China will always buy our debt as long as they want to be a net exporter to the US. There is no other way..... They deliver ships full of crap to us. We credit their account at the Fed with extra zeros. They turn around and buy treasuries. Can someone else tell me what they could possibly do with all the dollars that we send them (actually zeros credited to their account. The answer is nothing really. They could buy things such as natural resources or other imported goods from other countries. In that scenario, they use US Dollars for that transaction. Ultimately, all of those dollars have to end up back here in the US through treasuries or asset purchases from the US denominated in dollars. That is the beauty of having the reserve currency.
the thing is if they bought anything but treasuries it would force their currency to appreciate. By buying our debt they are allowing our big spending politicians to put off the day we have to balance our budget. ... its about time someone in Washington said wtf are we borrowing. even it we are going to deficit spend... lets stop the the borrowing. Sure we would have inflation... but a lot of that would be to goods made in china. China's goods need to go up relative to other goods. Which is the way it should be..... price is supposed to help us properly allocate resources. But when price is being manipulated... our resources are not properly allocated. it costs us jobs...an it allows bankers and others to buy our lobby (bribe) our politicians into inefficiently allocate things in other areas. China is being allowed to manipulate the invisible hand. Lets stop borrowing our debt.
you wonder whats going to happen when the bonds dive down in a quick fashion and interest rates go way up....
our markets are way to free with respect to banking and wall street. They need to be reregulated and the rest of the markets need to be lightened up on...
heck yeah... Treasuries underpin an awful lot of stuff.. Not to mention that the Federal Sector borrows 40% of all that it spends currently, if their interest rates go up it will get even worse... If one's outgo exceeds one's income then one's upkeep becomes one's downfall...
Eight "our markets are way to free with respect to banking and wall street. They need to be reregulated and the rest of the markets need to be lightened up on... " If Wall Street and Investment Banks were allowed to fail, I think the regulation would take care of itself. Too Big To Fail is just another way of saying Crony Capitalism (which is not Capitalism at all).
All that capitalism requires is that capital and the means of production be in private as opposed to government (public) hands. "Crony Capitalism" is very much a part of the broad spectrum over which capitalism can manifest itself.
You are correct. Crony Capitalism falls within the broad spectrum called Capitalism. But would you agree it also resides within the realm of Socialism? When Hitler came to power in Germany he was pressured to Socialise industry. He is reputed to have said, "Why Socialise business when all I have to do it Socialise business owners?" Crony Capitalism may allow one Capitalist in the market while denying entry to 99 other potential competitors. The government can also effectively control capital, like it did when it mandated private capital finance housing loans to folks that could not pay the loans back. Isn't control of capital more important than ownership? So perhaps I should have said Free market Capitalism to avoid semantic confusion.
I am essentially in agreement with you. "Free market capitalism" is that more or less ideal business climate that many of us, certainly most of us who are not business owners, espouse as being desirable. The public championing of free markets by business leaders, and particularly executives in major corporations, however, belies their decisions and actions. If fact, show me a capitalist who would not take advantage of the opportunity, by any legal means and sometimes illegal, to eliminate competition, and I will show you an incompetent capitalist. In other words, capitalists do not, in practice, like free markets, and free markets are not an essential component of capitalism, but rather a means of keeping capitalists from riding roughshod over consumers. Government's proper role, in this regard, is to preserve free markets, and protect them from capitalists. Crony capitalism is just a reflection of the government's failure to fulfill that role. Free markets are an endangered species in a plutocracy such as the U.S.A. where it is possible for those with the most capital to bend public policy in a direction they deem most favorable. It gets rather wearisome to see over and over again, particularly here at ET, "free enterprise" being connected to capitalism as though they had something to do with each other, when they don't. It was nice to see that you, at least, recognize that not all capitalism is free market capitalism. In fact, very little of it is. "Competition is a sin" -- remark attributed to J. D. Rockefeller --American industrialist and founder of Standard Oil.