working
(I'm using the term market social very loosely here).

~~~
001sky
Are you asking about china's economy as a whole or the impact on the us/oecd?
i think that makes a difference in how best to answer the question.

~~~
norea-armozel
It's more of an observation in regards to what seems to be the CCP's end goal
of lifting all of China's people out of poverty. It's been sacrificing
services like healthcare and education to get their economy up and running,
but it seems to only benefits only a few of China's citizens. So, I just
wonder if the CCP has given up on the goal of socialism to communism.

------
jhulla
Sell Treasuries --> USD Cash

What is being done with the USD Cash generated after the sale? Are the Chinese
immediately selling the USD Cash to local CNY holders in order to defend the
peg? What do they do with it next? Is the new USD Cash leaving Chinese
borders? Does it stay in local accounts - eventually to be used to buy up
other USD denominated assets?

~~~
dageshi
Companies, individuals, investors e.t.c. are moving their money out of the
yuan back into the dollar, China is selling some of its treasuries to get the
dollars to give to these people. I expect the vast majority of it is leaving
the country.

~~~
ars
Isn't that against their goal of making the Yuan part of the Special drawing
rights? If there are fewer Yuan internationally (and more in-country) they
have a worse case for that.

~~~
dageshi
The bigger hurdle to the SDR is I believe it has to be a free floating
currency, which the Yuan is not. Also, I mean, what are you going to do? If
people want to get their money out and you're not going to completely forbid
them from doing so then you have to pay up. If you want to maintain your peg
and pay up you need dollars to do it, which you have in the form of
treasuries.

------
coliveira
When it comes to currencies, supply has not such a powerful effect as people
think. The value of a currency is determined more by the subjective ability of
the government to support the currency, not by the amount of it in
circulation. If supply had such importance, large countries like Russia,
China, and India would have a great advantage over the USA, because their
currencies are currently not in wide circulation. In theory, the US could
continue printing money until everybody in the world would be using USD (now,
if this would or should happen is another thing).

------
beauzero
The big 1.6T question is who is buying them? Right now it looks like they are
going to Belgium?

~~~
adventured
The Belgium buys are now famous for being a China proxy. It's not actually
Belgium doing the buying.

[http://www.bloomberg.com/news/articles/2014-07-27/china-
hide...](http://www.bloomberg.com/news/articles/2014-07-27/china-hides-
treasury-buys-in-belgium-chart-of-the-day)

------
klean92
Will George Soros enter the fray and break the Bank of China? ;)

~~~
foobarian
Watch out for Porsche proxy-buying all the freed up treasuries!

------
mrits
"China sells to China"

------
adeptima
What Would Happen If Everyone Joins China In Dumping Treasurys?
[http://www.zerohedge.com/news/2015-08-26/what-would-
happen-i...](http://www.zerohedge.com/news/2015-08-26/what-would-happen-if-
everyone-joins-china-dumping-treasurys)

~~~
tptacek
Can someone provide a bad-case source that _isn 't_ from ZeroHedge?

~~~
mikeyouse
Izabella Kaminska writes some pretty good China posts for the Financial Times,
her Twitter is worth a follow;

[https://twitter.com/izakaminska](https://twitter.com/izakaminska)

But the best round-up of China lately I've seen is from Christopher Balding, a
professor in Peking University's business school:

[http://www.baldingsworld.com/2015/08/14/end-of-week-
thoughts...](http://www.baldingsworld.com/2015/08/14/end-of-week-thoughts-on-
a-big-week/)

Basically, a lot of wait and see, but China's headline reserves aren't nearly
as impressive as they sound and things could get interesting if they lose much
more value.

------
hiou
I think we just learned what that stock market drop in the US was about.

~~~
hodwik
The drop in the US stock market this week was because of massive drops in the
Chinese stock market (and secondary drops in the EU stock market).

Compare the 1 month view of the Chinese market
([http://www.bloomberg.com/quote/SHCOMP:IND](http://www.bloomberg.com/quote/SHCOMP:IND))
to Nasdaq
([http://www.bloomberg.com/quote/CCMP:IND](http://www.bloomberg.com/quote/CCMP:IND)),
and then recall that the Chinese market closes 7 hours before the US market
opens.

------
known
Dollar is pegged to OPEC oil; Yuan is pegged to exports;

------
gwbas1c
Gosh, I'd love to see other people's opinions on this article!

------
adeptima
What Would Happen If Everyone Joins China In Dumping Treasurys?
ttp://www.zerohedge.com/news/2015-08-26/what-would-happen-if-everyone-joins-
china-dumping-treasurys

~~~
001sky
this is a double post of your own post
[https://news.ycombinator.com/reply?id=10129397](https://news.ycombinator.com/reply?id=10129397)

------
mactitan
Note the title is opposite of what they recently did.

Selling treasuries has large ramifications for the US. and a warning that we
should think about getting our financial house in order (congress will not
heed this, only the bond traders will force "austerity" as they did during the
Carter administration) China's 2% devaluation of the renminbi a couple weeks
ago was the trigger for the current market turmoil.

Chinese financial tactics are probably aligned with the goal of inclusion into
the IMF SDR: <IMF Executive Board Approves Extension of Current SDR Currency
Basket Until September 30, 2016>
[http://www.imf.org/external/np/sec/pr/2015/pr15384.htm](http://www.imf.org/external/np/sec/pr/2015/pr15384.htm)
(Was it retribution for not being immediately included? Maybe not, but they
still are the major holder of US treasuries.)

Then they wouldn't need as many dollars to buy their trade goods. Chinese rise
is inevitable and we need to do serious things to prepare for living beyond
our means.

