Which would you rather be a Creditor Nation or a Debtor nation?
China, for example, holds over $1 Trillion in U.S. Debt.
What happens when we have to Default?
We have grown addicted to cheap goods from China and other places. We have done everything to Pull Future Demand Forward, we have an economy that is unbalanced.
What we have cannot continue, sooner or later the Reckoning happens.
Addicted to cheap goods, yes.
Despite your great love for me as your fellow man and American, I am certain that if someone from the next town outbid me on a job you would jump on that deal. How is this any different.
If we default on our debt, China is the least of our problems. Everyone here talks about how China will take the nation as collateral for the debt. That is not how treasuries work. Even if it did, yes they have a giant army but one aircraft carrier and no logistical means to move and supply a million man army half way around the world. Besides, much of what they have is made in China and will break shortly after its initial use.
They want our dollars, otherwise they would not trade with us or the price would be stupid high. Bastiat said, “Where goods and services cross the border, armies don’t.”