So the Mexican standoff between the United States and China continues.
The US and China have been pointing metaphorical pistols at one another for quite some time now, at least for as long as the quasi-communist Chinese abandoned “pure communism” for a more market-driven type of communism (consider that your oxymoron for the day).
What is going on exactly?
The Chinese government owns over 3 TRILLION dollars of US debt, primarily in US Treasury Bonds. The Chinese know that if they were to cash in some or all of these Bonds at once, the United States would be devastated.
Can you say “Depression?”
Interest rates would soar, inflation would return and the entire financial landscape of America would be transformed (for the worse).
Why will this never happen?
The Chinese make most of the junk (and I do mean junk, as in low quality) that Americans buy. The barbecue grill on your patio, the TV on your table, the watch on your wrist – I could go on and on and on and on.
If they destroy the US economy by calling in their Bonds, Americans would be buying far fewer products. That means demand for all products – Chinese products – would sharply decline, meaning 1 Billion Chinese citizens would find themselves either out of work or facing significantly reduced hours.
Why is this bad for the Chinese?
Because idle minds are Freedoms workshop. The un-elected / Self-Appointed “leaders” of the Chinese know if they can’t keep their citizens working and happy they will have a revolution on their hands (much like what is happening in Iran right now – unrest fueled by a failing economy).
Can you say Tianenman Square?
So every now and then the Chinese cock the trigger of their bond-buying gun to show us who’s boss, only to quietly lower it again when the US threatens Trade Sanctions in return.
It’s a tiresome game with no end in sight – and world-shattering implications if one or the other actually pulls the trigger.
You can add this to your list of 317 things that keep you up at night.
(Not me though. I’ll sleep like a baby – as always)
News reading tip #1 – When reading the sentence below the main title of the article notice these few words – “what they feared COULD be the end” – any time you see the word “could, might, may, maybe, possibly etc..assume you are reading a speculative piece of journalism or an opinion piece. I think that’s what they call “clickbait” these days..
Words have power.
**Originally Posted on 10 Jan 2018**