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According to a study from the NBER (National Bureau of Economic Research) that I recall reading, Chinese imports alone hold down inflation by over 1%, and perhaps up to 2%, per year. That's pretty amazing, actually. What it means is that stuff from China is cheaper relative to the price it could be obtained anywhere else in the world, and that if it vanished, prices would spike. China is actually shielding us from the consequences of our debt spending and inflationary monetary policy.
But when you buy from the bargain basement, sometimes you get unreliable stuff. Sometimes you get defective or dangerous stuff. That's just a consequence of demanding the absolute lowest possible prices.
China's prices is not only shielding us from the consequences of our debt spending, they are the ones who are supplying us with our debt.
I believe that China has the largest amount of U.S. bonds, I think worth an estimated $600 billion dollars?
Why would China supply us with money? So we have more money to buy their products, and in turn greatly stimulate their economic growth. We're so intertwined, that we need money from China, and China needs us to buy their products.
I don't think people understand the nature of our economic situation with China.
What if Americans decided not to buy Chinese products anymore. What reason would China have to keep our bonds?
What if they decided to dump about $100 or $200 billion dollars worth of U.S. bonds into the open market? Or even just threatened to do so?
Do you realize what devastating effect to our economy that could cause? Our economy would drop, the value of the dollar would be worth even less, we would most likely be in another huge depression like the Great Depression.
This would also affect China's economy as well, and they could be under a huge recession, so I see little reason for them to do so.
I expect China to call in our notes once they develop a large enough domestic economy to buy all the stuff they were selling to us. In case you haven't noticed our debt is the rope they are selling to us that old chairman Mao said he would hang us with. He didn't but his far more rapacious capitalist successors most certainly will. They will wait for the optimal time. With a 4,000-year-old culture they know how to wait.
Hell, they wrote The Art of War. I think they also read it.
Have you never thought about how America, as a nation, has been increasingly spending more and more money throughout the years without any serious tax hike?
We want to buy more and more stuff with less and less taxes?
How are we able to come up with so much money without being taxed so much?
Yep, China and Dubai have picked up the tab for our over spending. Scary thought, right? But no one seems to talk about it. Even when I say something to people about it, they give me a blank look.
I expect China to call in our notes once they develop a large enough domestic economy to buy all the stuff they were selling to us. In case you haven't noticed our debt is the rope they are selling to us that old chairman Mao said he would hang us with. He didn't but his far more rapacious capitalist successors most certainly will. They will wait for the optimal time. With a 4,000-year-old culture they know how to wait.
Hell, they wrote The Art of War. I think they also read it.
You know, that is such a scary thought and I have thought of it many times! Scares the bejeebers out of me.
I assume they are using us to underwrite the development of their factories . . . and yes, gear up their workers . . . and let's not forget - THEIR WAR MACHINE.
China's prices is not only shielding us from the consequences of our debt spending, they are the ones who are supplying us with our debt.
I believe that China has the largest amount of U.S. bonds, I think worth an estimated $600 billion dollars?
Why would China supply us with money? So we have more money to buy their products, and in turn greatly stimulate their economic growth. We're so intertwined, that we need money from China, and China needs us to buy their products.
I don't think people understand the nature of our economic situation with China.
What if Americans decided not to buy Chinese products anymore. What reason would China have to keep our bonds?
What if they decided to dump about $100 or $200 billion dollars worth of U.S. bonds into the open market? Or even just threatened to do so?
Do you realize what devastating effect to our economy that could cause? Our economy would drop, the value of the dollar would be worth even less, we would most likely be in another huge depression like the Great Depression.
This would also affect China's economy as well, and they could be under a huge recession, so I see little reason for them to do so.
Still, it is a very, very complicated situation.
Exactly what right does our Gov't. have to place us in the position you describe? IMO most Americans would be strongly opposed to a scenario as dependent as this. Richard Nixon embraced the communist nation, liked Chinese food and resigned--but this s*** is surely another chapter of detrimental policy.
I expect China to call in our notes once they develop a large enough domestic economy to buy all the stuff they were selling to us. In case you haven't noticed our debt is the rope they are selling to us that old chairman Mao said he would hang us with. He didn't but his far more rapacious capitalist successors most certainly will. They will wait for the optimal time. With a 4,000-year-old culture they know how to wait.
Hell, they wrote The Art of War. I think they also read it.
Yes, that is the thought behind many in what could possibly happen in the future. Once China's domestic economy gets to a largely sustaining level where it doesn't need the U.S., it could use our debt as a weapon that is just as threatening as launching a nuclear attack. Or at least deter the United States from criticizing any moves China makes (like actually physically invading Taiwan).
We just can not separate ourselves from Chinese trade all at once right now. Doing so will risk the death (or at least the severe crippling) of the U.S. economy.
What we have to do is unravel it slowly but surely, pieces here and there. It's like a big tangled mess of yarn. If you try to untangle it to quickly, the yarn could break or become tangled even more. You have to pick it apart piece by piece, thread by thread.
The trouble is, getting people to start consuming less, or raise taxes to help lower the debt. And people want to do neither.
How many trips to China did Treasury Secretary Henry Paulson make to beg the Chinese government to stop artificially keeping the value of the yuan (Chinese currency) low so it's cheaper to export?
Has the Chinese listened at all once? Has America been able to do anything about it? I think that shows you the telling truth right there.
Last edited by tenken627; 03-04-2008 at 02:27 PM..
Exactly what right does our Gov't. have to place us in the position you describe? IMO most Americans would be strongly opposed to a scenario as dependent as this. Richard Nixon embraced the communist nation, liked Chinese food and resigned--but this s*** is surely another chapter of detrimental policy.
I totally agree with you. But, it's very, VERY hard to run a campaign for Presidency, or any of the Senate or House seats on the idea of less spending and/or higher taxes.
Individuals and especially corporations greatly dislike that kind of talk.
Yes, that is the thought behind many in what could possibly happen in the future. Once China's domestic economy gets to a largely sustaining level where it doesn't need the U.S., it could use our debt as a weapon that is just as threatening as launching a nuclear attack. Or at least deter the United States from criticizing any moves China makes (like actually physically invading Taiwan).
We just can not separate ourselves from Chinese trade all at once right now. Doing so will risk the death of the U.S. economy.
What we have to do is unravel it slowly but surely, pieces here and there. It's like a big tangled mess of yarn. If you try to untangle it to quickly, the yard could break or become tangled even more. You have to pick it apart piece by piece, thread by thread.
The trouble is, getting people to start consuming less, or raise taxes to help lower the debt. And people want to do neither.
How many trips to China did Federal Reserve Chairman Ben Bernanke make to beg the Chinese government to stop artificially keeping the value of the yuan (Chinese currency) low so it's cheaper to export?
Has the Chinese listened at all once? Has America been able to do anything about it? I think that shows you the telling truth right there.
The reality is that we are addicted. The Chinese economy is growing. Ours has stumbled.
What is the advantage to China for putting the screws to its best customer? I have been trying to figure that one out. Confucius vs Evil Emperor Ming?
China does not increase value to the Yuan because they already have a 10 percent domestic inflation rate.
Taiwan? I think only the old guard really cares. The younger generations don't recall what the beef was.
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Corruptive Trade
