Party is over for the U.S. when Beijing says it is! How the U.S. is Dependent on China-Robin Trehan
It’s hard for many individuals to believe that a leading country like the U.S. could be dependent on China. If you’ve been following closely with the doings and spendings of the United States, you’ll see how this has come to take place. First off, America has a very bad spending habit. We are in debt so high that not many people see how we can get out of it. The United States is debt spending and a lot of important holders of Treasuries are in control of whether the U.S. will be charged higher interest rates or not. If America isn’t careful, they could risk the Treasuries dumping their holdings altogether, which would cause the value of the dollar to plummet. Right now, this type of spending has pushed the U.S. to depend on Russia, China and Gulf States.
Then the doings of the U.S. has created great ties with China. The economic relationship that the two countries hold is probably the most important in the world right now. This was definitely the case when it came to the trading of goods, but now it seems this tie has a great influence on monetary policy also. Two years ago, expert Martin Wolf said that the party is over for the U.S. when Beijing says it is. With that being said, you can imagine how deeply the U.S. and China are tied.
This tie deepened when China and the U.S. established the Strategic Economic Dialogue, also known as SED. This was created during the President Bush and President Hu Jintao era in 2006; it is now known as the US-China Strategic and Economic Dialogue. Yes, the two have plenty of dialogue on global warming and such, but the bigger picture still points to the U.S.’s large budget deficit and China’s necessity to stabilize the yuan. Now, China is forced to buy dollars, even as the value of the dollar is decreasing. Now, President Obama will have to present and sell a policy to the Americans, Congress and China. The economic contraction will cause turmoil and uncertainty and China sees this. For the U.S. China is too big to ignore, and for China America is too big to fail. Looks like money does make the world go around.
Robin Trehan, is associted with private equity group of Credit Capital Funding. More information www.LatestBusinessReport.com