One of the CFR (and $#*) arguments has been that China must buy Treasuries in order to sterilize incoming dollars and keep the yuan cheap.

This has never set well with me, but in looking into this further it seems there are structural issues with China (or the entire world outside of the US) being able to do so.

Specifically that there may not be enough money at all for this action even if desired.

1) China's trade surplus with the US is only going to be between $100B and $300B this year

http://www.outsidethebeltway.com/arc...u_s_increases/

2) Europe's trade surplus with the US will be somewhere in a similar range:

http://english.peopledaily.com.cn/90...5/6660221.html

The EU trade surplus fell with the United States from 11.7 billion euros to 4.2 billion in January-February year-on-year, and with Switzerland fell from 3.1 billion to 2.2 billion.

The EU trade deficit decreased with Russia from 12.5 billion to 7.2 billion in the same period, with Norway from 8.5 billion to 6.0 billion, with Japan from 5.3 billion to 3.7 billion.
Other data points:

http://www.census.gov/foreign-trade/...t/deficit.html

Year To Date
Deficit in Deficit in
Millions Millions
Country Name of U.S. $ of U.S. $

China -16,753.76 -67,137.50
Mexico -4,117.02 -13,805.52
Japan -3,217.88 -12,332.19
Federal Republic of Germany -2,223.70 -7,934.91
Ireland -2,115.16 -7,283.52
Russia -1,219.35 -3,713.10
Canada -1,216.12 -6,353.87
Korea, South -986.91 -4,983.78
Taiwan -985.23 -4,315.18
Italy -982.52 -4,461.45
Even given a tripling of these numbers, the net trade surplus for the top 10 exporters to the US would be less than $500B.

Where's the remaining $1.35T to be bought? Net Fed monetization looks like it will have to exceed $2T this year alone.