1. They can use dollars obtained from providing products to Wal-Mart et al. to buy oil and other commodities that are sold in dollars. This will drive up the prices of these commodities and drive up most prices in the US. (Think fuel prices for airlines as one example.)
2. They can sell the treasury bonds on the open market, which will drive down the price of the bonds and increase interest rates. This will increase the cost of money to individuals and business, causing massive bankruptcy, both for businesses and for individuals as they lose their homes.
3. They can sell dollars and buy Euros. This will reduce the value of the dollar. As a result oil will cost more in dollars and the price of energy will go up.
All of these actions will increase inflation and require the government to borrow even more money at a higher price. Business costs will rise causing more job loss and more moving of business to other countries. Meanwhile, the hope of selling our products to the world at a lower price will be frustrated because China and Japan now make and sell at a much lower price a lot of what we might have sold. Ironically, we gave them the wealth to develop their industry so that their products are just as good as ours and cheaper.
Thanks to the greed and shortsighted planning of major companies and the ignorance of the government, we are slowing selling to China the power to weaken our country without firing a shot. Meanwhile, we go into debt and transfer funds from important programs for our people, to fight terrorism that has been created to a large extent by our failure to address the real problems in the world and to some extend is being encouraged by China. China is playing Go while we are playing Chess.
Regards, Ed
Jones Beene wrote:
Terry
An interesting treatise on the future war with China:
http://www.321energy.com/editorials/winston/winston020905.html
There is probably a better adjective... maybe terrifying, alarming, etc. but is it really accurate? Are there any economists on Vortex?
"As China's Master Plan to Destroy America manifesto outlines, the multifaceted battle plan recommended by the Chinese military has taken shape...Financially: Using Currency as the Primary Weapon...[snip]
While America's media is hypnotizing us with frivolous entertainment such as American Idol or The Amazing Race, they are totally ignoring the perilous economic time bomb the Chinese have placed against us.
The Government of China is holding U.S. currency and Treasury notes in a $1.9 trillion Treasury bond trap. When they pull the trigger on their "primary weapon," the dollar will crash and gold will break $600 in a heart beat and just keep going."
[End of quote]
I wonder how accurate this is... what can the Chinese do with this paper, in reality. Since Nixon took us off any international gold standard, they have no choice but to hole the paper, correct? We do not back up any T-bills with gold anymore do we?
Jones
