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  1. #1
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    Default China, our debt, our dollar

    First off I hope must of us here know that China is one of the largest holders of our debt. They buy our bonds while in turn we promise to buy goods from them and eventually pay them back somewhere in the far flung future. In light of this economic crisis, countries around the world are quite livid with our habit of debt spending to the point where our currency is no good and is aiding in the global economic instability. China threatened some days/weeks ago that they would stop buying our 30 year treasuries. They want to stop buying our debt. In response, the government started implementing a new policy of beginning to sell bonds/treasuries to the Fed, our own national bank. We will, in effect, be buying our own debt. Obviously that will not be sustainable. Anybody with an ounce of common sense can see where this is going, and there is no amount of economic magic tricks that will negate the impact of what we are really doing with our currency, our debt, and our standing with all the other nations.

    This is what China had to say the day before yesterday-

    http://www.istockanalyst.com/article...icleid/3037592
    # China will continue to buy US Treasury bonds even though it knows the dollar will depreciate because such investments remain its “only option” in a perilous world, a senior Chinese banking regulator said on Wednesday. Luo Ping, a director-general at the China Banking Regulatory Commission, said after a speech in New York that China would continue to buy Treasuries in spite of its misgivings about US finances.
    # “Except for US Treasuries, what can you hold?” he asked. “Gold? You don’t hold Japanese government bonds or UK bonds. US Treasuries are the safe haven. For everyone, including China, it is the only option.”
    We hate you guys. Once you start issuing $1 trillion-$2 trillion [$1,000bn-$2,000bn] …we know the dollar is going to depreciate, so we hate you guys but there is nothing much we can do.

    -- Lueo Ping, China Regulatory Commission (02/11/09)
    They "hate us" because we are creating pressure on them to continue buying our debt despite the fact that our dollar will become pretty worthless soon enough. When they REALLY stop buying our debt is when the crash will come under full swing. Gerald Celente, one of the people I listen to intensely when he speaks about economic trends, believes we will see another tumble downhill in the U.S. around March, and I believe he said it would be with the dollar.

    Again, I don't like to sound like Mr. alarmist, but between what I see coming down the line with my own state of CA, what's going down on the national level, and with Mexico and the rest of the globe, at the very least people with sense should be preparing for the worst. We don't have to expect the worst will happen (though I see the potential getting greater week by week), but we should be responsible enough to be prepared mentally, financially, etc. for what could be a VERY difficult number of years to come.

  2. #2
    Content. Content? DigitalMethod's Avatar
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    If the US were to become self-sufficient.
    Wouldn't this lead to some revolution in China?
    "The life of the individual has meaning only insofar as it aids in making the life of every living thing nobler and more beautiful."
    - Albert Einstein

  3. #3
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    They hate us because the world is extremely dependant upon America doing well, and there's nothing they can do about that. If it gets bad enough, I'll bet you 3 schillings China will just say "Fuck it, debt erased" and we can start over :P It helps to realize money exists only in our minds. Whenever national debt is cleansed and restarted back to 0..... nothing happens (apart from currency markets fluctuating). It doesn't even matter....

    Seriously, what are they gonna suggest we do if they want us to pay them back? Write them a big phat IOU like the one kyuuei posted?

  4. #4
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    Quote Originally Posted by nozflubber View Post
    They hate us because the world is extremely dependant upon America doing well, and there's nothing they can do about that. If it gets bad enough, I'll bet you 3 schillings China will just say "Fuck it, debt erased" and we can start over :P It helps to realize money exists only in our minds. When debt is cleansed and restarted back to 0..... nothing happens (apart from currency markets fluctuating). It doesn't even matter....

    Seriously, what are they gonna suggest we do if they want us to pay them back? Write them a big phat IOU like the one kyuuei posted?
    Nuh uh, there is no magical debt eraser. What they are going to do is stop buying our debt and the world is going to reject our currency. The USD will no longer be the reserve currency, and when all of that comes to fruition this economy will sink into the icy depths. The only thing that I contend will curtain that possibility is a globalization of the economy and/or our currency. either way, I guarantee the USD will not exist as it is today.

  5. #5
    I'm a star. Kangirl's Avatar
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    Well shit. I get paid in USD.
    "Only an irrational dumbass, would burn Jews." - Jaguar

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  6. #6
    DoubleplusUngoodNonperson
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    I'd choose to get paid in Euros myself!

  7. #7
    I'm a star. Kangirl's Avatar
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    I do most of my work for Americans. I have considered charging in Euros but things are so uncertain I don't feel like pushing people away (and i feel like doing that might accomplish it).

    It was only quite recently that living in Canada and getting paid in USD was a very sweet gig. Damnit.
    "Only an irrational dumbass, would burn Jews." - Jaguar

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  8. #8
    Minister of Propagandhi ajblaise's Avatar
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    We're actually more interconnected to China than a lot of people know. It's a very complex relationship, but we're in it together.

    60 percent of Chinese exports to the United States are produced by firms owned by foreign companies, many of them American. http://www.foreignaffairs.org/200507...ith-china.html

  9. #9
    DoubleplusUngoodNonperson
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    and debt HAS been erased before: Iraq had a lot of their former debt removed IIRC.

    also: BBC NEWS | Business | Cameroon sees $5bn debt erased

    not nearly the same order of magnitude of TRILLIONS, but for their overall GDP 5bn is a lot. If it comes down to excusing debt, or as ajblaise points out: suffering serious losses due to a collapsing US economy, I think they'd write off some of the debt.

  10. #10
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    Quote Originally Posted by nozflubber View Post
    and debt HAS been erased before: Iraq had a lot of their former debt removed IIRC.

    also: BBC NEWS | Business | Cameroon sees $5bn debt erased
    That was Iraq, a country that was taken over by us, then returned to the Iraqis under a completely new government. Apples and oranges when comparing it to the United States' situation. Trust me, there will be no happy debt eraser rubbing us into salvation.

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