GeminiAtlas

China's Arithmetic When It Comes to the Dollar

Have to agree, it seems that China and US are dancing some kind of MAD dance. Except that China seems to keep the longer view (50 years), as well as systematically teaching the 36 Stratagems, Sun Tzu, etc. type-thinking to it's mandarins (pun intended). The US it seems does not keep the longer view (many times the strategic view, at least economically, seems to emphasize no more than 5 years down the road). Seeing that the growing deficits and therefore nat. debt sees no sign of ever being paid back, it looks like this will be a lose-lose situation for both sides. Now it's just about who will lose the least. That isn't so clear, since if China dumps the dollar, they wreck their best client's economy and therefore, their own. If the US monetizes the debt, the US wrecks it's own economy and China gets screwed with worthless paper Treasuries.
Maybe the solution will be to proclaim the new "Sino-American Pacific Empire" and China and the US will live happily ever after.
:)


On Jun 01 06:32 PM Cleveland1 wrote:

> The Chinese-American relationship is effectively akin to our nuclear
> policy of mutually assured destruction. They have to keep buying
> dollars in order for Americans to afford the products spewing out
> of their factories while we continue float ungodly amounts of debt
> to prop up our broken economy and assuring our slow growth for the
> next two decades punctuated by inflation once we do start growing.