...telling us things are improving? The only thing keeping the U.S. afloat right now is the temporary willingness of Asian countries to keep buying U.S. debt, thereby pumping up the U.S. economy with dollars earned on the backs of Chinese laborers.
But even the Chinese -- known for their tolerance of hard times and manual labor -- may eventually tire of lending money to a posh, arrogant Western nation that has all but abandoned the concept of saving money.China is saving so much that it’s running a current account surplus.
Not only is China supplying capital to the rest of the world, it’s increasingly doing so via direct investment. The question for the United States is whether China will tire of investing only indirectly in our country and begin to sell its dollar-denominated reserves. Doing so could have spectacularly bad implications for the value of the dollar and the level of U.S. interest rates.
The value of the U.S. dollar would plummet, the level of U.S. interest rates would skyrocket, and hyperinflation would be well underway.
We would find not only that our dollars to be near-worthless on the global market, but their savings to be all but wiped out as well. You'll still have the same number of dollars in your bank account, but they won't be worth anything.
But even the Chinese -- known for their tolerance of hard times and manual labor -- may eventually tire of lending money to a posh, arrogant Western nation that has all but abandoned the concept of saving money.China is saving so much that it’s running a current account surplus.
Not only is China supplying capital to the rest of the world, it’s increasingly doing so via direct investment. The question for the United States is whether China will tire of investing only indirectly in our country and begin to sell its dollar-denominated reserves. Doing so could have spectacularly bad implications for the value of the dollar and the level of U.S. interest rates.
The value of the U.S. dollar would plummet, the level of U.S. interest rates would skyrocket, and hyperinflation would be well underway.
We would find not only that our dollars to be near-worthless on the global market, but their savings to be all but wiped out as well. You'll still have the same number of dollars in your bank account, but they won't be worth anything.