What would happen if china sells their dollars?

[Verr]

since my prophecy ww 3 thread was closed i feel urged to make a step by step discussion.

we all know that US power not only relies on military, spying ,manipulation and diplomacy but also on their right to produce the world currency.

no matter hows the shape of US economy, people WILL need dollars to buy oil and rescources at least.
now china stored a nice amount of dollars. what will happen if they sell them? and why do they want to do this?

edit: can a mod change there to their... it does sound the same doesnt it? :/

[Astaroth]

- Slower Chinese economic growth, perhaps higher unemployment

- More expensive for the US to borrow money

- boost to US exports

[Denny Crane!]

US power relies on everything every other country relies on you mean.

And it has already happened to a large degree with the Euro being traded by many countries instead of dollars. To add to this you have the possibility of digital currencies being used. Everything that could happen in this regard would happen in degrees so we would adapt in degrees. No apocalyptic vision of WW3 as you seem to want.

[Thorn777]

US power relies on everything every other country relies on you mean.

And it has already happened to a large degree with the Euro being traded by many countries instead of dollars. To add to this you have the possibility of digital currencies being used. Everything that could happen in this regard would happen in degrees so we would adapt in degrees. No apocalyptic vision of WW3 as you seem to want.

Every Euro is for 70 Eurocents underwritten by US Dollar....

[RubiconDecision]

With quantitative easing, the Federal Reserve has been propping up the demand for US Securities (T-Bills, Notes, and Bonds). It's a massive shell game in which less and less countries and their citizens desiring to park their money in these investments. Then if China, whose growth boom has peaked, and having massive real estate problems, has to call in investments, this would crash the US economy.

50% of US Treasuries are by the Federal Reserve. It's fraud, money created from thin air to purchase US debt, and to keep the bankrupt nation from going under. Foreign purchasers of US treasuries amounts to 3.5 Trillion.
http://www.treasury.gov/ticdata/Publish/mfh.txt

China, Mainland 1272.9
Japan 1210.5
China and Japan both own 1.2 Trillion in US debt instruments. If China invaded Japan, then at once US dollars would be worthless. 2.4 Trillion in worthless paper. The Chinese would lose that paultry sum, but gain Japan. It's actually a pretty good deal as long as the USA cannot respond militarily. That leaves 1.1 Trillon in US treasuries owned by several other nations but in much smaller amounts.

Dollars are artifically boosted by a demand by petrodollars. Oil is sold in dollars, and so currency must be converted into dollars for the exchange. But there have been lots of side deals between countries over the last four years to directly trade currency for oil. As such, there's also been a move to make the yuan the new currency of choice for oil. This also reduces demand for dollars.

After all of that,.China could declare war. Not sure if they have the capabilities for US invasion, but they sure could invade into South Korea and Japan. An EMP strike by the North Koreans could severely cripple the USA (either by satellite or submarine), and with so much happening at home, the USA military forces would be taken out of the equation.

How's that for a mad conspiracy scenario? That is if we're looking for doom-and-gloom.

With China being powerful, and Russia seeking to return to the old paradigm of the Soviet Union, then wouldn't Russia and China naturally be allies? Wouldn't both support Syria and Iran in the Middle East? The EU is broke, do you really think they would do anything if China decided to invade Japan or South Korea?

Would anyone push the nuclear button as that means total annhilation? In the end, the nuclear deterrent likely is no deterrent at all. We've collectively spent billions on weapons that cannot be utilized.

The value of a dollar is based upon the ability of the USA to pay their debts. Of course, like most governments, we cannot afford to pay our debts, but shift them forward on to the next generation. As long as we generate new debt instruments, we can create more money, then we can live beyond our means.

As huge amounts of industry left the USA post-NAFTA and post-GATT, and relocated to China, in essence the USA has an inability to generate income by these means. A large portion of US jobs are government ones, many are temp jobs. A huge portion of the USA is unemployed as there are no jobs. A huge portion have been eliminated from the unemployment rolls as they have been unemployed for so long that that their numbers are hidden.

In effect, the US dollar is artificially boosted in value, but truly is valueless. When other nations realize this, they will shift away any investment in them. However that creates its own problems as the USA purchases their debt instruments as well, plus offering loan guarantees. All of that shifting around of "funny money" created from thin air, creates wealth. If the US crashes due to currency default, so too would Western civilization, as happened during the Great Depression.

Why do you think there are war hawks in the USA pushing for WW3 with Syria being the target? They think WW3 is the only economic solution, just as the failed policies of FDR didn't get the USA out of the Great Depression, only WW2 did it.

[hellheaven1987]

Russia and China would never be allies when Chinese want to claim lost land from Russia and Russia is paranoid Siberia would become Chinese Canada; be the temporary partner of crime is quite possible however.

[RubiconDecision]

In the scenario I listed above, Russia would gain back huge swaths of land in the interim, but it would also mean enabling China to be the preeminent world power. China crashing the world economy in this manner would actually benefit them in a huge way, as long as the USA cannot respond with nuclear weapons to deter them.

You know the USA is bankrupt when they downsize the military. The very game played by Reagan and Gorbachov with military spending, that bankrupted the Soviet Union, now is finally bankrupting the USA. There is a limit to military expenditures creating wealth.

