Ron Paul to be on with Alex Jones today!

[Brandybuck]

He says he wants to bring up the deficit at the next debate, saying how China or other countries we borrow from could bring us to our knees.

And if every Chinese jumped up and down synchronously, they could cause earthquakes in Kansas. OMG!

If China did this, it would hurt them just as bad. This is basic economics. If I were a large bank and decided to go nuts, I too could call in all of my accounts. But the massive defaults and bankruptcies would destroy me. It would be like tossing all my assets on a bonfire. If I were a crazy mofo I might do it, but I don't think China is that crazy. China spent a crapload of money getting the US debt, it would destroy them financially if they threw it all away in a fit of spite.

 

[ThePieSwindler]

And if every Chinese jumped up and down synchronously, they could cause earthquakes in Kansas. OMG!

If China did this, it would hurt them just as bad. This is basic economics. If I were a large bank and decided to go nuts, I too could call in all of my accounts. But the massive defaults and bankruptcies would destroy me. It would be like tossing all my assets on a bonfire. If I were a crazy mofo I might do it, but I don't think China is that crazy. China spent a crapload of money getting the US debt, it would destroy them financially if they threw it all away in a fit of spite.

But couldn't China just stop lending the US money? I don't purport to be an expert on macroeconomics, but, it seems to me that Paul means more than just "they could call in all our debts" when he says they could bring us to our knees. I think it simply means they have the ability to impact our economy in a significant way, and would have many financial inroads to undermine the US in the event that the two nations became even slightly hostile.

 

[aravoth]

It wouldn't hurt the chinese at all. All they have to do is abandon the dollar and start trading in euro's. That would severly hurt the dollar on the global market. Then they could call in the debt. It would be nothing more than a hiccup in the asian market for about 5 minutes.

 

[KingTheoden]

But couldn't China just stop lending the US money? I don't purport to be an expert on macroeconomics, but, it seems to me that Paul means more than just "they could call in all our debts" when he says they could bring us to our knees. I think it simply means they have the ability to impact our economy in a significant way, and would have many financial inroads to undermine the US in the event that the two nations became even slightly hostile.

Allowing foreign powers to have massive shares of your debt is extremely dangerous and wholly apart from the risk of those countries selling debt holdings all at once. It allows such nations to qualify their countinued investment in debt with demands (e.g. end of restrictions against foreigners holding American property, etc.). If foreigners decided to stop their capital inflows, our nation would be brought to its knees in that there would be no way to finance the wars and welfare state anymore.

It becomes tedius debating the economics of taking on foreign debt as some point to the apparent fact that interest rates are low despite such a dependence on investment abroad. The bottom line is that it is highly irresponsible to treat large yearly debt increases as normal and to boot rely on foreign inflows. Eventually this game has to stop and I believe it will grind to a halt much sooner than some 'experts' prognosticate UNLESS Ron Paul gets into office and can end spending orgies like the war.

 

[LibertyOrDie]

On YouTube :

Part 1 of 2: http://www.youtube.com/watch?v=pd24EmZHmsY
Part 2 of 2: http://www.youtube.com/watch?v=CA4CxnAHh9s

 

[kylejack]

On YouTube :

Part 1 of 2: http://www.youtube.com/watch?v=pd24EmZHmsY
Part 2 of 2: http://www.youtube.com/watch?v=CA4CxnAHh9s

Excellent, thank you!

 

[4Horsemen]

And if every Chinese jumped up and down synchronously, they could cause earthquakes in Kansas. OMG!

If China did this, it would hurt them just as bad. This is basic economics. If I were a large bank and decided to go nuts, I too could call in all of my accounts. But the massive defaults and bankruptcies would destroy me. It would be like tossing all my assets on a bonfire. If I were a crazy mofo I might do it, but I don't think China is that crazy. China spent a crapload of money getting the US debt, it would destroy them financially if they threw it all away in a fit of spite.

True, but they got the Euro as back up, plus they grow their own food. Where's the American farmer at these days? Then you have to wonder why the IRS ruined Willy Nelson? was it because of his Farm Aid concerts trying to get the American people's attention about the problem? People need to start growing their own food, including me.

 

[Brandybuck]

It wouldn't hurt the chinese at all. All they have to do is abandon the dollar and start trading in euro's. That would severly hurt the dollar on the global market. Then they could call in the debt. It would be nothing more than a hiccup in the asian market for about 5 minutes.

If they abandon the dollar, then they are in essence shredding billions of "dollars" of value. It's like sending all their production over here for free. We would see some temporary deflation, but it would be a huge boon to us as we don't have to pay any of this back! Which is why they're not going to do it, because it's so foolish. It would be like your banker saying "I'll show you! I'll tear up all these IOUs, you filthy capitalist scum!"

On the other hand, they could abandon the Dollar by trading them all for Euros. But now the Europeans have our dollars, and will need to either spend them on US goods, or trade them to someone else who will.

p.s. I am not denying that we have become dependent on China as a source of credit. However, the typical scare scenario is that China could call in all of its loans and wipe us out overnight. That isn't going to happen. They would be committing financial suicide to spite us. I trust Mises and Hayek over Lou Dobbs any day.

 

[kylejack]

If they abandon the dollar, then they are in essence shredding billions of "dollars" of value. It's like sending all their production over here for free. We would see some temporary deflation, but it would be a huge boon to us as we don't have to pay any of this back! Which is why they're not going to do it, because it's so foolish. It would be like your banker saying "I'll show you! I'll tear up all these IOUs, you filthy capitalist scum!"

On the other hand, they could abandon the Dollar by trading them all for Euros. But now the Europeans have our dollars, and will need to either spend them on US goods, or trade them to someone else who will.

p.s. I am not denying that we have become dependent on China as a source of credit. However, the typical scare scenario is that China could call in all of its loans and wipe us out overnight. That isn't going to happen. They would be committing financial suicide to spite us. I trust Mises and Hayek over Lou Dobbs any day.

No, they just wait for us to pay off outstanding debt and then they abandon us.

The loans they pay us are consistently paid off....with new loans they give us. All they have to do is stop issuing new loans.

 

[joenaab]

What China is and will continue to do is buying up all real assets that are sold for USD's. For example, they are here in south America signing contracts to buy oil, gas, minerals and timber for decades to come, and they are paying for a lot of it in advance with USD's today. They have been negotiating with Iran to pre-purchase enormous quantities of future oil and gas production and paying in advance with USD's (this is one of the reasons for a US invasion). They are doing the same in Africa. They are buying tens to hundreds of billions of dollars in US equities, essentially becoming owners of US corporations. They are buying US land and real estate, or land and real estate overseas where the sellers will sell for USDs (or they exchange USD's for the local currency). Japan is doing this too.

Some of these countries are getting so many USD's from China that they are using them to pay off all foreign debt to the World Bank and IMF (denominated in dollars) and then withdrawing their membership. China gives and loans them money with no strings attached, whereas the US and these Int'l Banks loan money with a long and unfair list of conditions these countries must abide by (don't grow cotton, import cigarrettes, keep all drugs illegal, make all your natural resources available for private purchase, etc., etc.). Remember, China alone is holding $1.2 trillion USD's. They have more USD's to lend than the World Bank and IMF!

What is happening is that the world's oil & gas reserves are being pre-sold to countries that hold large amounts of USD's, due to our huge trade and budget deficits. This is how the U.S. can be harmed by putting so many dollars into the hands of foreigners. One motive behind an attack on Iran is to render null and void the recent contracts to sell their oil and gas reserves to China and India.