jepsd, wow! Interesting stuff. Why do you think the Fed will lower rates? With high inflation, how can they do so? Perhaps inflation will be reduced when the recession starts, and then the interest rates can be lowered. Why would that “make things worse”? If the dollar falls, our exports will go up, and that will help balance the economy, right?
One more thing about China that nobody ever talks about: they are printing money like mad, at the rate of their exports to us! Every year, China’s central banks print $600-700 billion or more, of yuan. [Q: do they print the full amount of exports, or only the deficit amount?]
The reason: to keep their currency from appreciating, they cannot exchange the dollars they get for yuan, so they print yuan to give to the person who brings them dollars, and invest the dollars in the U.S. I am sure nobody really understands this, but I know this from reading The Dollar Crisis. So my question is: how is this affecting China’s economy, and how long can they get away with it?
jepsd, why didn’t US consumers start purchasing back in 1921? Why isn’t China taking steps to make their citizens into consumers? Don’t they see the US recession that is looming? Why are they backing themselves into a corner?
Most important, why does China really need the US? They are exporting to us ON CREDIT. Why not “export” to their own citizens? They are making goods so cheap, they could just consume it themselves, right? They get no interest off the Treasury notes they buy, so basically they are giving away all the things we buy from them. If we stop buying from them tomorrow, it won’t affect them at all, since we are not paying them anyway! This is the biggest joke of all. We think China needs us, but we buy on credit, so who needs whom? China can dump their treasuries all at once, and use the proceeds to buy up natural resources all over the world.