Meanwhile the USA is full of aging critical infrastructure, and since the tax base has eroded so deeply, as has real estate prices, there isn't a middle class to pay for it, nor is there any hope that there is a better financial future over the horizon. One cannot expect that technology sales will somehow remove us from this morass as there is a crash in tech happening as we speak. Broke consumers do not need one more gadget, not when they need foodstamps to buy bread. There actually are more USA households needing foodstamps then there are full-time female workers. That should be a clarion call.

Has green technology been the panacea for the USA's economy? Nope. Massive subsidies for an industry with few consumers and generating a miniscule amount of employment.

Has healthcare resulted in massive boosts to the USA's economy? Nope. We actually are laying off nurses amidst a more than 35 year critical shortage of RNs. Obamacare's increases to health insurance will actually result in severe damage to the healthcare sector.

Added to this is a massive drought issue that has been on-going for over three years, resulted in huge agricultural and livestock losses, causing food inflation. It's a repeat of the Dust Bowl which also happened during the Great Depression.

Meanwhile China has been stockpiling natural resources for years. This is documentable. They also have been investing in infrastructure in ghost cities. All of which was paid for by a gullible Western Civilization. The war has been won, with China being the victor, without having to ever fire a shot. Now they need only actively invade South Korea and Japan, but only when the time is right, say a natural disaster, a political crisis, a pandemic, or an EMP weapon deployed over the USA.

China has suckled at the tit of the USA, and now that consumers cannot afford Chinese products (the same ones that the USA used to manufacture), there really is no need for USA citizens anymore. The tit has gone dry, so why not kill the emaciated cow barely left standing?

[hellheaven1987]

Ya, but the world is no longer two superpowers; it is an arm race between multiple powers, just like the "Cold War" between major powers during 19th Century, which never bankrupted anyone anyway. In the end it is not "China arm race vs US arm race", but "US arm race vs China arm race vs Russia arm race vs India arm race vs EU arm race vs Brazil arm race (Brazil does have a pretty large military industry, to my surprise)".

Which is probably good for all war-loving people anyway, since we all love 16 free-for-all death match instead 8v8 team death match.

[RubiconDecision]

While the US has aggressively invaded countries toward no end save the blanket attack on terrorism, a nebulous war which can never be won by definition, we haven't invaded and then taken the land. Do you really think that China or Russia would have the same qualms about that kind of military adventurism? All China need do is dump dollars upon a crisis point, and it would cripple the US as we are staggering like a hopeless drunk.

When that happens, lots of countries might take advantage based upon their military power. Of course, their economies will face ruin in the short run, but increasing land mass generally results in more wealth in history.

We're all more interconnected than in 1929. If anything, a global crash would be far worse. Something as small as bank runs in China, something that has recently been discussed at the end of March of this year, could easily cascade. There are far more coming in all likelihood. Losses lead to liquidation of assets at bargain basement prices.

[Verr]

.

When that happens, lots of countries might take advantage based upon their military power.

when china sells dollars the dollars goes down.
usa can sell better... but can buy harder. they do have a lot of rescources but made only little attempt to use them - i mean they can print money and buy oil from others saving their own oil.

so usa will be left with shortage on resscources for a period of time.
however US people are skilled i think china und russia will underrate the speed of the american res. industry especially since russias treassures are in siberia where it is more complicated to harvest them so they got wrong impression of how long there thing take.

[RollingWave]

Depends a lot on the context.

If it's done purely in market terms , the US ability to borrow would go down by a lot, because the worth of it's bonds and related stuff, and in effect the US dollar, would go done dramatically, which probably means reduced purchase power and GDP in the short term for the US as well (well maybe not, since world wide GDP is still calculated in USD.)

let's suppose that this is done and the market doesn't over panic (which is not a fool proof assumption.) then in the longer term this means the US export will probably improve due to lower cost and cheaper dollar, it's unemployment might(?) go down, and it's trade deficit reduced.

So, in a pure market vacuum, this would probably be good for the US, the problem is that dramatic changes of this magnitude can often cause chain reactions that might lead to mass panic of the market , in which case all bets are off, and of course, it's hard to see why China would do this without also having other political moves done in conjunction (such as war with other countries.)


So best case: world economy realign to more balanced phase, everyone wins (better employment and finance in USA, wealthier citizens in China.)

Worst (and more likely) case : crashing the world market as panic sets in and over leveraged banks on the assumption of perpetual strong dollar goes under.

[RubiconDecision]

I highly doubt the "balanced phase". This presumes that Americans had factories and workers ready to go as the value of US dollars decreased, and then employment could be restored. In actuality, that equipment and those factories have been sold. There is no US capacity to rebuild industry. That time has come and gone. That equipment sold sometimes for pennies on the dollar.

The multinational corporations sold out America, as many were based there, but they wanted cheaper labor and not to deal with unions. Therefore they pushed NAFTA and GATT. Of course, that lead to very high corporate profits, with investors in those multinational corporations seeing high dividends and growth, so some Americans profitted.

What's happening is a radical change of income levels in America, with a very small percent having a very high amount of income and assets while the majority have less and less. A good portion are literally two paychecks from being homeless. Chinese dumping of dollars would trigger a massive collapse, easily wipe these people hanging on by their fingernails.

How many people can accept foodstamps before there are too many to be supported anymore?

