printThe proverbial hat in hand, Hillary is begging Beijing to continue to prop up the US’s stupendous spending. China, I suspect, is hip to Hillary.
Reports Reuters:
China is the world’s biggest holder of U.S. treasuries and Clinton said continuing to invest in them was “a very smart decision” for two reasons.
“First, because it’s a good investment, it’s a safe investment. Even despite the economic challenges sweeping over the world, the United States has a well-deserved financial stability reputation.
“And secondly, because our economies are so intertwined the Chinese know that in order to start exporting again to its biggest market, namely the United States, the United States has to take some very drastic measures with this stimulus package, which means we have to incur more debt.”
[SNIP]
China must know that the US is not good for it; that it has not a chance in hell of paying the debt it has incurred.
China is probably more likely to dump dollars than invest in them. First Bush, now Obama—the one devalued the dollar, the other is in the process of laying it to rest. The dollar will soon pass from the world as a reserve currency, and certainly as a solid currency.
The Chinese know full well that they are stuck with all that debt for awhile anyway. Don’t be surprised to see them sell these bonds off as quietly as they can, like Russia did.
If word gets out that China is selling, then the trickle will turn to a flood and the dollar could crash. Whether it happens slowly or quickly, it seems inevitable. Even if China simply doesn’t buy, then the Fed must print the government’s ballooning deficit. When the printing starts in earnest, people will start to dump the bonds anyway.
With Gold going high, I think I’ll be buying ammo, cigarettes, and whiskey.
I read that the entire worth of the world’s gold is only about $40 Billion so it obviously cannot suffice by itself to grease the world economy. Gold itself may be the next bubble. China, like the US and Japan, has a good deal of governmental mal-investment. So there is no real safe haven. The touble is that while things are ugly now, additional mal-investment (like “green headqarters” for the FBI, keeping deadbeat squatters in homes, F-22 stealth fighters to achieve air supremacy against the Taliban, etc.) will make things worse. People will be reluctant to invest in private enterprise if the government is going on a panic and subsidizing economic losers vs. economic winners. It is like being in the center of town with nothing but one way streets pointing inbound – no clear way out!