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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: gregor_us who wrote (42288)	4/20/2005 9:23:02 PM
From: Think4Yourself	Read Replies (2) of 206160

That makes sense but I'm not completely convinced. The deficit is a major problem for the US, or so everyone says. Bush is pushing hard for an end to the peg. My understanding is that we pay China for goods we import in dollars. China uses those dollars to buy our debt via T bonds, rather than dumping the dollars on the Forex. They are subsidizing our consumption of their products to keep their people employed. If we cut down on consumption from China due to their products becoming too expensive, or for other reasons (rising interest rates or inflation for example) doesn't the China strategy lose its appeal for them? The benefit to their economy is reduced when our economy slows down. At some point their policy doesn't help them and they have $700 billion in dollar demoninated T Notes that are useless to them. Why would they want to be stuck in that situation? Could they also at some point determine that they want to stimulate internal consumption and the benefit would more than offset losses by selling dollars and damaging the US economy?

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