There are no new home mortgages as no one can afford to purchase a home who doesn't already have a home mortgage. Loans last year were in two categories: student loans and automobile loans. Something like 50% of those under 25 were not using their education to acquire a job, merely working in areas like bars and restaurants. These people cannot afford to pay their student loans, and surely cannot afford to buy a home in ten years.

It's the death of the American Dream for them.

[RollingWave]

I highly doubt the "balanced phase". This presumes that Americans had factories and workers ready to go as the value of US dollars decreased, and then employment could be restored. In actuality, that equipment and those factories have been sold. There is no US capacity to rebuild industry. That time has come and gone. That equipment sold sometimes for pennies on the dollar.

The multinational corporations sold out America, as many were based there, but they wanted cheaper labor and not to deal with unions. Therefore they pushed NAFTA and GATT. Of course, that lead to very high corporate profits, with investors in those multinational corporations seeing high dividends and growth, so some Americans profitted.

There is some merit and possibility in what you say, indeed I noted myself that my argument was more theoretical and in practical terms I suspect that human panic will likely make things much more complicated.

Though to put another perspective in what you say, the fact is that if there is a massive sell off from China or Japan, the US GOVERNMENT will be screwed, but it is not entirely sure if it's PRIVATE sector will be (pending on their ability to avoid self inflicted meltdowns.) The USA WORKER is readily available and probably in better overall distribution of skill level than most places in the world (aka having both a large pool of high skill worker and a large low skill base.), equipment wise the same multinational companies that you rail on, would also be still able to borrow from other countries precisely due to their status, and privately due to the diminishing value of the dollar, the local banks should be quite willing to borrow (providing that they still have the money to do so.) given that holding on to the money will only see diminishing return.

What's happening is a radical change of income levels in America, with a very small percent having a very high amount of income and assets while the majority have less and less. A good portion are literally two paychecks from being homeless. Chinese dumping of dollars would trigger a massive collapse, easily wipe these people hanging on by their fingernails.

Would it? Their mortgage and pay check are both in the same currency, so assuming they don't lose their job, then it wouldn't make any difference.

The question is if they can avoid a major overall panic collapse , which I do agree is dubious. But if you do look at all the industrise in detail and consider which sector would actually be crushed from the US dollar falling massively in value, it seems only speculation related industry in finance would be, or say.. foreigners buying US assets would suffer as their investment value plummet, now, these aren't exactly drivers of employment.

How many people can accept foodstamps before there are too many to be supported anymore?

There are no new home mortgages as no one can afford to purchase a home who doesn't already have a home mortgage. Loans last year were in two categories: student loans and automobile loans. Something like 50% of those under 25 were not using their education to acquire a job, merely working in areas like bars and restaurants. These people cannot afford to pay their student loans, and surely cannot afford to buy a home in ten years.

It's the death of the American Dream for them.

Well you do need to consider that in the worst case, if panic down the market entirely, banks going under would also wipe out all those mortgages as well, and the VALUE of those mortgage would also go to hell anyway.

The American dream never said that you can't suffer bad times, America has seen plenty of bad times in the past, it is that they could always make a comeback that is the dream.


In short, I think realistically it could be quite bad for awhile given human nature, but in the longer run it should be alright.

Also, I should note, if worst come to worst, there are significant portions of the Americans population can make it working aboard, given that their skill is thought after, and nowadays most places have folks that can communicate well in English.

[empr guy]

After all of that,.China could declare war. Not sure if they have the capabilities for US invasion, but they sure could invade into South Korea and Japan. An EMP strike by the North Koreans could severely cripple the USA (either by satellite or submarine), and with so much happening at home, the USA military forces would be taken out of the equation.

How's that for a mad conspiracy scenario? That is if we're looking for doom-and-gloom.

I don't think the plot to homefront should be used to predict the future, China declaring war on japan would probably end up being a financial disaster for the US but not because we just ignore it and loose the value of our currency...

[RubiconDecision]

In the case of a severe downturn in the market, analogous to the trigger of the Great Depression, you'd have massive deflation. That's a worse case scenario. The devaluation of stocks would lead to more and more devaluation of property. People would do as they have been doing...walk away from mortgages for they would lose their jobs and never get the price of their homes high enough to get anything from the sale of their home (and equity).

No matter how hard a young person tries today, earing money at a bar or restaurant, they are not going to be able to save enough money (20% of the mortgage) to buy one. Even if the real estate prices fall, they'll lose their jobs first, so it's no dice.

There are lots and lots of homes that should have been foreclosed, but mistakes made with the titling companies led to a scandal in America, the robosigning scandal, and so there are lots of people squatting in their homes while the foreclosures have not moved forward. This means that the values of those homes have also plummetted, and so the artificial value of those homes on paper is propping up banking in America. Should the foreclosure move forward, it will sell for significantly less, and so that paper value will dissapate into thin air.
http://en.wikipedia.org/wiki/2010_Un...closure_crisis

The only logical solution is to bring back industry by creating penalties for bringing in cheap imports, something no one wants, but at a certain point, it becomes a matter of survival. Why do you think the American government has been purchasing so much ammunition for the last three years? Literally in 2008, they were worried about martial law as a result of the Lehman scandal and subsequent banking scandals.


