The Chinese

Discussion in 'Economy' started by lth68, Oct 3, 2009.

  1. lth68
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    lth68 Rookie

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    I have some questions that I can not figure out.... I'm new to this forum sorry if this is a hashed subject....

    1. I need to understand why after fighting communism for years and years that all of a sudden it is ok to sell trillions of dollars worth of US bonds to the Chinese?

    2. How is the fact that the US owes trillions of dollars to the chinese, how does that obligate the US to favoring policy to the Chinese? What kind of position does that put the US in?

    3. The Chinese Gov. is buying gold and silver at a record pace while creating incentive plans for their miners and encouraging there citizens with incentive programs to buy gold and silver strengthen there currency, while our Gov. is handcuffing our miners with strict environmental laws... Why is it that our Gov. does not find some middle ground with the environment and the miners while creating incentives for miners to strengthen our dollar? why is it that our Government has such a hard time managing our natural resourses?

    4. What happens if the Chinese cash in there bonds and the US doesn't have the cash? are we talking mega depression?

    Your thoughts are apprieciated
     
  2. Kevin_Kennedy
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    Kevin_Kennedy Defend Liberty

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    1. China isn't communist anymore, the ruling party simply calls itself the Communist Party. It's a misnomer, however, as they also accept open capitalists into the party. At any rate, we didn't genuinely have any problem with communism even when the Soviet Union was around. We simply had a problem with the Soviet Union and used that conflict to paint all communists as evil.

    2. If our policies start to offend China in any way then they'll stop buying our debt. The federal government needs them to keep buying our debt so we can continue funding the welfare/warfare state. It's like a junky looking for a fix.

    3. The federal government doesn't want the dollar to have to compete against gold here at home, and doesn't want to promote gold because that would show weakness in the dollar and would tell other countries it's time to dump the dollar as reserve currency.

    4. It doesn't matter what China does. We're never going to be able to pay them back. The sooner China comes to this realization the sooner they'll be able to cut us off and focus on themselves. Their standard of living would go up dramatically.
     
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  3. Mr Clean
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    Mr Clean Gold Member

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    One word:

    CHEAP LABOR
     
  4. lth68
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    lth68 Rookie

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    kevin said"

    3. The federal government doesn't want the dollar to have to compete against gold here at home, and doesn't want to promote gold because that would show weakness in the dollar and would tell other countries it's time to dump the dollar as reserve currency.




    So if thats the case, why would china invest trillions of dollars in the US then drive gold prices up causing inflation in the US? makes no sence to me other than they want there currency to be the reserve currency... and if thats the case why would the US put themselves in that position? does the US believe that radicle advances in alternitive energy is going to advance the country out of depression?
     
  5. eagleseven
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    eagleseven Quod Erat Demonstrandum

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    1. Kevin is right. China now has a mixed-economy ruled by a one-party dictatorship. They call themselves Communists for propaganda purposes, but are Communist in name only.

    2. It makes the Chinese and American economies connected at the hip. If America collapses, China will lose the money they lent us, as well as export profits. If China does not buy our debt, the American government will become insolvent and collapse.

    3. China is busy attempting to isolate themselves from our economy (undoing #2), so that they do not suffer from our foolish policies. The American government cannot effectively mange our resources because we elect community organizers, not businessmen or economists, to political power.

    American politicians are expert at one thing: campaigning.

    4. If China stops purchasing our debt, or worse, calls us on our debts, the US Government will become insolvent. The government will be forced to print massive amounts of money to make ends meet, resulting in Zimbabwe-like hyperinflation ($50 for a candybar). As the US Dollar is the world's reserve currency, hyperinflation would cause the world economy to crash a second time.


    China is buying up the world's gold supply precisely because they expect American hyperinflation will destroy the dollar and cause a second crash. Or, as my Chinese friend said, "In ten years, Americans will be immigrating to China for jobs."
     
    Last edited: Oct 3, 2009
  6. Kevin_Kennedy
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    Kevin_Kennedy Defend Liberty

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    They're buying gold because they don't want to hold dollars. As we inflate our currency the dollars held by the Chinese depreciate and they want to protect their wealth so they buy gold which goes up in value as dollars go down in value. Remember that inflation is defined as the increase in the supply of money.
     
  7. RadiomanATL
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    RadiomanATL Senior Member

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    There's a whole lot of them.
     
  8. Zander
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    Zander Platinum Member

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    Not exactly. Inflation is an increase in the money supply and an increase in available CREDIT. Credit is shrinking at a much faster rate than the money supply is increasing. That is why we will see deflation first, before we have any inflation. Inflation will come back eventually, but only after we have credit expansion.
     
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  9. Valerie
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    Valerie Gold Member

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    As our supply of money increased we deflated the value of the US dollar.

    Consumer Price Index (CPI)
     
  10. Toro
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    Toro Diamond Member

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    Because the Chinese aren't really communist. Communism does not allow for widespreaad ownership of property and large differences in income, as occurs in China.

    But American foreign policy is based on realpolitik, not ideology, as it is with all great powers.

    It ties both countries closer together, making war less likely. That's a good thing.

    I have no idea.

    Bonds aren't "cashed" in. Most "cash" are electronic digits that are never converted to tangible items.

    But if you mean by "sell," then yes, the US would go into a severe recession as interest rates would spike. However, China is highly reliant on the American economy, so why would China pummel its own economy?
     

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