But wouldn't China lose out on that flooding event as well? Sure they bring us down, but since we are their biggest market - I would think they would suffer quite a bit if our economy/currency tanked.
I dunno - if I take the more cynical view and assume China to be a financial and true communist potential enemy, then they could dump our currency, bury us economically, and then use all that industry they built up to crank out consumer goods for the local populace and military goods for flexing their power. But they're too deep into capitalism now to back out without significant uprising from the new middle class and the rich Politburo members who have made so much money on all of this.
The point isn't the Chinese and their intentions. They've seen it to be in their interests to finance our consumption to the tune of thirteen hundred billion dollars. They're not about to cut their own industries off at the knees unless their hand is forced.
Plenty of people on our side of the water do want to force their hand though. Some of them are people who say that it's impossible to compete against artificially cheap Chinese goods, others are gold bugs just praying for the eschaton.
Much talk was made over the Chinese think-tank that said that if we were intractable on "certain sensitive issues", they could go ahead and dump the dollar, and that's true, but unless we force their hand, cooler and greedier heads will prevail. The point, though, is that there are serious people willing to go to the WTO over the artificial devaluation of the Yuan, and if these people make it so that there's no advantage in holding on to all that increasingly fragile dollar debt, they're in danger of getting what they wished for.
Absolutely; I believe that the only reason that we haven't seen price inflation anywhere near the levels of our monetary inflation (running at greater than 7% for years now) is that foreign investors have soaked up the excess and kept it out of circulation. If it enters circulation, then we the only thing that'll stave off Weimar-era inflation would be to raise our interest rates through the roof (guaranteeing a nasty recession). Or, of course, just do like the Russians did and forget we owe anything to anyone -- that would REALLY be financial armageddon....
4 comments:
But wouldn't China lose out on that flooding event as well? Sure they bring us down, but since we are their biggest market - I would think they would suffer quite a bit if our economy/currency tanked.
I dunno - if I take the more cynical view and assume China to be a financial and true communist potential enemy, then they could dump our currency, bury us economically, and then use all that industry they built up to crank out consumer goods for the local populace and military goods for flexing their power. But they're too deep into capitalism now to back out without significant uprising from the new middle class and the rich Politburo members who have made so much money on all of this.
Perhaps I am missing something...
The point isn't the Chinese and their intentions. They've seen it to be in their interests to finance our consumption to the tune of thirteen hundred billion dollars. They're not about to cut their own industries off at the knees unless their hand is forced.
Plenty of people on our side of the water do want to force their hand though. Some of them are people who say that it's impossible to compete against artificially cheap Chinese goods, others are gold bugs just praying for the eschaton.
Much talk was made over the Chinese think-tank that said that if we were intractable on "certain sensitive issues", they could go ahead and dump the dollar, and that's true, but unless we force their hand, cooler and greedier heads will prevail. The point, though, is that there are serious people willing to go to the WTO over the artificial devaluation of the Yuan, and if these people make it so that there's no advantage in holding on to all that increasingly fragile dollar debt, they're in danger of getting what they wished for.
Ahh...now I understand.
We do indeed live in interesting times, don't we?
Absolutely; I believe that the only reason that we haven't seen price inflation anywhere near the levels of our monetary inflation (running at greater than 7% for years now) is that foreign investors have soaked up the excess and kept it out of circulation. If it enters circulation, then we the only thing that'll stave off Weimar-era inflation would be to raise our interest rates through the roof (guaranteeing a nasty recession). Or, of course, just do like the Russians did and forget we owe anything to anyone -- that would REALLY be financial armageddon....
Post a Comment