On top of this, the Democrats are pushing for immigration reform, as if we haven't done this twice already with foregiveness of those who crossed the borders illegally. Why would the Democrats do this? It's millions of new votes for these new American citizens. Why do you think some Republicans are now pushing for it? They see the handwriting on the wall with a huge loss of votes. The fact that this will add a whole new layer of unemployed new citizens who need healthcare benefits, who will get financial aid for higher education, translates into business opportunities by some agencies in charge of EBT cards and banks making those government backed loans. J P Morgan is making billions on the food stamp business. So is Walmart in all honesty, for their sales would plummet without these injections of government funny money.
http://www.breitbart.com/Big-Governm...ff-Food-Stamps

Food stamps literally hide the real poverty of the average American, and pass on the costs to the other working consumers, rather than being born by the corporations. As long as we can hide the costs of healthcare and food stamps, then corporations need not pay their workers enough. This keeps down prices, but not in reality. It costs everyone, and ultimately costs in jobs that move to other countries.

If that happens before China sells dollars and US Securities, it will be even worse that what I listed above.

With massive deflation, it would be impossible to pay back your debts, and so overnight those who had any hard currency in the form of gold, would still have something valuable, but everyone else would be debtslaves.

Free Trade actually results in poor living standards in those places with cheap labor. Instead of natural economic pressure to meet the needs of the locals, they make cheap goods that they themselves cannot afford. That only works as long as some new source of cheap labor can be found. Meanwhile embrace the sucking noise as jobs leave as well as economic security for the original workers.

[RollingWave]

Food stamps literally hide the real poverty of the average American, and pass on the costs to the other working consumers, rather than being born by the corporations. As long as we can hide the costs of healthcare and food stamps, then corporations need not pay their workers enough. This keeps down prices, but not in reality. It costs everyone, and ultimately costs in jobs that move to other countries.

If that happens before China sells dollars and US Securities, it will be even worse that what I listed above.

With massive deflation, it would be impossible to pay back your debts, and so overnight those who had any hard currency in the form of gold, would still have something valuable, but everyone else would be debtslaves.

Free Trade actually results in poor living standards in those places with cheap labor. Instead of natural economic pressure to meet the needs of the locals, they make cheap goods that they themselves cannot afford. That only works as long as some new source of cheap labor can be found. Meanwhile embrace the sucking noise as jobs leave as well as economic security for the original workers.

Your jumping a lot of steps here, and ignoring a lot of alternative decisions possibility , and also missing the blatant fact that almost all of the most noted export driven economy of the last century eventually lead to considerably improved living standard of it's population, including, I might add, the USA it self in it's "good" old days.

First off, if there is really a mass market break down, all the debt are for naught, banks will be closed, it's paper will be wiped clean, you can not owe money to something that is no longer there. If the market is really bad enough for banks to go under like that, no one would dare to take over its books anyway, thus resulting in it's complete liquidation.

More over, you can always declare for bankruptcy, which would wipe your debt clean and the credit punishment is rather pointless in such a situation (given that the market has crashed, what would you need checks / credit cards for? it's basically a no lose situation for you.)

For the USA in particular, it is actually quite self sufficient in most necessary goods. It's government could and probably will just shut down international monetary trading in such a catastrophic event, which would bring the rest of the world's financial establishment down with them, it is for this reason that it is rather unlikely countries like Japan or even China would risk such a move.

You are also assuming that in this sort of crisis, the State will still enforce laws in favor of crumbling cooperation, when most history show that it will likely enforce / change laws for the sake of social stability on top of all else. if it doesn't, it'll be a revolution and the same result will still happen, only with more dead people.

If your saying that Export economy have REDUCED the standard of living in say, China (certainly the current standard bearer of export driven economy with cheaper labor), among it's working poor, I'll just flat out say your either completely delusional and/or have obviously never visited China in the past or present.

[RubiconDecision]

Not in the USA. Student debt cannot be discharged in bankruptcy. Neither can tax debts. It's true that the largest debt would be mortgage debt, which covers people walking away from their debts as is happening right now in the USA. There are in fact several people in the USA in debtor's prisons, as many states do not have laws preventing them. Those people might actually go to jail who couldn't discharge their student loans or tax debts.
https://www.aclu.org/blog/tag/debtors-prisons

I say HA on the USA being self-sufficient! Would you like to see how much industry has been lost since NAFTA and GATT? It's enormous. Much of that kind of self-sufficient industry is gone and in all likelihood will never come back.

Did you know that they cannot afford for law enforcement in Detroit round the clock, that they cannot pay for streetlights? That they have discussed bulldozing vacant areas in order to not have to protect those zones or provide any ultilites. It's not that no one lives there, it's that it's too expensive to maintain them anymore. That's how broke the Rust Belt is.
http://reason.com/blog/2013/11/12/if...ey-come-detroi
"Large-scale destruction is well known in Detroit, but it is also underway in Baltimore, Philadelphia, Cleveland, Cincinnati, Buffalo and others at a total cost of more than $250 million. Officials are tearing down tens of thousands of vacant buildings, many habitable, as they seek to stimulate economic growth, reduce crime and blight, and increase environmental sustainability....

[M]ore than half of the nation’s 20 largest cities in 1950 have lost at least one-third of their populations. And since 2000, a number of cities, including Baltimore, St. Louis, Pittsburgh, Cincinnati and Buffalo, have lost around 10 percent; Cleveland has lost more than 17 percent; and more than 25 percent of residents have left Detroit, whose bankruptcy declaration this summer has heightened anxiety in other postindustrial cities....
At least one city that has taken a pioneering approach to confronting diminution has found that accepting shrinkage does not mean problems go away. Youngstown, Ohio, once a bustling steel city of 170,000 but now with only 66,000 people, has sought to head off collapse by tearing down thousands of vacant houses — 3,000 so far and 10 more each week."

