OrangeEmpire
The White Debonair
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- Nov 28, 2005
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Foreign investments in Fannie/Freddie
China is largest holder of the debt in Asia
China does not have to engage us militarily to weaken us at this point. They can hurt us by selling U.S. bonds and other investments on the open market. If I recall correctly, China is the single most largest holder of U.S. debt. Think of what would happen to the dollar globally, and our financial credibility in the global market, if China began selling its dollars and U.S. debt on the market? Our dollar would fall rapidly, the economy would begin to decline, foreign investors seek refuge elsewhere and begin withdrawing their investments in U.S. markets, exacerbating the economic decline.
The notion of an open and free market has assisted us but when our companies and government spend beyond its means, and sell its debt to foreign banks and companies, in large quantities, we make ourselves vulnerable. The U.S. might be a superpower militarily but this is current situation is exemplary in the sense of demonstrating how there is more than one way to address a military superpower other than slugging it out with them in battle.
Think about the potential implications of the present situation. If China or other Asian banks disapprove of what we are doing internationally, can they not threaten to harm us economically unless we conform our behavior to their dictates? For example, China is adamantly opposed to any U.S. military strike in Iran. What position are we in to ignore China's warning they will immediately sell U.S debt and assets on the market if we were to attack Iran?
Now, there is some give and take here. At this time, under the present arrangement, the world economy is so interdependent right now, along with the fact a lot of foreign economies are predicated upon U.S. consumption of their goods, that if the U.S. economy sinks, so does the rest of the world. This fact may preclude China and other Asian banks from doing what they threaten, unless the calculate the harm perpetuated upon themselves by their own actions will not be as great as what is inflicted upon the U.S.
We may control the military, but China controls our purse. Tell me, how far do you get when the purse is closed?
Thoughts?
China is largest holder of the debt in Asia
China does not have to engage us militarily to weaken us at this point. They can hurt us by selling U.S. bonds and other investments on the open market. If I recall correctly, China is the single most largest holder of U.S. debt. Think of what would happen to the dollar globally, and our financial credibility in the global market, if China began selling its dollars and U.S. debt on the market? Our dollar would fall rapidly, the economy would begin to decline, foreign investors seek refuge elsewhere and begin withdrawing their investments in U.S. markets, exacerbating the economic decline.
The notion of an open and free market has assisted us but when our companies and government spend beyond its means, and sell its debt to foreign banks and companies, in large quantities, we make ourselves vulnerable. The U.S. might be a superpower militarily but this is current situation is exemplary in the sense of demonstrating how there is more than one way to address a military superpower other than slugging it out with them in battle.
Think about the potential implications of the present situation. If China or other Asian banks disapprove of what we are doing internationally, can they not threaten to harm us economically unless we conform our behavior to their dictates? For example, China is adamantly opposed to any U.S. military strike in Iran. What position are we in to ignore China's warning they will immediately sell U.S debt and assets on the market if we were to attack Iran?
Now, there is some give and take here. At this time, under the present arrangement, the world economy is so interdependent right now, along with the fact a lot of foreign economies are predicated upon U.S. consumption of their goods, that if the U.S. economy sinks, so does the rest of the world. This fact may preclude China and other Asian banks from doing what they threaten, unless the calculate the harm perpetuated upon themselves by their own actions will not be as great as what is inflicted upon the U.S.
We may control the military, but China controls our purse. Tell me, how far do you get when the purse is closed?
Thoughts?
