Posted on 08/09/2007 9:33:21 AM PDT by Contentions
Dan Simon’s commentary in the article is illuminating:
[Quote]
It’s probably true that a massive Chinese sell-off would weaken the dollar and strengthen the other currencies into which they bought. Of course, since the Chinese reserves are so dollar-heavy, the main effect of this rebalancing–aside from making American exports more attractive–would be to reduce the value of the Chinese goverment’s cash reserves.
More to the point, the reason that China holds that huge hoard of currency reserves in the first place is to keep the value of the US dollar up, and thereby maintain the ability of the American consumer to continue buying Chinese manufactured goods. This is an extremely stupid game they’re playing, and they will one day have to figure out a way to quit. But that quitting process will inevitably be at least as painful for China, with its brittle new export-driven economy, as for the US, with its much larger, more self-sufficient and more adaptable economy.
The Chinese “threat” to sell off their dollar reserves should therefore be taken in the spirit of Cleavon Little’s character in “Blazing Saddles”, who, when finding himself surrounded by enemies, responds by taking himself hostage, holding a gun to his own head and threatening to shoot if he’s not allowed to escape. Particularly right now, as the US economy shows signs of succumbing to a credit crunch, the obvious American response to the Chinese offer to let loose a flood of cheap dollars should be (to use another film reference), “go ahead–make my day”.
[Unquote]
“China’s ecconomy is SMALLER than the increase in our ecconomy.”
They produce more automobiles annually then we do.
and we have a GROWING industrial manufacturing base and still have a larger growth than their entire economy.
Remember who we are. They are just in the age of steel, entering the silicon era, we are already into the age of composits.
If China tries to mess with us, we shift all to india or whereever.
What’s in your bong?
capitalism.
Move to China then. That’s where it’s being practiced.
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