The USA has natural resources, but unless there is a need due to industry, then we cannot use it domestically. If there were a crash, then those materials we export would also dry up as revenue streams because those countries' industries wouldn't need those natural resources either.

The Middle East would be an economic wasteland in such a crisis, for oil production again wouldn't be needed with a lack of industry, but if it were military takeovers, then absolutely would be gobbled up.

Take a look sometime at what politicians in the USA belong to globalist groups, and I think you'll see a pervasive issue of corruption. If there is a power vaccuum, then will government support the corporations or the people? The corporations, I think, unless there is outright revolution. The large ammunition purchases rather limit the chance of revolution in America, don't you think? In American history, after initial fallout from the market crash in 1929, many wealthy industrialists actually bought up shares for pennies on the dollar, and made out like bandits.

[Condottiere 40K]

Currencies, especially fiat ones, are faith-based.

Three dee printing may well change the equation regarding how you determine industrial base.

[conon394]

OP

Really not this myth again...

So what is China going to buy instead?

In any case OP - you mean what China sells off their US government bonds en mass - correct?

First - China looses a lot of money. People always fail to point this out when they work out this fake doomsday scenario for the US. What reserve currency and debt instrument is China going to replace their sell off with?

Second since the vast majority of US debt is in fact not held by China big deal.

--------------

@RubiconDecision

Man you need to lay off the conspiracy theory, panic, the US is doomed web sites. I admit you got valid points in your text but I have to say mostly I see unreasoned fear and poor analysis.

Mostly from #4 but also the rest

With quantitative easing, the Federal Reserve has been propping up the demand for US Securities (T-Bills, Notes, and Bonds). It's a massive shell game in which less and less countries and their citizens desiring to park their money in these investments.

Really? I have not noticed any such trend.

The US looks to be little problem selling its debt:
http://www.bloomberg.com/news/2014-0...fore-sale.html

But oh wait it looks like China has issues selling a smaller amount of debt at a much higher interest rate:

http://www.bloomberg.com/news/2014-0...e-outlook.html

Then if China, whose growth boom has peaked, and having massive real estate problems, has to call in investments, this would crash the US economy.

I'm not sure what you mean - you cannot call in a US debt security that is not how they work, you can sell them but you have no right to demand principle payment. It is a contract its like a mortgage and as long as party A holds up its end of the deal party B cannot just swoop in and demand. I suppose China could theoretically try, but it would make an international pariah state since that is how everyone else issue debt and nobody would trust them again.

It's fraud, money created from thin air to purchase US debt, and to keep the bankrupt nation from going under

And so is every other major or minor currency and debt issue. I really don't see you panic unless you have been spending way to much time on gold bug sites because you do know I hope that is a 'fraud' as well, Unless you need it for manufacturing or making art - gold has no more value than a federal reserve note.

China and Japan both own 1.2 Trillion in US debt instruments. If China invaded Japan, then at once US dollars would be worthless. 2.4 Trillion in worthless paper. The Chinese would lose that paultry sum, but gain Japan. It's actually a pretty good deal as long as the USA cannot respond militarily. That leaves 1.1 Trillon in US treasuries owned by several other nations but in much smaller amounts.

What - just WTF?

First China lacks the capacity to invade Japan - a Japan fighting alone, or even defeat the US troops and USN in the Pacific if Japan did nothing at all.It is important to realize that China may just only now have achieved the ability to Invade Tiwan and hold off the USN and associated US forces. Even that assessment requires A completely maximal assesment of Chinia's supposed theoretical capacity and a dire assesment of both the US and Taiwan.

Second I have no ideal what us mean about US treasuries becoming "worthless paper". You realize you are proposing China fight a war on a scale not seen since Korea - that costs money... So do think they are burnining those US notes or what. They could sell them but than somebody else would own them -> not worthless. Japan Government would of course retain its US securities under siege or in exile I have no ideal where you get these ideals.

Dollars are artifically boosted by a demand by petrodollars

Not really

As such, there's also been a move to make the yuan the new currency of choice for oil. This also reduces demand for dollars.

Great - China will have to have a normal policy w/o currency manipulation, its export economy will suffer and the US will export more and buy less artificially cheap stuff from China.

After all of that,.China could declare war. Not sure if they have the capabilities for US invasion

China's ability to invade the US is more or less less than 0

but they sure could invade into South Korea and Japan

NO they cannot invade Japan and if they were really lucky the result of an attack on South Korea would only be the same as last time and that involves an inordinate amount of dead Chinese soldiers for no actual gain.

China has not all that much in the way of impressive ASW ability, it has one CV that is just barely usable, and little anti mine capability and only maybe this year has is started deploying Anti-sub sensors in its coastal waters. On balance the US available maximum SSN force in the Pacific could probably end an attack on Taiwan easily and Japan by itself could sink any fleet China tries to send its way if the US did nothing.

An EMP strike by the North Koreans could severely cripple the USA (either by satellite or submarine), and with so much happening at home, the USA military forces would be taken out of the equation.

