China can retaliate if the United States criticizes it on human rights, on Tibet and on supporting repressive regimes such as Myanmar’s; China holds the most important card-the economic card.
[Policing Wall Street]
Isn’t it amazing how quickly the so-called greatest financial disaster since the Great Depression has quickly turned around?
Economists and pundits are calling for the recession ending during the summer. Trillions of dollars poured into the economy have saved Wall Street and there will now be little action on the much needed financial reforms.
While some Americans may be buying this script, China’s not falling for it. China is worried about the dollar and inflation; even though most Americans are not worried. At least I’m not hearing these concerns being adequately articulated.
Last Sunday, Guo Shuqing, the Chairman of the state-controlled China Construction Bank, called for the United States and the World Bank, which is largely controlled by the United States and is headquartered in Washington, to issue Yuan-denominated bonds.
The Yuan is the Chinese currency.
Very rarely does the head of a state-controlled bank make a comment that has not been approved by the government of China. This call for the United States to issue Yuan denominated Treasury securities serves three purposes. It boldly states that China is the economy of the future; that the Yuan will appreciate against the dollar; and, that the dollar will suffer from inflation due to the increase of trillions of dollars in the budget deficit and of trillions of dollars in liabilities that the United States
assumed during this current financial crisis.
Most importantly it tells the United States that China is a world power and can dictate critical terms to America.
China can retaliate if the United States criticizes it on human rights, on Tibet and on supporting repressive regimes such as Myanmar’s; China holds the most important card-the economic card. After all, it’s China that is financing the American military.
When the dollar declines in value all those wonderful planes at a cost in excess of $100 million each will double in price. The escalating cost of financing the American military will become unsustainable because the once-powerful dollar will be replaced by the Yuan.
Many years ago, I remember watching British Prime Minister Harold McMillan declaring that Britain could no longer afford its military bases east of the Suez due to the decline in the value of the once-mighty British pound.
The sinking of the pound reached its nadir in 1992 when George Soros, the billionaire currency speculator, discovered that he could borrow more money from banks to crush the pound than the British government could borrow to defend the value of the pound.
Soros bet against the pound and won.
As the pound went; now so goes the dollar.
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“Speaking Truth To Empower.”
