Disaster Averted? Not! The Back Story on the Debt Limit | Experts' Corner | Big Think - 0 views
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You see, it is an extremely important but little known fact that China's currency peg -- the #1 trade cheat the Dragon uses to vacuum jobs out of the USA -- actually compels them to loan us money no matter how loudly they insist that that they have a choice of investments. It works like this: American's proclivity to take both the wages from our Democratic stimulus job and the checks from our Republican tax refunds down to Wal-Mart for another cart full of Chinese products, not only creates more jobs in Guangzhou than it does Milwaukee but also leaves China bursting with US dollars. The Chinese government then soaks up a lot of those bucks from companies like Huawei by selling short term, high yield bonds that pay back in Yuan. They then march those dollars right back to the US treasury. In fact, they pay MORE to get the dollars out of private hands in China than they earn on the increasingly risky bet they are making in US debt! At this point you should be thinking, "WTF?"
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If China's firms were allowed to trade their dollars for Chinese Yuan on the foreign exchanges, the dollar would fall against the Yuan and undermine China's unfair 40% advantage against every American (and European and Asian) product. If they trade those bucks for some other currency, like the Euro, the dollar is still being sold and it still falls, plus China's growth draws a them right back in searching to buy Yuan, which would then rise. If China purchases products or commodities on the open markets, those dollars would still be exchanged, the greenback would drop to competitive levels, the Yuan would rise to its real purchasing power and Americans would go back to work making things.
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Wishing to avoid that horror of horrors at all costs, the Boys from Beijing must hold their noses and throw another billion good dollars after bad into the pit of the US treasury.
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Excellent article written by Peter Navarro and Greg Autry, authors of "Death by China: Confronting the Dragon -- A Global Call to Action". The authors explain why China MUST continue to buy US Treasuries regardless of the low rate of return and extremely high risk of default or ravage by inflation through the destruction of the dollar. Very interesting. But the game China is playing really looks unsustainable. The one thing the authors don't touch is the role International Banksters and their New World Corporations have played in this assault on American propserity. I guess i have to get the book! One last point; having worked for a Chinese Corporation desiring to enter the USA-European information technology markets, i don't doubt for a moment that Autry and Navarro have this exactly right. We are at war, with Chicomms providing the shock troops for this latest Bankster - Bankster Corp assault on our liberty.