Secretary of State Hillary Clinton departing for Asia Feb. 15

The State Department says there is “no factual basis” to an Internet rumor that went viral over the weekend claiming Secretary of State Hillary Clinton was willing to pledge American homes to China as collateral for Beijing buying U.S. debt.

The rumor, in various versions, claimed Clinton brought with her last month to Beijing a written agreement offering to extend to China the option to exercise eminent domain rights within the U.S. The rights purportedly were offered as collateral for China’s continued willingness to purchase additional trillions of dollars in U.S. Treasury debt the Obama administration hopes to sell to finance projected federal budget deficits.

“There is no factual basis or substance to this report,” Laura Tischler, a State Department press officer, e-mailed WND in response to an inquiry.

The Little Green Footballs blog traced the story to an unsigned post at LiveLeak.com that claimed an unnamed source at the U.S. Embassy in Beijing had “confirmed” that Clinton brought the agreement with her to China.

Little Green Footballs also referenced a similar story written by talk-radio host Hal Turner that reproduced the LiveLeak.com story virtually word-for-word.

The now-discredited story seemed to gain emotional energy from the unfounded fear that “our federal government has now granted to China this power to ‘take’ our homes and businesses in the event the U.S. government defaults on its debts.”

WND has reported the U.S. Treasury is planning to raise $2.5 trillion in debt in 2009 and an additional $4 trillion in 2010 to provide financing for the projected Obama administration deficits.

The massive amount of U.S. Treasury debt financing is projected to increase the current $10 trillion national debt by 65 percent in just the first two years of the Obama administration.

Underlying the Internet rumor was the fact that a major purpose of Clinton’s February trip to China was to make sure the Chinese would continue to buy U.S. Treasury debt in the trillions of dollars the Obama administration will need to fund the massive budgetary deficits planned for economic bailouts and an unprecedented expansion of the welfare state.

China and Japan are the two largest holders of U.S. Treasury debt, with China currently owning some $800 billion in Treasury debt securities.

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