China: Savers versus Debtors

February 28, 2008 at 10:21 am (National Debt)

Hey, as bad as things are becoming in the US, at least we don’t have 100,580.2% inflation like Zimbabwe.  But, like the Zimbabweans, we are to a large degree kept from complete disaster by loans from China.  In fact, about half of the three trillion dollars we owe to foreign nations is owed to China.

Whereas we Americans like to spend all the money we have, and then spend all the money we don’t have, both on an individual and collective basis (can anyone say 3 trillion dollar war?) the Chinese actually live within their means.  In fact, were OPEC to de-peg the price of oil from the dollar and instead sell in euros, as the leaders of Iran and Venezuela would like, and just as Saddam did back in 2000 (funny how all three of them were never on our friendship list), it would shatter faith in the US dollar so drastically that one of the few things giving the dollar value would be the fact the Chinese had enough faith in the currency to buy it up.

You’d think we’d be at least respectfully polite to the Chinese for doing so, but no.  I wonder what would happen if China dumped all their reserves at the same time OPEC ditched the dollar?

Today’s article of doom: the FDIC prepares for big bank failures.

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