A 5-10 year deflationary episode like Japan is almost singularly what the CB's and Bernanke are trying to avoid. Yes, there will be pain. But the tweakers expect they can avoid such pain for a longer term period. That's where the point is. You don't need to float the Yuan anymore - dollar is weakening to put the hurt on China. Look back to when the chinese dumped treasuries this summer as a warning and then we allowed the USD to plunge to 1.43 vs the euro as a result. Note that Paulson hasn't been back to china lately? FYI - most political instability has been brought about by a disenfranchised middle class - they have the education, but not the means; as opposed to the upper class which has the means but often not the education/information/wherewithal. You can argue that as we become more of a meritocracy, there is convergence, but I would argue that is nowhere near well established. The lower middle class is toast.
Read it again, slowly this time. The idea that Japan is the second largest economy is pure, unadulterated bullshit. China surpassed them a while ago. In PPP terms, they're gaining on us rapidly.
No Prez, especially not a Dem one, would be able to survive Taiwan's forcible takeover by China. And as of now, between Taiwan's own defense forces and our own, we can still stop them from succeeding in a military attempt. However, a political absorption would go over peacefully.
nice to see that trefoil is still as dumb as before. i usually do not see his posts because he is one of the few that got on my ignore list - certainly an achievement given that people like eagle488 (who for instance threatened to kill families of other posters) or more recently sisepuede (definition of hatred ) did not have this privilege.
Key Phrase: Longer Term. Thats 10 years out. At which point, the country will be knee deep in the Social Security/Medicare crisis. How do you reckon the Treasury Department plans to meet all those unfunded liabilities? Central Bank "Tweakers" are more political functionaries than economic purists. Their role is to cajole the economy into financing the political agenda of the sitting Administration, or the promises made by those before it. Paulson and Bernacke rollover when Congress demands another 400 Billion for Iraq or Wallstreet wants a bailout. No, its not. The Yuan/Dollar valuation appreciated a meager 5% in the past 1.5 years. The Chinese mini-dump was a shot across our Treasury's bow that was more symbolic than real. Sure, the Chinese are getting the shaft on T-Bills. But that doesn't impact the Yuan / Dollar exchange or the price of Chinese goods, does it? The Chinese Government is getting screwed. But its a small price to pay to keep their number#1 customer buying. When the landed cost of Chinese goods starts accelerating, thats when problems start.