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2009-05-25 Home Front: Politix
China warns Federal Reserve over 'printing money'
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Posted by tipper 2009-05-25 09:39|| E-Mail|| Front Page|| [6505 views ]  Top

#1 If China Stops buying then your interest rates SOAR.
Posted by Bright Pebbles 2009-05-25 10:45||   2009-05-25 10:45|| Front Page Top

#2 The USG at this point thinks there is no other choice but to "monetize the debt", or "print money". This is because that current debt and self-imposed obligations would require the Chinese to double, triple, or quadruple their current purchases of T-bills to pay for Washington's excess, and they not only won't, but they can't.

The only alternative to monetizing the debt is bankruptcy, which, truth be told, may be inevitable. And the Chinese won't like that a hell of a lot more.

Talk about the US joining an "international currency" is b.s., because that would have the same effect as bankruptcy. All the overspending and largesse would end.

By this I mean that Dr. McCoy has already pronounced Social Security, Medicare and Medicaid dead, and the Defense budget cut by 50% or more.

Interestingly, I saw a trial balloon in Wired magazine of the idea of abolishing paper currency and coins. This is because that would be the only way for the government to force everyone in to an electronic payment system under their control.

Otherwise, even if the government went hog wild with the electronic currency, it *couldn't* prevent people from having a stable paper currency. This is because there is no physical way for the government to print US dollars fast enough to inflate them alongside its electronic dollars.

If the public insists on cash, the currency is split, with electronic money becoming worthless, and paper money and coins becoming very valuable. Paper money and coins are legal tender, electronic money is not.
Posted by Anonymoose 2009-05-25 12:13||   2009-05-25 12:13|| Front Page Top

#3 Coin is the only thing keeping our currency afloat right now. It won't last forever.

The Idiot walks in the door and spends $10 trillion thinking that inflation gets us out of housing problems. What a miserable waste of money and it does screw China hard as they are hevily invested in our system.

Such a poor, terrible waste.
Posted by newc">newc  2009-05-25 13:20||   2009-05-25 13:20|| Front Page Top

#4 The only thing keeping our currency afloat at the moment is the fact that most of the developed world is printing money at least as fast as we are.

China's stuck: if they stop buying treasuries their $2T in UST holdings evaporates as the fed steps in with new money to shore up Treasury's ability to borrow; if they decouple their currency from the dollar completely their currency soars against the dollar and their export base crashes; if they keep buying treasuries the dollar & their UST holdings erode away.

If I were the Chinese I'd divest all of those US Treasury assets for farms & mineral interests in nominally friendly nations, ramp down new purchases of UST issues to zero, and then float the currency. The ensuing dollar crash, US hyperinflation & US federal bankruptcy would give them at least a decade, and probably two, to become a global military superpower with little interruption from a neutered USA.
Posted by AzCat 2009-05-25 22:22||   2009-05-25 22:22|| Front Page Top

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