China threatens 'nuclear option' of dollar sales

Originally posted by kacou
Uncle Sam, Your Banker Will See You Now

In reference to this thread I have find this very interesting article By Paul Craig Roberts who was Assistant Secretary of the Treasury in the Reagan administration.

www.informationclearinghouse.info...

Kacou

Just reading through the article now,
so far, its a fantastic read. All should read it.

Blah, I knew I made some errors in my post, sorry about that, I was up late when I typed all that stuff, brain was not fully on at the time.

I read that link above, Interesting stuff.

- W -
* Strange Days Indeed *

Hi Infinite,

Some great answers, thank you. I need to make one correction though:

Saudi Arabia holds 1.6 trillion in US securities
China holds 1.3 trillion
Japan holds 1.2 trillion

The UK is not in the top 3 of US securities. Keep up the excellent posts though, very enjoyable reading.

APC, I have to agree with Muaddib regarding your outdated chart. The world then was a very different place than now, and then (1981-2001) gold was in a bear market, now it is in a bull market.

Furthermore, although I agree that one needs to especially focus on the long term, don't you think it is a bit difficult predicting secure investments when there is an imminent correction on the way? The only thing that seems to keep its purchasing power throughout history (regardless of value of dollar, any other currency, inflation etc, in other words, all the things we have issues with today) has been gold.

And the only thing internationally recognized (and will remain so regardless of what happens, even a nuclear war) is gold, so it is a good alternative to other monies, whereas your paper investments in such a case would be worthless.

Moving back to the China issue, I am sure it will pay whatever price necessary to take the power away from the US as global power, even a recession in its own eceonomy. Whatever happens, the emerging markets will continue to do better than western markets, and if they choose to allow the dollar to dive, then perhaps we will see mainly Asian faces in the audience at the '08 Olympics, as many westerners will not be able to afford the trrip anymore. How would that look as a sign of dominance using globally televised events? Just a thought, I have no idea if this is part of any plan.

Five things China can do with their US dollars


Maybe there is more to the story here?

So far we all know what China has been doing . . . buying our debt. . .

They have a plan and they are following their plan very careful.

Their next step is to use their money to start investing in US companies base in the US, at least the left over that are still hanging here in our nation.

As many already has seen our nation belongs to many foreign investments and no much is ours anymore.

China wants to start manufacturing Autos and we all know how bad our own left over auto manufacturing is doing so far.

I will not be surprise if China buys out whatever is left of that also.

This a war people, but it seems that while we the citizens are outrage at what is happening our politicians don't give a darn about the situation because it benefits them at the end.

Hi edsinger, Thanks for the chart, I saw it three days myself. My only comment (just so people do not get confused) is that there is a difference between the money invested in the US national Debt, and the money invested in US treasuries.

Money invested in national debt is asset based, money invested in US treasuries are IOU's from the US govt to anyone who buys them, a promise to pay in future so to say.

US National debt is about 9 trillion, total US debt is about 50 trillion

i could be wayyyyyyyyyy off base here but ima take a stab at this from a different point of view.

everyone wants to blame the chinese, the govt, walmart...but arent we, you and it and bob over there in the corner also very largely to blame for a lot of our economic woes?

heres what i mean. bob over there refuses to work for $4/hr as would most of us. he wants top dollar for his job whether he's actually worth it or not. for his employer to pay him and his coworkers top dollar they have to charge more for their goods and services. that gets passed back to all of us (bob included) in the cost of purchasing said goods and services.

now, bob works hard for his money (in his opinion) so when he spends his money he wants the most bang for the buck so he's going to go buy his goods from places that will sell to him cheaply. enter walmart. walmart cant buy goods from bobs employer and still sell them at a price bobs willing to pay, so they import, they import a lot.

now the problem is, since bob gets top dollar...other countries like china arent really interested in importing our goods when their own workers can produce the goods they want for nearly nothing.

think about it, if bob gets paid way more than the avg chinese worker and yet bob wont pay the price of domestically produced goods, why would anyone expect that a chinese worker making less money is going to buy those same goods?

