MFN wasn't given to China by Clinton. It started with Nixon, was extended by Carter, was renewed annually by Reagan and Bush I, when Congress attempted to restrict it post-Tienanmen, Bush I vetoed it, Clinton extended it, Bush II extended it... Systematically turning China into a dumping ground for Treasuries that will ultimately be defaulted on has been national policy from both parties for over 30 years.
It was made permanent by Clinton vs. being renewed annually, allowing long term decisions by Wal Mart and others to be made and amplifying the damage ten fold that had been done in the past. You may believe China relations are good but they are helping to destroy our country.
That is an interesting idea that I had never previously considered. Are you suggesting that the US has had a long-term strategy to tolerate an undervalued Chinese currency, buy cheap Chinese products, encourage China to put the profits back into US Treasuries, then default on the debt? Is that your idea or did you read about it somewhere? I can only imagine such a strategy leading to catastrophic consequences.
I don't generally believe any organization - private or public - is capable of formulating (much less executing) a multi-decade plan. Things just happened-out this way - a succession of US administrations needed a dance partner, China for it's own no doubt valid-at-the-time reasons accepted, and away we went. China's value to the US is almost entirely based on its willingness to keep eating Treasuries. That may not have been clear to Congressional types 20 years ago, but it is becoming quite clear to them now. If the US does this right - by moving towards internal fiscal discipline first - defaulting the on the China CUSIPs could be quite a stimulus to the global economy. Except for China's, of course.
to accumulate a debt of that size its quite obvious there is no intention to pay back, as further confirmed by recent US gov't actions to go spend like there's no tomorrow, if u were in the same situation on a personal level like with 20 credit cards u would have done the same
So as a recap, the consensus is: China will revalue its currency and USD will fall against it. Prices at walmart will go up. People with no jobs and fixed salaries will not be able to afford as much. US economy grows. I have that about right?!?!
At some point China will decide it is time to let RMB strengthen a little, perhaps 2%, maybe more. Then they will do a little selling in USTs, $ assets and perhaps equities too just to lessen the imminent currency losses when they announce it. What about commodities - what do you think happens here when China has decide on a move (but not yet announced it) and is doing a little 'pre-positioning'? I'm erring on the side of some strengthening in $commodity prices due to US imported inflationary impacts after the RMB appreciation... But you could also argue $commodities such as oil represent a $investment to some extent and might also be sold off with bonds and stocks and worsening economic prospects... After a RMB appreciation I would guess commodities in $ terms are pulled up as $ weakness would likely dominate. Any thoughts?