Really not this fantasy again? What submarine do think North Korea has than can deliver and EMP weapon to the US. Via satellite? What one wobbly launch after how many failures that failed in orbit - oh no the US is doomed

http://www.nytimes.com/2012/12/18/wo...satellite.html

Mind you the US has the very much working and effective X-37 and a long and well demonstrated series of anti satellite weapons

http://en.wikipedia.org/wiki/Boeing_X-37

I'm not loosing sleep about NK's space program

And just in passing people like to throw around the US is bankrupt thing but they never to point out the US does buy stuff with its debt (more below) but 2 things is for now: 2 Ohio class SSBNs on high alert in the Pacific (and usually 2 more on more general patrol (1.)). That would subs that neither China and very much not North Korea have any chance of finding or sinking and are not going to be affected an EMP. Which means Great maybe North Korea really can hire a James Bond Bad Guy and through some uber cool non logical super complex plot do the EMP hysterical fantasy attack and then for all that effort 30 minutes or so later the USN will turn North Korea into a radioactive parking lot. I am pretty sure being incinerated for China is not high the list of things Kim Jong-un has on his daily to do list.

1. source:

http://blogs.fas.org/security/2009/03/usssbn/

The value of a dollar is based upon the ability of the USA to pay their debts. Of course, like most governments, we cannot afford to pay our debts, but shift them forward on to the next generation. As long as we generate new debt instruments, we can create more money, then we can live beyond our means.

You know you more or less absolutely incorrect here. The US actually has rather vast slack capacity it just borrowing because it can and it is cheap for it right now. Again let's not for get the US actually does buy stuff and thus has a laundry list of assets it does not sell or allows to be used below market rates or does not use at all due to environmental or health concerns that could buy most of China if sold at auction.

Let us just consider a small sample shall we with the BLM:

The US as a nation has decided to value Mustangs very much - living wild free and all that and rather a lot money is spent by the BLM trying to follow the laws Congress imposed and the views of lots of people who live in cites and likely do not even know wild horses are an invasive species.

http://www.slate.com/articles/health...y_the_blm.html

Now don't get me wrong here I love my mustang - she has the conformation and color I find attractive in a horse and is smarter than any horse I had or boarded or visited. Altogether the process of training her from a wild feral horse was awesome, but it was also awesomely expensive and time consuming.

In any case - I drift - the point here there is a very simple and effective way for the BLM to manage Mustangs that would roundups followed by sale for slaughter. Simple, cheap and efficient and likely a program paying for itself. Instead the US has decided on an extravagant attempt to both round up and adopt out Mustangs and or try to treat them with drugs to prevent birth. Thus paying for research and lots of programs run by well compensated government employes or academic types - and the full cost of the adoption program is not addressed in the link. They (the BLM) really do come back and visit (adoption is only provisional at first)to make sure you are both treating your horse properly not just sending it on to the knacker that means again in the west (of the USA) likely a long trip for a federal employee. In fact there are foster children who likely don't get as much oversight and the potential protection of extreme legal risk for their abuse as what the BLM does and can do for wild horses.

Thus lets get back to 'simple and effective' the USA has chosen to manage wild horses as if you will a luxury way - and luxury costs. Do you need a new Cadillac when you have a running and paid off Ford Escort? No likely not and the BLM could change its policy on a dime and save vast amounts of money if push really came to shove.

OK enough about horses

The US can of course also simply revert to pre-Bush Jr tax rates or good god give every one at FOX news an aneurism by say going to the JFK rates.

Again slack capacity

The US government owns or controls vast amounts of resources that it mostly chooses to not use or lease or exploit for lots of reasons. Or provide and below market rates as well. Similarly if the US was content with air or water quality comparable to what China puts up with we could expand industry easily.

As huge amounts of industry left the USA post-NAFTA and post-GATT, and relocated to China, in essence the USA has an inability to generate income by these means. A large portion of US jobs are government ones, many are temp jobs. A huge portion of the USA is unemployed as there are no jobs. A huge portion have been eliminated from the unemployment rolls as they have been unemployed for so long that that their numbers are hidden.

Sans outright protectionism those jobs were leaving anyway. Its important to recall that the US has a whole boomed post WW2 partially by the devastation of the rest of the world, and the fact the USSR and China took a large chunk of the world out of the market system. That was great the US. But it could not last. You can argue about particulars but if the US is going to value stuff other than immediate profit and employment. Health and safety in the workplace - (for example reducing and compensating miners for black lung) or halting the use of asbestos. Concern for the the long term viability of fisheries. Not selling and exporting sequoias for fancy art and wood products, the list is endless we will pay a cost as a society.

But your doom and gloom is over the top.

For example the country has a largely decided to pay the environmental cost of fracking and one result is the US has very cheap natural gas prices. Thus the US has both clear air than it might have at less cost (vs say the expensive attempts at clean coal). But more important it gets jobs back

http://chemistrytoenergy.com/sites/c...full-study.pdf

http://www.npr.org/2013/03/28/175483...-u-s-factories

http://www.pwc.com/en_US/us/industri...-potential.pdf

http://publicsource.org/investigatio...s#.U1jlSVdWDLc

But as I said at a cost - you have to be willing to accept fracking. Its true we can likely reduce water use and reduce some pollution but that raises costs a bit and well you see. We could of course due the same with coal roll back regulation and we could have cheap and more or less endless energy and retain and attract more industry, save small town jobs in West Virgina and Wyoming and export more but you might end up with days like this:

http://en.mercopress.com/2013/02/14/...rms-neighbours

In effect, the US dollar is artificially boosted in value, but truly is valueless. When other nations realize this, they will shift away any investment in them.