(at this point let me applaud grover for his attitude of buying american whenever possible. go you )

now where i do blame the government is in the constant screwing with the tax codes. other than the fact bobs just greedy, after taxes he just doesnt take home enough to buy domestically produced goods.


so, do away with income tax, cut the tax breaks to the oil companies until they start selling gas for a resonable price (does anyone really beleive that a company making 60 billion a quarter needs any tax breaks?) and institute a larger federal sales tax in its place. the result: we take home more money each week/month so mentally we think we have more money so we spend what we take home. sure, its all still taxes but its a fair tax. someone making 200k/yr pays the exact same taxes i do particularly on "luxury goods". (of course there are certain necessity goods youd not tax or tax lightly. food, medicine, anything for babies (toys notwithstanding)) but at least then everyone pays the same % tax on their money and thats fair (cuz all this complaining aobut rich people is lame, why penalize someone for doing well? isnt that the goal for all of us?) offer lower tax rates on us made products than you do foreign made products (who cares if its fair to them? it encourages us to buy domestically thus keeping bob in a job and making money and spending it at home)
is this a perfect plan? not even close...but it could be a start, and it would make a LOT more sense than the current tax laws. i mean, the current laws are so complicated that most of us have to hire someone else to explain them to us and do our taxes for us. all the govt has done with the current tax code is to create a whole job market for tax attornies and preparrers. i may not know how to do a 1040 but i know that if im looking at a product that costs 100 bucks and if theres a 15% tax on it i owe $115. and i like simple, particularly with math.

but to sumarize, i think its a hole we've dug for ourselves. we want high wages and low prices. if we're being objective...we cant have it both ways. not on domestic goods anyway. and as long as we ARE making top dollar at our jobs...countries like china simply wont buy our products while being the only source of the goods we want at prices we're willing to pay.

whats this got to do with foreign countries owning our notes? well, maybe if we had a stronger manufacturing base and were spending more of our money at home...we may not have needed to sell off the notes to start with?

yeah i know, its simplistic and possibly naive, but if you think about it i may not be THAT far off

Damocles, great post and a great theory, I have actually seen a similar system work in the 90's in another country. The govt sponsored purchasing locally purchased goods and educated the people in this manner, and it worked.

The only difference there was that the currency had more purchasing power than the US Dollar has in its own country, and then there is the federal reserve.

With the inflation (price inflation) going at the rate it is, and seems to be heading, Bob won't be able to start purchasing locally produced goods until after a recession.

Thanks for your comments, great read and definitely a step in the right direction!

Everyone in the U.S. Needs to stop purchasing foriegn crap if they really care about this country. I dont go to walmart for hardly anything, There is always a small private store somewhere to buy from and I dont care if its twenty dollars more because I know that one I will get better service and support in the long run. Anyone notice how Wal-marts beef looks as it were spray painted red, I wonder if it glows in the dark too?

This whole China owns our debt thing is laughable. Okay China, come take our money. See how far ya get. Currency is only wortht the paper its printed on and while China's strength is growing, it is GREATLY exaggerated on many fronts.

Learn Chinese, Use chopsticks and buy a hazmat suit. Build an underground bunker and pray for the Messiah. Pray that the little yellow men don't invade.

It would not be in China's interest to watch the dollar fall. It would have been a poor investment. Look at the chart and you can understand just who owns the debt.

As for the 50 trillion - that is the great burden left by the socialists, entitlements promised for votes.

btw - these socialists are both democrats and republicans.

China doesn't even have to do anything right now, it appears as if the rest of the global market is reacting by itself already (210 billion of liquidity having to be pumped into the markets by the ECB during the last two days).

China's reaction to Congress' threat to impose tariffs is merely power play, they are taking the reigns and not scared to show it (or follow their words by actions in this case).

o_____O Who is the United States pissing off more, RUSSIA? or China lmfao..

Busch needs to go. seriously.

[edit on 10-8-2007 by burnthemonkeyz1]

Originally posted by burnthemonkeyz1
o_____O Who is the United States pissing off more, RUSSIA? or China lmfao..

Busch needs to go. seriously.

[edit on 10-8-2007 by burnthemonkeyz1]

Why Bush? Did he start this? I seriously doubt this whole China issue started the day he took office.

Heck, let's look at Clinton. Wasn't there some scandals going on with him getting contributions from China? And Gore also?



So China cuts us off at the knees. Who else will be buying there stuff? Sure, Europe, the rest of Asia, etc, but will they be buying as much as the US??

And if China decides they want us to pay back our debt, don't you think the US will be wanting to collect our debt from other nations? We might go down the toilet, but a few other countries will get burned, too.

And after the US is crippled, and there is no market for Chinese made goods, or a market that's a shadow of it's former self, what happens to the Chinese workers? Lot of them will be losing their jobs.

And what happens when the next disaster hits? Mudslide, Tidal wave, hurricane, snowstorm, whatever. The country affected goes to the UN requesting aid. The US will be telling them, "Sorry about that, we're broke. No aid from us, and our military can't deliver what there is that's coming to you. You're on your own."

And right now, China has the "one child" rule for families. What happens when the oldest generation hits retirement age, and there are only a few million to take care of the old billions? That ought to be interesting.

I think one of the significant things that separate Americans say from the Chinese, whom are in fact the only original surviving civilization is memory.

