Now here’s an interesting take on what is really going on with China’s scolding of America over debt. Clyde Prestowitz argues that the Chinese are not only being deceptive in their criticism of us, they need us to be in debt for a variety of economic and strategic reasons. Think this is a crazy theory? Read his post today in Foreign Policy yourself:
I mean, let’s get real. Even as they were scolding, the Chinese authorities were in the market buying billions of dollars worth of U.S. Treasury debt. And why are they doing this? Well, there are complex reasons, but a main one is to keep their own currency undervalued as a kind of export subsidy. By buying U.S. Treasuries, China’s leaders are pushing up the value of the dollar versus the yuan and thereby making U.S. exports more costly and U.S. imports of Chinese goods and services less expensive. In effect, they are devaluing their own currency.
This behavior by China has tended to depress U.S. interest rates, subsidize U.S. consumption, and remove any disadvantage to the United States of its over-consumption. In short, China has done everything it can to encourage and induce just the behavior it is now urging Washington to halt.
No one is forcing the Chinese to buy dollars and treasuries, and a sure way to force Washington to become more serious about prudent fiscal behavior would be for China to halt its buying. But it doesn’t and it won’t. Not only does China constantly accumulate dollars as a result of the trade surpluses its weak yuan policies induce, but, unlike most countries, China’s dollars all wind up being held by the government because Beijing does not allow private citizens and corporations to hold the dollars they earn. Rather they have to turn them over to the government in return for yuan. Thus, just as the United States, over-consumes, China chronically under-consumes as an essential element of its long term, export led economic growth strategy.”
Obviously the junkie is responsible for his actions. But remember, the pusher doesn’t want them off drugs. He wants them….dependent.
You can find the full story here.
Comment count on this article reflects comments made on Breitbart.com and Facebook. Visit Breitbart's Facebook Page.