GLENN: The U.S. national debt is over twenty trillion and rising. Most of that is owned by you or the government, but there’s 6.3 trillion Treasury bills, notes and bonds that are held by foreign countries. China is the granddaddy of them all, holding US treasuries totaling 1.2 trillion. It’s been good for China, helping to keep their currency weaker than the dollar, which in turn keeps their exports competitive, and it’s been good for us. Consumer prices for goods remain low, and the government gets more money to spend themselves silly.

Some people try and make all this sound hard, but it’s actually pretty easy. The United States is like a big corporation. Countries like China that purchase our debt in the form of treasuries are like investors. They buy a ten-year treasury, we get the cash but promise to repay when it matures.

Something interesting happened yesterday morning. The dollar, treasuries and stock-index futures all declined due to a rumor coming from China. The rumor was that senior government officials in Beijing had recommended slowing or even halting purchases of US Treasuries. The consequences for that could be huge. China is our biggest investor. Why would they do this now?

Hardly anyone’s talking about the danger the Chinese economy is in. The last few years for them have been the worst in thirty years. Like the rest of the world, they never really recovered from the 2008 financial crisis. Less people are buying their stuff while, at the same time, their labor costs are rising. They’ve racked up huge debt with underperforming loans, and nearly half a billion people live below the poverty line.

If your family invests in the stock market, but then dad loses his job and starts to miss mortgage payments, do you keep buying stocks or do you save your money and prepare for hard times? This is the position China is now in. They see trouble and they’re getting ready. The truth is, they’ve been quietly selling debt and calling in loans since 2016. Japan briefly overtook China as our largest debt holder before, they too, began calling in loans.

This leaves us with a couple choices. The government can either cut spending or they can print money. Which one do you think they’ll pick? But one thing is clear: the global economy is getting ready for something big. Here’s hoping we don’t pour kerosene on a bonfire.