In 1839 the Chinese people were drugged and bullied into submission by the British Empire. They pleaded with the British government to respect their ways and their culture, but in return the British, drugged them with opium and then quickly destroyed them with successive wars.

This wasn't the only time the British had done this. It also happened in the Battle of Plassey in India.

When indigenous nations refused to open up their trade to the British Empire they were simply forced to with war. I'm afraid nothing much has changed.

Out of the radioactive ruins of World War 2, Empire got a new title; Anglo-American supremacy. In addition to getting a world government, a world army, a world bank (one for Europe and one for US), we got our first world currency. If you wanted to trade in anything worth trading in the world, you had to do it in U$, but most importantly we got GATT.

GATT went to work destroying all the world's protective tariffs, simply bulldozing indigenous nations, laying a path for globalization. GATT simply replaced the Muscat and opium with a 'respected' world body. GATT was recently renamed WTO.

China still has strong roots in it's long Confucian-Daoist history. Don't be confused by their recent move towards capitalism, I suspect one of the reasons that they have moved in this direction is because it will be hard to nuke communists when they have a Starbucks in one hand and a Big Mac in the other.

China has been playing a game with the West for a long time now, communism was a move that had to be made to protect its borders from ever increasingly borderless world and the terminal world cancer; globalization.

China holds the world in its hands. You only have to look at the green light India has on nuclear weapons to understands this. India is not a member of the non-proliferation agreement, Iran is, Iran is getting harassed for 'plans' to build weapons, India already has them, but India, shares a border with China unlike Iran.

The encirclement is forming; Korea, India, Japan, Phillipines and it is no different from the encirclement which is forming around Russia by NATO; all in direct contravention of the old Warsaw Pact, the precursor of the CFE.

Don't think for a minute that I believe China or even Russia for that matter are any better or worse than America, that's just not true. It's just interesting how America's culture of excess, consumerism, greed and debt has so quickly destroyed it's country's soul and will no doubt lead to it's early demise as a mere 60 year old empire.

The excess is fueled by the so called American Dream, it's a shame that the people don't realise that their excess is maintained by wars and the bulldozing of indigenous nations (war and WTO).

Someone has to pay for a life of excess. Vietnam paid for it for a while, Korea as well, but then in the 80's, excess went to a new level and it was paid for with Desert Storm in 91. This outing gave them a mere 10 years of more excess, Iraq has paid for a mere 4 more years of excess. It seems the times are getting shorter. (invite for 2012 crowd there).

So, anyway, China is not excessive, a very small percentage of China are experiencing wealth, most of the Chinese population keep to themselves out of the cities enjoying the freedoms that their history has provided to them in the past.

It would be such a Confucian-Daoist victory to destroy the very machine that stole it's soul, culture, land, ports and commodities in 1839, not with war but with the very same money that was used against it. The irony makes my heart glow.

And what will they do with this new perecieved leadership of the world, nothing. Just like when they sailed the world with massive ships; they will simply return home and destroy the ships. No way? wu wei!

[edit on 11-8-2007 by grantdwalker1]

Originally posted by grantdwalker1ISomeone has to pay for a life of excess. Vietnam paid for it for a while, Korea as well, but then in the 80's, excess went to a new level and it was paid for with Desert Storm in 91. This outing gave them a mere 10 years of more excess, Iraq has paid for a mere 4 more years of excess. It seems the times are getting shorter.

I just do not see the wars of the last 50 years that way..sorry. As for 2012, well I guess we will have to see.

Originally posted by grantdwalker1
When indigenous nations refused to open up their trade to the British Empire they were simply forced to with war. I'm afraid nothing much has changed.

Sorry to be picky,

but we no longer have an Empire, so something has changed

China pull liquidate its US treasuries? LOL! Go ahead! it's insignificant compared to other countries holdings.

China wants the US economy in trouble? haha...right on! Then who's gonna buy china goods?

China wants its $ to remain undervalue, becomming with an unfair advantage as an exporter against the rest of the world? Go ahead, keep it up and the rest of the world are gonna return china goods back to china, nobody gonna buy it out of fear of shoddy or dangerous material. Rumours gonna get spread and get worse. Its state and private enterprises will go bankrupt in no time. Massive unemployment = revolution - the most feared action China understands.

Why fear China at all? If it doesnt start behaving like the rest of the civilised world, both militarily and economically, it will face the wrath of nations. China holds no trump card over US or EU. It is fully dependent on US and EU economically, so US govt officials are right to demand and insist it behaves for the good of the rest of the world.


.

Originally posted by SeekerofTruth102
China pull liquidate its US treasuries? LOL! Go ahead! it's insignificant compared to other countries holdings.

how did you work that out?

China hold the most, even economists and politicians admit China has the potential to knock out America.