China artificially devaluing it's own currency to increase exports

Suicidal is a strong term... unwise would be a better one. China can't exactly recall its loans or put strings attached to them, so it's not really a big deal. You just need to diversify your holdings.

"Diversify?" You mean outsource even more?

I mean if you're going to outsource, do it with many different countries so that it doesn't matter. No one country can hold power over the USA.

...why don't we just not sell the debt, instead?

It doesn't work that way.

Well, ok, I'll amend that:

How about we don't sell the debt to foreign powers?

That's the better question. The biggest reason you could say is the banks and the US economy don't have the spare cash on hand to fund the US government that way.

Oh, I'm sure they have the money. They would just have to (~gasp~) not have ridiculously massive profit margins/wages at the highest level to do it.

~shrug~

If they like being owned by China...

Not really. The US deficit this year alone was a significant fraction of our entire GDP. That's what we produce, not the cash we have on hand. (Net profits of the entire economy for the entire year would fail to sustain the US budget for 6 months.)

edited 17th Oct '11 5:40:53 PM by MajorTom

Bleh, I won't derail into Keynesian versus Austrian/Chicago.

Either way, selling debt to China was a bad idea.

Choir. You are preaching to it.

Oo, does that mean you'll sing church songs for us? Some hymns are honestly not that bad.

There was half a page worth of comments in response to your opposition to giving debt to China.

Well, hell, we could sell it to Europe or even Russia. Pretty much everyone but China (and maybe India) would be a safe bet...

They wont buy it. That is the fun part.

No one wants to make the same mistake they did with Greece. Except the Chinese who stand much to lose if our economy goes under.

Actually China is out best possible ally.

edited 18th Oct '11 7:08:32 AM by Baff

USAF, you have to ask yourself why China bothers to purchase debt it probably won't get back and is netting them next to no interest income. It's because they don't want USA to collapse due to financial insolvency.

You can't borrow from home, because your saving rate is deplorably low and thus there's nothing to borrow. So if America took cash from the Federal Reserve (and I really think the US needs a central bank, and yes there's big difference between that and a Federal Reserve), they'd have to do one of two things. Print money to the government and the government has to pay interest to the Federal Reserve or raise direct taxes (payroll, income, sales etc).

Or you can get free loans from China.

Your choice.

I'd rather just raise taxes and be done with it.

Damn it.

^^ Well, I wouldn't disagree except that you know how American politics are like. The citizenry needs to step up and pay for the government they want instead of expecting a free ride constantly.

Taxes?? Socialist!!!!!

China?? Maoist Socialist!!!!

Economy goes under???? Spineless Wall Street Bail outing socialist!!!

and that is why Obama and the Gop dont get along.

edited 19th Oct '11 7:26:56 AM by Baff