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National Debt

Paying the Piper

  • September 14, 2009

    As previously studied in a previous article, China's grip on the U.S. is tightening amid a new trade controversy that could easily spill over and crash our financial system.

    China's ownership of U.S. debt has become a reason for concern following an escalation in tit-for-tat trade embargoes between the U.S. and China over, initially, tires.

    With the president's decision to impose tariffs on China's tire imports to the U.S., up to 35% enforcing trade laws, China has retaliated by imposing their own tariffs on U.S. poultry and cars.  The move by the U.S. has touched a particular nerve in China creating a backlash against the U.S. and calls from some to punish the U.S. through the manipulation of U.S. debt held by China.

    This was a scenario spelled out at the beginning of the summer in a previous article, U.S. at Mercy of China?, and one that may ultimately come to pass, exposing the elephant in the room: that the U.S. is subject to China's will.

    It would not be in China's best interest to sell off all of their U.S. debt (which would most likely collapse our economy) as they would stand to lose billions of dollars as well as a one of their biggest customers, but selling off just enough to cause a market hiccup would certainly send a strong message to Washington about just who is in control and that further financial incursions will have similarly painful repercussions.

    Our government and our citizens, for decades, have failed to realize that the U.S. is no longer the young, flexible country capable of endless endeavors with great risk and cost.  We are the middle-aged weekend warrior who pays for their actions all week and are now suffering the consequences of our own policies and actions.

    From Afghanistan to China to Israel to healthcare to Social Security, our country is on a decline of our own making that has been in the process for decades, all the while we citizens and our elected officials close our eyes and cover our ears and hope that when we are willing to look and listen again, all of our problems will have magically solved themselves.

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