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| Joined: | Mon Nov 21st, 2005 |
| Location: | California USA |
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When you get right down to it, Washington’s tough talk is nothing but a silly pointless provocation of Washington’s largest creditor. What if Washington’s idiocy causes China to worry that Washington and its UK and European puppets will seize its bank balances and refuse to honor China’s holdings of $1 trillion in US Treasury bonds? Will China pull its balances from the weak US, UK, and European banks? Will China decide to strike first, not with nuclear weapons, but by selling its $1 trillion in Treasury bonds all at once?
It would be cheaper than war.
The Federal Reserve would have to quickly print another $1 trillion dollars with which to buy the bonds, or US interest rates would shoot up. What would China do with the $1 trillion in newly printed paper? In my opinion, China would dump it all at once in the currency market, because the Federal Reserve cannot print euros, UK pounds, Japanese yen, Swiss francs, Russian rubles, and Chinese yuan with which to buy up its newly printed currency.
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Please recall the 2008 doubling of the total U.S. Dollar supply, and as Gary North has reported the extra money is being held up as reserves by the Federal Reserve Policy of paying a reward for holding cash in reserve - for some reason.