Fine. So why have they been buying our Treasuries up to this point, despite their low interest? Why didn't they instead buy American cars, planes, trains, heavy machinery, electronics, consumer goods etc.? Because, as we all know, they have not been engaged in commerce in good faith, rather that runs precisely counter to their plainly visible objective: The absolute destruction the U.S., its economy and military supremacy, and their usurpation of our previous position. They transparently yearn for Chinese Hegemony. And they will perpetrate any evil, any crime, and as Ronald Reagan said, "reserving to themselves the right to lie, to cheat, and to steal" to get there.
The PRC doesn't want to do ANYTHING to prop up American industry. They wish to steal those very surviving industries for themselves. Hence they are very careful to only buy American manufactured goods and machine tools that are at distressed prices...such as auctions of defunct manufacturing plants, Chapter 11 sell-offs, or Chap. 7 liquidations. Relocating them to Tianjin, etc. If they have to buy state of the art, and pay top dollar, they prioritize buying from outside the U.S., and from U.S. competitors. All to weaken the U.S. The main enemy.
Your points on the Congress and President's deficit spending have some merit, as the Chinese didn't "make" them do it. But they did rather deliberately, and knowingly, enable the consumption binge. By buying those Treasuries, it financed the deficits with the debt purchases, and like a credit-card junky we kept on increasing the spending rather than pulling back. The Chinese Government was cannily acting like a drug pusher. And the Chinese fellow-travellers, the Democrats, gleefully pushed the spending-aholicism along, cheerily egging on the smugly-overconfident GOP which engaged in a "bidding war" for the Demoncrats voter base.
It was a cynical, misguided and ultimately futile exercise...as the narrowness of victory proved. Why Karl Rove is not currently swinging from the highest rafters is beyond me.
The Treasury purchases also served their purpose by aiding and abetting their conspiracy to keep their wages excessively deflated versus the U.S. and their competitors. To become....and stay...an economic "industrial capital black hole" sucking in everything into the maw of its "low cost" vortex. The treasury purchases have often been timed to and sized to optimize their currency manipulation to keep the rmimbi-dollar ratio "pegged."
The PRC has always been prepared to take a "hit" on these securities, as they knew that the dollar was weakening...and their T-Bill purchases were artificially sustaining it... They always hoped to time it of course. So that the "rug-pulling" operation of selling off U.S. Treasuries would have the effect of reversing roles. It was a cynical, calculated ploy on their part. Well worth the loss of the "investment" if it had the intended effect of bankrupting the U.S. and smashing its military finance capability.
GWB is only now finally making noises about tariffing China in retaliation for its WTO-illegal currency peg (only a part of the overall Chinese wage-suppression plan). Hence, China may be hurrying up its timetable. Having to do the rug-pulling now or the very near future may be premature from the standpoint of their ulterior plans.
Or maybe not. We'll see.
I've already expressed concern about how the U.S. government is devaluing the dollar and creating claims on future tax resources with it's reckless spending...
To your credit, you, unlike a number of pseudo free trade spin-meisters here at Free Republic, admit to concern about the devaluation of the dollar. And also the disadvantageous taxes and regulatory over-burdens on our manufacturers.
If all that is so, how do you feel about the following proposal to cure the problem:
(1) Eliminate all forms of the U.S. Income Tax. Corporate, Personal, and Capital Gain. All of it. Rescind 16th Amendment if needed to effectuate this. (i.e., making sure the States also have to eliminate it).
(2) Replace the funds lost with exclusively consumption taxes so as to promote production and savings again:
Via
-- (a)a National Sales Tax...constitutionally limited to 15%. And
-- (b) a 25% foreign "revenue" tariff. (Revenue tariffs are permitted by WTO regime).
(3) Pass a Balanced Budget Constitutional Amendment with teeth. Spelling out that shortfalls automatically come out (through disallotment) of Domestic Spending Giveaways, not Defense.
The "enemy within" of a runaway government you fear would be constitutionally curtailed.
And the "enemy without" would similarly see its plans foiled. By the Power of the People being asserted at the last instant to save the Republic.
Because they've been trying to create relatively stable reserves for their banking system. Buying a Buick doesn't improve the balance sheet of a bank trying to have reserves for lending. Their banking system is a horrendous mess though, another reason I'm not worried about the U.S. falling prey to the dragon.
They transparently yearn for Chinese Hegemony. And they will perpetrate any evil, any crime, and as Ronald Reagan said, "reserving to themselves the right to lie, to cheat, and to steal" to get there.
No less tranparently than American neocons like Bill Kristol and his cabal yearn for American hegemony. Our own fiat money system is a crime against Americans, and I can't fault the Chinese for tying themselves directly to our currency to avoid the unmitigated default our government's constant inflation of the money supply represents.
The danger to the US's currency's role as global reserve currency is a better alternative. It's not an accident that since the French and Belgians voted no on the EU constitution gold has risen against all fiat currencies. If the Chinese try to float their currency and discharge their U.S. denominated reserves they'll destroy their economy more effectively than we could with a fleet of bombers. Their best recourse, and one that would threaten the dollar's position in global trade, is to tie themselves to gold, but since that would remove the ability of the leadership to manipulate the currency to the advantage of themselves and cronies, I don't see it happening.
They wish to steal those very surviving industries for themselves. Hence they are very careful to only buy American manufactured goods and machine tools that are at distressed prices...such as auctions of defunct manufacturing plants, Chapter 11 sell-offs, or Chap. 7 liquidations.
Then why are they willingly paying a 2 billion dollar premium on the value of Unocal? Is it in bankruptcy? The purchase of distressed company's assets isn't unique to China. If they can make profitable use of the equipment, the world benefits.
But they did rather deliberately, and knowingly, enable the consumption binge. By buying those Treasuries, it financed the deficits with the debt purchases, and like a credit-card junky we kept on increasing the spending rather than pulling back.
Again, they were trying to establish their own supply of stable banking reserves. The Chinese aren't responsible for the lion's share of financing U.S. debt. The Japanese have been picking up that tab, in a bid to reflate their own economy. You can read more about it here, it's pretty interesting, especially with that madman Bernanke poised to replace Greenspan.
The "enemy within" of a runaway government you fear would be constitutionally curtailed. And the "enemy without" would similarly see its plans foiled. By the Power of the People being asserted at the last instant to save the Republic.
While we're dreaming, let's return the currency to a solid footing. Link the dollar to weight in gold as done originally, and undone to finance the socialist dreams of FDR. Ditch the Federal Reserve for creating the credit environment (afterall, it has authority to monetize Federal debt, so you can't blame foreigners for funding our debt, the Federal Reserve can print till its heart's content to buy U.S. debt) that has every man woman and child in the nation staring at $100,000 in debt.
I'd be happy to see income tax abolished. Get rid of SSI, Medicare, and Medicaid in the same fell swoop. If States want to tax their citizens to provide these services, they are of course empowered to do so, but people will be able to escape those States with their property.
I have concerns about the nature of the sales tax proposed. I can't see how it results in a less intrusive government. I'd prefer the federal government collect it's direct taxes via capitation from the States. Perhaps even better would be to have the federal government collect them directly. But no 'emergency withholding' (as instituted in the midst of WW2), instead citizens write out their payment in full on the first Monday in November. The tax ID can serve as their voter identification on the following Tuesday...