Posted on 09/05/2007 1:34:50 PM PDT by blam
Keep in mind that America is 23+% of the entire worlds GDP and if we go so does the rest of the world.
That's just dead wrong and is an example of how misunderstood foreign trade and trade deficits are.
We do not "finance" our trade deficit through foreign borrowing. We pay for our foreign purchases with the profits we've earned in our domestic economy. We're creating wealth, trillions and trillions of it each year. If we spend some of it abroad or all of it here, it makes no difference.
Look, if I buy a 50lb bag of seed and grow it into 200 bushels of corn, then I've created about $500 or $600 of wealth that didn't exist before. Yes, I've got to deduct my expenses, but if spend all that profit abroad (on a new Chinese TV for example), neither I nor the government has had to borrow a single red yuan.
Worrying over the trade deficit is as senseless as fretting about global warming. Boob bait for economic bubbas.
If they are dumping then somebody is buying
You're assuming your logic and reasoning is the same as their's, therefore they would never do such, however, different values and dogma drive different cultures. They may think they have a way around your expected results. They need us but don't forget they hate us and our freedom values. If they thought for a second they could knock us down to their level and not commit total utter economic suicide, they'd do it in a heartbeat. Their logic is not our logic.
The speculation was that Chinese selling of US Treasuries would lead to a spike in US interest rates. In reality, the collapse of subprime has led to that spike. US business now have to pay more to borrow, whereas Treasury rates are trending down. Why is this? Treasury rates were artificially high because domestic and foreign investors disdained Treasuries for higher-yielding mortgage assets or corporate bonds. Once credit issues surfaced, they rushed back into Treasuries. Cash is once again king. This means Treasuries are back in vogue, regardless of what the Chinese do. Say what you will about Treasuries, but they are the only instruments with the taxing power of the United States Federal government behind them. I’ll take that taxing power over the credit rating of any financial firm or industrial behemoth any day of the week.
If you support free trade with Communist China...you are a Communist.
Plain and simple
Time to stop the anti-American nonsense
Ping.
The current state of the Treasury market - with lower rates than just a few months ago - just shows that possession of Treasuries give the Chinese zero leverage. It’s just the best place for them to park their cash. I would love to see them park their cash elsewhere - that would simply be a case of them cutting off their collective noses just to spite their faces.
Before long, they will be quietly invading.
I heard a great interview with an economist about that so-called “nuclear option.” He laughed at the suggestion that China could do any damage at all to the U.S. economy — comparing their threat to a guy who walks into a bank, pulls out a gun, and threatens to blow his brains out if he doesn’t get all the money.
When you're right, you're right.
Everything’s dandy!
Or a war...
We’ve been trading real infrastructure for goods from overseas. The long-term vs. short-term gap is bridged with paper.
More so when you understand economics.
That’s why they call economics “The Happy Science.”
> If they are dumping then somebody is buying
Somebody was buying in 1929 too.
Toddsterrrrrrrr. You go girl!
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