Comments: raymond - 2004-12-15 15:45:28 It's hard to fight one of the main supporters of the insane US deficit. The deficit is increasingly financed by the purchase of the US treasury by the Chinese, and Wal-Mart is China's 8th largest trade partner followed by Russia and Great Britain. As long as the dollar depresses and inflation increases, the trade deficit is reduced in value, the treasury shortage is covered, and we can buy more crap. If China determines that investment in an insane holy war is bad business and turns to Euros for stability, crash-o-rama. * * * * * * * * * * * * Laura - 2004-12-15 15:49:11 That is a fascinating angle on the whole question, and one I had no idea about. The part I don't quite understand is how the Chinese are purchasing the U.S. treasury; would you please help me understand what you mean, Raymond?--thank you. * * * * * * * * * * * * raymond - 2004-12-15 16:16:54 Instead of hoarding the dollars collected by the trade deficit, China invests them in US treasury bills. The bills are sold to cover the US deficit. Thus, the US owes future revenues, if any, to China. * * * * * * * * * * * * Laura - 2004-12-15 16:19:38 Yikes. I had no idea it was even legal for a foreign government to buy our treasury bills. That seems rather risky, to this layman. * * * * * * * * * * * * raymond - 2004-12-15 16:40:03 Yeah, it's like when banks lend money to deadbeats on a mortgage expecting to take over the property when the payments aren't made. China not only has nukes, but also the means to deliver them. They have formidable goons to send around to collect. * * * * * * * * * * * * Laura - 2004-12-15 16:43:19 Yes, that seems like a good simile. Seems a bit close to home to let other nuke-armed countries scoop up our treasury bills. * * * * * * * * * * * * lynne - 2004-12-15 22:11:28 Not really. It does mean that we will not be able to sustain the trade deficit if people in other countries decide to put their money in Euros or other investments. That would have some negative consequences like higher prices. But, honestly, I think that most Americans probably could do with a lot less stuff. Also, a weak dollar would mean less out sourcing and more jobs staying here in the US. See? even economists can be optimists. * * * * * * * * * * * * Laura - 2004-12-16 09:13:16 Seems like both of you have a far better grasp on how this all works than I do; thank you for the info. * * * * * * * * * * * * raymond - 2004-12-16 16:38:23 http://en.ce.cn/Insight/200411/26/t20041126_2405804.shtml The parts of the above link I like best are "...the political field in the U.S. are subject to this influence" and "In cooperating with Wal-Mart, Chinese manufacturers have learned the experience of competing with price, instead of competing with brands." Who's runnin' the USA anyway? For a big laugh, count the number of "Buy American" bumper stickers in the Wal-Mart parking lot. * * * * * * * * * * * * Laura - 2004-12-16 16:45:26 That's a great and rather sinister article, Raymond. Thank you. I also like the quote "Some media rank Wal-Mart the eighth trading partner for China, followed by Russia and Britain." * * * * * * * * * * * * add your comment: your name: your email: your url: back to the entry - Diaryland