what's this all about???

Discussion in 'Economy' started by sparky, Mar 9, 2010.

  1. sparky

    sparky Gold Member

    Oct 19, 2008
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    China – Our Banker, Now With Leverage To Change U.S. Govt. Policies

    China ? Our Banker, Now With Leverage To Change U.S. Govt. Policies | Economy In Crisis

    The U.S. government predicts a $1.56 trillion deficit in 2010, or 10.6 per cent of the economy measured by gross domestic product (GDP). The budget deficit will, among other things, fund the wars it fights all over the world. Japan, China and others buy large chunks of this debt in the form of T-bills to collect interest and allow the U.S. to continue its spending spree.

    But what if China said no? What if Chinese and U.S. interests diverged in such a fundamental way that it caused China to pull the plug on its vast treasury allocations?

    That option is now on the table after recently several high ranking Chinese officials threatened to use the so-called “nuclear option,” the liquidation of their U.S. holdings, to counteract current pressure from U.S. congress over the Yuan. Such liquidation could cause the dollar to plummet in value and threaten to seriously destabilize the American economy.

    Foreign nations now hold a staggering 44 percent of U.S. debt, a powerful leverage against American interests.

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