Why do creditors continue loaning to the fedgov?

[From a comment I left on Tuscany Circle blog]

Kind of simple actually. The creditors have more to lose than gain in the collapse. The creditors, mainly China, have a huge stake in American debt. Like any other bankruptcy, the creditors lose too. So the creditors must get out without causing a stampede that wipes their position out. There are several ways really. One they can reduce what they loan and extract tighter concessions on the loan. The Chinese have reduced the term of their treasuries purchase from 30 year notes to seven year notes and interest is up. Second, they can increase their imports and pay for them with US Dollars reducing their cash holdings. Note that this does not have to be with us, it can be any other country, and can be at a discount off par value - that is they can pay generous prices to keep up the illusion. This spending can be petroleum, land, food, or virtually anything. It could be the Panama Canal. Oh wait, they've done that.

Or they could surreptitiously dump the money so as not to start a panic that would render their dollar holdings worthless just like yours will be when the government goes default. Several weeks ago, $134B in bearer bonds were caught being smuggled through Italy by two "Japanese" men. The story died a quiet death. The news didn't find it an interesting story. The US Government declined comment. It meant nothing. Someone is exiting holding our money in favor of G. Gordon Liddy and Gold. They just don't want anyone else to know about it. Only one problem with all this. It is a game of musical chairs. Someone (many?) will be left standing when the music stops. But you don't want it to collapse until you are clear of the carnage.

Omerta

The Fed - Lender of Last Resort. Are We Really There Already?

Today the Federal Reserve Bank began buying Treasury Bills to underwrite the currency of the United States. Since the Fed is also the one who circulates the debt funded currency, what we really have here is paying for our National Mastercard with our National Visa card.

It really reminds me of the old Cheech and Chong movie where one of them was going to make some money selling pot. He had done very well ... selling it, on credit, to himself.

On the Credit Crunch or Words Mean Something

"Credit is the provision of resources (such as granting a loan) by one party to another party where that second party does not reimburse the first party immediately, thereby generating a debt, and instead arranges either to repay or return those resources (or material(s) of equal value) at a later date. The first party is called a creditor, also known as a lender, while the second party is called a debtor, also known as a borrower."
....................................Wikipedia <- credit of source, so you can believe ...

From third person singular from the Latin credo or "I believe", credit is the root of all societies from the origin of time. Credit is the belief that at some point in the future you will be repaid plus something for the use of your money/property/labors/credit.
The Wikipedia definition of credit is merely one use of the word, and it has bullied its way to the forefront; but the root meaning of belief is still valid as the cause of the crunch. Belief.
The problem is: What do we as a people believe in? God? Our Country? It's Constitution? Our money? Our Future? Our humanity? Our selves?

For the last century we have been crawling then walking, then striding toward a belief in nothing. Not just Atheism, but anarchy. Driven by a media, Politicians, and an educational system some with good intentions, some not, but with a commonality that they attribute no importance to the individual other than as being owned by society. Then there should be no surprise that the population holds no credit in our future. They instinctively credit these bailouts and the president-elect's promises are written to be paid for with an every increasing draft on our future labor. And that belief means less of our future for ourselves and our families. That you can believe.