or foreigners could decide that the return from US treasuries is lousy compared to investing in their own economies. That’s the real danger of foreign capital flight from the US, IMO.

On the surface it looks that way but where can you invest Trillions of dollars and have the liquidity. Only the US can absorb that kind of figure without making a ripple effect on the world.

Europe, China, Japan and other economies could not handle these kind of figure without caused a huge inflation and eventually a firework collapse. Abundant of supply without demand is very bad for business and profit, you know what I meant.

A reminder, if foreigners sell US dollars right now then we would be very happy to buy them back at discount. It could be a little bet painful in the short term but will be good in the long term. Some will ask with what? The answer is as long as we are the most powerful militarily countries in the world, money will come easy.

Guess what will happen then to the countries that dump our money. You know the answer. You may call it arrogant but it’s the reality. You don’t have to look that far into the past the see that if other countries such as China, Japan, Germany, Italy, etc., is the world power, their actions would make us looked like “as Arnold said” girly.

Like HeWeGo said, the Chinese are turning to investing in their own economy. That will be an ongoing process. If you go to China you’ll see that construction is rampant, not just in the cities.

China is looking for ways to “decouple” from the American consumers.

That won’t happen overnight but over decades. We can’t count on cheap money forever.

China is also modernizing its military.
http://www.washingtonpost.com/wp-dyn/articles/A45056-2005Apr11.html

When China reaches critical mass, Japan will turn to investing in China just like it invested in America.

I am totally aware of that and been there recently. The development is impressive and good for China but we are not talking about China’s progress.

The “decouple” from American consumers is like “biting the hands that feed you”. Most countries that are trading with us have tried that but you will need constant external buyers just to maintain the current flow. No one will have a trade deficit to China in the 200 to 300 billions a year.

There are no other countries in World will be consuming “insanely” like American. European & Asian are also consumed but on things that are more useful and not every crazy things. For instance, the European and Asian will not paid $150 to $500 bucks for a “died cast” model car. Why you think Arts and old junk stuffs worth so much in America especially if it’s came from Europe and not from Asia when the items from Asia is thousand years older or rarer. Who are the buyers of these things? You don’t see much Chinese buying do you. There is not a market for most items in the world except in America, period.

Yes, any countries can modernized their military overnight if you have spare 100 billions to spend a year. “Don’t believed the figure in the news, the Chinese always have more and spend more than published.

One thing that most people do not see why American still and will be economically and militarily superior to other countries in the world is that we have the best from all corners of the world to work for us here in the US. I am talking about the diversity of people who are mingling together.

A mono-cultural will not and never be as powerful as a multi-cultural society.

Lastly, maybe you don’t understand the Asians but every other Asian countries “Japan, Vietnam, Korean, Philippines, Mongolia, India, & etc.” hated China guts and will gladly side with another power country. As you may know, China was one a very powerful country and has abused their power to create so much animosity just like we are now everybody hates us.

We better settle the Iraq’s war soon and start focusing on winning back the respect from other countries otherwise the only country that I can soon be able to vacation on is America.

For crying out loud, in Europe the local would accept Canadian money but not US dollar.

Sucks to American these days when you travel.

Peace.