Monday, February 23, 2009

Begging for Money

The true purpose of Secretary of State Hilary Clinton's recent Asian tour was revealed when she visited China to beg them to continue buying American debt. If the Chinese elected not to buy American debt, there would be no money for the stimulus plan. Of course, the ace in the hole for America is that we provide, by far, the largest market for Chinese exports. So it makes sense for the Chinese to buy more American debt.

This huge trade deficit the United States currently has against China must be solved at some point. China has such a controlling interest in the United States that our very sovereignty could be threatened. China is much like an investor in a business. China is investing it's money into a business called the United States. And it has become the single, largest sharehold in this business. By being the largets shareholder, they can hold large sway over decisions being made by the company. In this case, is the United States.

China has threatened the nuclear option of liquidating American debt in the past. Yes, China would suffer if they chose to make sure a move but not nearly to the extent the United States would suffer. China's huge surplus in exports would help them recover from the collapse of the dollar. And a weaker yuan would only increase their imports. On the other hand, the collapse of the dollar and the staggering amount of debt on each American would debilitate the economy.

Instead of looking to an answer for this threat to national security, we continue to beg the Chinese to buy our debt. Eventually that debt will cost us dearly. It's not a question of if, but when.

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