Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The US does not borrow from China so much as China invests dollars it doesn't know what else to do with in US Treasury securities and other dollar-denominated assets. Where do they get all those dollars? They sell us stuff. If they can't sell us stuff -- and they are having a harder time of it in the current economic climate -- they cannot hit the GDP targets necessary to support their newly emergent urban middle class. Those folks like their cars, and TV's, and comfy urban apartments. If jobs and incomes start to erode within this group, their already tentative support for the current government starts to wane quickly, and that leads to internal instability and crisis. So the Chinese will continue to sell us as much stuff as they can. They'll use some of the dollars to buy stuff from us. They'll use some to buy stuff from others who take dollars in international exchange, and the residual they will invest in US Treasury securities, etc. If they had anything better to do with those dollars, they would already have done it. They hope their accumulated store-of value (currently about $800 billion in Treasuries alone) will maintain its value and not be eroded away by inflation as the petro-dollars of OPEC were in the late 70's and early 80's. Hence, they ask the US Government not to be too rash in its policies. This is not some stick that China waves at the US, but more of a plea to be gentle so as not to damage all those Chinese dollars too much. China doesn't have any actual recourse at the current time. All they can do is keep giving us their residual dollars and then hope for the best for them. This is a dance in which each partner needs the other. Hence, the dance will go on.
It is time to roll over and listen to China until we fix things, because the last thing we need is China to collect on those notes and put us into superinflation and be in worse shape than Tanzania and have 2000% inflation and a crumbled economy.
Look at the bigger picture. If the U.S. government overspends, the U.S. must raise taxes on Americans to pay for part of Obama's big government expansions and service the higher debt on the rest, meaning... Americans have less money to buy the stuff China wants to sell us.
American people can't afford X. So, we don't have X. But, Americans want the government to provide X. The government can't afford X. So we shouldn't have X.
It should be that simple.
Once China stops funding us, we are in deep you-know-what.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