To other 'Valueless' currencies and instruments - none of which are produced by the largest economy in the world and thus none of which really have the capacity to sustain the demand needed to be a reserve currency/product. I mean does Nigeria look like such a better option than the US - how bout that Ukraine? How is the US dollar artificially boosted anyway last time I checked it trades freely on the world market and US monetary policy is open and available to every nation and trader - it is what it is.

Why do you think there are war hawks in the USA pushing for WW3 with Syria being the target? They think WW3 is the only economic solution, just as the failed policies of FDR didn't get the USA out of the Great Depression, only WW2 did it.

Actually FDR did get us out of the depression, its just he neither the authority due to opposition in congress nor the ability to keep his policy long term often due to bad advice and conflicting economic theory and opposition in congress. WW3 and Syria - what are you talking about again?

You know the USA is bankrupt when they downsize the military. The very game played by Reagan and Gorbachov with military spending, that bankrupted the Soviet Union, now is finally bankrupting the USA. There is a limit to military expenditures creating wealth.

Or maybe we are not fighting in Iraq anymore and are leaving A-stan in a few months... You know reducing the military is what the US traditionally does after stopping or leaving or winning a war. By your logic Truman got rid of the WW2 Army because the US was Bankrupt.

And enough with the bankruptcy BS why not add up all the physical assets the US owns - have you done that or do you just like gold bug fantasy web sites.

Meanwhile the USA is full of aging critical infrastructure, and since the tax base has eroded so deeply, as has real estate prices, there isn't a middle class to pay for it, nor is there any hope that there is a better financial future over the horizon. One cannot expect that technology sales will somehow remove us from this morass as there is a crash in tech happening as we speak. Broke consumers do not need one more gadget, not when they need food stamps to buy bread. There actually are more USA households needing food stamps then there are full-time female workers. That should be a clarion call.

Well actually the tax base is what it is the US has simply chosen not us it. That is I grant a problem but a return to the tax structure of 60s would easily fix that particularity since the accumulation of wealth at the top 10/5/1% now.

"There actually are more USA households needing food stamps then there are full-time female workers"that is an odd statistic and rather a bit of cheat.

One would expect food stamp usage to be high as we crawl out of the 2nd worst recession in the last 100 years, but the use of full time female work is deceptive. Since women remain traditionally the primary expected care giver for children - Thus a lot work slightly under full time or only part time. There is reason I has the remote/contract worker in my family have to sigh up not as a room parent at my kid's school but as a room mom.

Has green technology been the panacea for the USA's economy? Nope. Massive subsidies for an industry with few consumers and generating a miniscule amount of employment.

Fracking has and again you are looking for easy targets and making stuff up what massive subsides.

Has healthcare resulted in massive boosts to the USA's economy? Nope. We actually are laying off nurses amidst a more than 35 year critical shortage of RNs. Obamacare's increases to health insurance will actually result in severe damage to the healthcare sector.

On the second part I am baffled. On the first to say it a general trend is foolish and incorrect. Can you Google specific instances. But in many cases you are finding badly run facilities or the typical complaints of badly run facilities or Administrators who don't want to pay a fair wage.

Added to this is a massive drought issue that has been on-going for over three years, resulted in huge agricultural and livestock losses, causing food inflation. It's a repeat of the Dust Bowl which also happened during the Great Depression.

Bad Drought - right, dust bowl - epic hysteria

[QUOTE]Meanwhile China has been stockpiling natural resources for years. This is documentable.[/QUOTE}

Really!!!!!!!! where and how.

In point of fact so has the US via all its environmental regulations.

For example:

Consider the re opening of the Mountain Pass Mine in California, China on the one hand had I dunno skillfully and via luck and lack of environmental or health concerns gave itself practically a monopoly on rare earth production and initial processioning. But in using that monopoly for political purpose it looks like it might loose it as an asset. The US is now willing to reopen mines closed for environmental reasons and congress is willing to subsidize reestablishing the processing infrastructure. The same in Europe and elsewhere.

Its also far to point out say the issues surrounding these mines in the US are worth noting.

http://www.triplepundit.com/2014/03/...13323974609375

http://earthfix.opb.org/land/article...mine-in-idaho/

I think its not unreasonable to say in China neither project would be facing any such scrutiny or opposition - be it official or citizen based via courts. So who is really winning the game? The US is retaining viable mineral resources, and preserving long term renewable ones and not polluting its citizens, water, or air. China is mining away and buying US debt it can't really dump W/O immense cost and with no alternative. Honestly I think we have rigged the system well in our favor.

The war has been won, with China being the victor, without having to ever fire a shot. Now they need only actively invade South Korea and Japan, but only when the time is right, say a natural disaster, a political crisis, a pandemic, or an EMP weapon deployed over the USA.

China has suckled at the tit of the USA, and now that consumers cannot afford Chinese products (the same ones that the USA used to manufacture), there really is no need for USA citizens anymore. The tit has gone dry, so why not kill the emaciated cow barely left standing?

Will you just quit with the EMP fantasy? or the equal Fantasy That China could invade Japan. So who exactly is China going to sell stuff too w/o the USA what Nigeria and their impressive middle class and vast economy?

