I think Mvic has it right. The Chinese won't dump our dollars YET. They are going to wait until they make all the cars, airplanes, food, etc. for the USA and half the world. Don't forget the Europeans are also outsourcing alot of factory work to them. The problem will be when they have a decent internal market, and the rest of the world is buying from them. They are going to let us fall flat on our faces. It will be really ugly, IMO.
Agreed. So many people miss this important point: How did China get all those dollars? The US is in more of a position to crush the Chinese economy then most people realize. The consumer in China is ultra-leveraged right now with people taking out loans and using credit cards to purchase equities - much like a 16 yr old who gets a hold of their parent's credit card shops at the mall without a sense of guilt. IMO, this is a bluff from China: if they dump their dollars and US bonds on the market their 1 Trillion of USD influence turns into much less in a short time. And with M3 gone, the mint just needs to print more paper to absorb the blow to the Forex markets. I think Paulson is smarter then he plays....
If the US would just STFU about currency manipulation and deal with our own imbalances we created for ourselves, we wouldn't be in this situation. Congress is playing an enormously dangerous game of brinkmanship. China has currency reserves worth ~10% of the US economy.
1 problem with your hypothesis. If China dumps their dollars in the market they have to buy something else. If they buy Euro's they inflate the Euro to the sky making the Europeans very rich... and they'll want to buy chinnesse crap... now paid in Euro's... until the Europeans are as adicted to China as the US is today... Or... M.A.D.
Ah, you guys are just so unbelievably stupid. Sorry, Americans. You have lost. Up to your eyeballs in debt, while China has all the money. Perhaps you should try a default. Then enjoy the status of a third world country.
Hear, hear. Of course if things get bad enough we can just go to war with them. Last time that happened we ended up retreating from the Yalu River past the 38th parallel, longest retreat in US military history. Never underestimate the Chinese. Martin
Ironically ,MacArthur, the self-concieved general was defeated by Dehuai,Peng, the general of Chinese army with inferior weapons
this is what happens when you go to a foreign nation and dictate to them how to run their economy. happened in palestine.