Let them eat dollars (China Has Some Chutzpah Warning The U.S. About Its Debt)

You have to love the Chinese. No sooner had Standard and Poors downgraded U.S. debt than Beijing let loose with a huge scold about how Ameica has to get its debt under control.

Normally I'd be lambasting Uncle Sam right along with the Chinese. For more than thirty years I have been urging that U.S. incentives to save and spend be reversed in an effort to weaken the dollar, reduce the U.S. trade deficit, and increase domestic investment, production, and jobs. But in this case, I just can't allow the Chinese gall to go unremarked even though their criticism is technically valid.

I mean, let's get real. Even as they were scolding, the Chinese authorities were in the market buying billions of dollars worth of U.S. Treasury debt. And why are they doing this? Well, there are complex reasons, but a main one is to keep their own currency undervalued as a kind of export subsidy. By buying U.S. Treasuries, China's leaders are pushing up the value of the dollar versus the yuan and thereby making U.S. exports more costly and U.S. imports of Chinese goods and services less expensive. In effect, they are devaluing their own currency.

This behavior by China has tended to depress U.S. interest rates, subsidize U.S. consumption, and remove any disadvantage to the United States of its over-consumption. In short, China has done everything it can to encourage and induce just the behavior it is now urging Washington to halt.

No one is forcing the Chinese to buy dollars and treasuries, and a sure way to force Washington to become more serious about prudent fiscal behavior would be for China to halt its buying. But it doesn't and it won't.

As much as I detest the Chinese government, I’m not going to fault them one bit for taking our government leaders to task.

We have been trying to get them to knock off this ridiculous spending for decades. They won’t listen to us.

On the offside chance they might be embarrassed by the Chinese government into doing something to end this spending, I say shout louder Chinese government.

I wish I had that loud a voice.

"Even as they were scolding, the Chinese authorities were in the market buying billions of dollars worth of U.S. Treasury debt."

Another government--not the Chinese--put some big money in stocks a while back. Then after the debt downgrade, the Dow mysteriously dropped a few hundred points, while big bucks zoomed into treasuries (?). At the same time, international bankers get together to fix a few currencies. Now there's a synthetic market tide machine.

Moves to cut foreign manufacturing and freight fuel costs (oil) again, perhaps? Late 2007 all over again? Investors reach yet another height of cynicism?

The Chinese have one HUGE advantage over the US, at least for now. They can shut their borders, turn off the newspapers, internet and radios and kill every living person that opposes the government. Then in a couple of months, get back to "business".

Obama and the dems wish they could do that and have tried with union thugs, willing media and quisling legislators.... but that final bullet in the head that makes you stop and obey...well the flash mobs can try to do the intimidation, but dang it, there's too many people with weapons that are not going to tolerate being robbed or intimidated. At least not here in Texas.

I'd advocate for everyone to just keep your powder dry, load up on ammo, get your CCW permit and just hunker down till the next election. Don't buy anything over $100 unless it's used, do staycations, minimize air travel, don't go overseas unless you are required by business and just make your nut to pay your bills. Delay your taxes till the last minute and starve the beast by NOT passing any bond, taxes, fees or any spending at the local level. Just SHUT IT DOWN, for 1 year. NOTHING. Vote OUT every single person that wants to borrow to "beautify" the city, put up light rail or some "senior center" . Just vote out every single spender and then, maybe then, we'll start to starve the beasts in government.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.