All China need do is dump dollars upon a crisis point, and it would cripple the US as we are staggering like a hopeless drunk.

Still not seeing the logic here - so all China need do is loose a lot of money and what invade who - maybe Taiwan or Russia but you seem to think that are both easy cheap and effortless and have no cost or consequence.

Also you are playing a game of deception in not allowing all variables to be flux. Let's take FDR as you said he barely managed to ameliorate the great depression. Why because as bad as things were he still faced opposition in Congress and the courts and from critics etc such that he could not fully implement the polices needed. Of course December 7th changed that. Thus I don't see why you seem to feel a profound act of aggression by China would not alter the US political landscape.

What's happening is a radical change of income levels in America, with a very small percent having a very high amount of income and assets while the majority have less and less. A good portion are literally two paychecks from being homeless. Chinese dumping of dollars would trigger a massive collapse, easily wipe these people hanging on by their fingernails.

Indeed real issues - how many people in China are 2 or less paychecks from the same?

There are no new home mortgages as no one can afford to purchase a home who doesn't already have a home mortgage. Loans last year were in two categories: student loans and automobile loans. Something like 50% of those under 25 were not using their education to acquire a job, merely working in areas like bars and restaurants. These people cannot afford to pay their student loans, and surely cannot afford to buy a home in ten years.

It's the death of the American Dream for them.

W/O a link I call BS. What does it mean not using your degree? I work in IT and Programming but my Degrees are in Economics and Engineering. One of the best help desk guys I ever managed had a degree in communications - he was only ever so/so in IT but he could massage the bosses, the people we wanted warranty work from and the plebs like nothing else.

Again I don't disagree the stagnation of wages and the concentration of wealth have become issues, but I not sure sure you are seeing the right problem. Why go to college? My father did not or only sort of he went through the Ford Journeymen program in Tool and Die (which did include a 2 year Associates degree). Loved his job did 30 years and lived better than many with liberal arts degrees. Even when the economy tanked in the late 70s and he was on long term layoff from Ford he could find work in a job shop. The question is why we push everyone to go to collage vs other options like apprenticeship programs or similar options. Similarly do you need to own a house? Is it really the end all be goal.

Did you know that they cannot afford for law enforcement in Detroit round the clock, that they cannot pay for streetlights? That they have discussed bulldozing vacant areas in order to not have to protect those zones or provide any ultilites. It's not that no one lives there, it's that it's too expensive to maintain them anymore. That's how broke the Rust Belt is.

Using Detroit is again cheating... and yes I grew up there I know And NAFTA and GAT have very little to do with the Detroit's decline.

Detroit always was a boom town its just the largest most spectacular one and boom towns bust - there 100s of towns that barely exist or don't exist all over the US because they existed for a mine or a railroad or some such or because we used to need a lot more people to run agriculture. Detroit knew it was a boom town and between racism and some really - really bad choices after WW2 and a lack regional planning (mostly the result of bitterness created by Detroit itself in its heyday) it more less sealed it own fate no matter what economic policy the federal government implemented or failed to.

You actually misusing your own link - cites decline and that can be managed for better or worse but pointing at the rust belt - ignores say the perpetual steady existence of New York or San Fran or the boom in any place that does Fracking (and the decline that will happen one day) or the more or less constant prosperity of many small towns like Ann Arbor or Madison.

Take a look sometime at what politicians in the USA belong to globalist groups, and I think you'll see a pervasive issue of corruption. If there is a power vaccuum, then will government support the corporations or the people? The corporations, I think, unless there is outright revolution. The large ammunition purchases rather limit the chance of revolution in America, don't you think? In American history, after initial fallout from the market crash in 1929, many wealthy industrialists actually bought up shares for pennies on the dollar, and made out like bandits.

Not entirely sure what your point is here???

OK in a crash if you have assets that are the ones not crashing you can potentially buy cheap and ride out the crash. That seems like just market economics not sure I fear here.

Did I miss something Ammunition purchases by whom? What by the government the one that has been fighting 2 wars for over a decade and world wide anti insurgency fight - gosh amazing it needs to buy ammunition.

Oh look the US turns out to have lacked the right weapon (by that I mean both effective and least expensive) for the job in the war(s) it was fighting -

https://medium.com/war-is-boring/80401a4e4ebb

Note the small point also that the oh so broke US government with no apparent assets was first was able to use spare equipment in storage.

You do also realize that in general having a stockpile of ammunition is an asset since... A: it always gets consumed faster than the power point says back at the Pentagon or any other military HQ in any country. B: Most nations or rather very much nobody else really has much of a stockpile on hand. Why not look up how many M1 tanks the US has and than compare that with everyone else?

[empr guy]

OP



What - just WTF?


snip

I have no ideal where you get these ideals.

it's very reminiscent of the plot to the game "homefront", except China is invading instead of north korea.

It involves;
the magical appearance of chinese military prowess,
The US abandoning asia/defensive treaties/ etc "just because"
The US economy collapses ( now because suddenly people start burning US currency for literally no reason instead of a nuclear war elsewhere)
the north koreans launch an emp strike with their magically obtained space/submarine program that apparently no one noticed
the chinese invade with their magically obtained navy that the US can't do anything about "just because"
everyone else in the world does absolutely nothing "just because"

so you know, a prediction based on facts and logic.