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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: Paul Kern who wrote (17865)	2/22/2009 4:47:34 PM
From: RJA_	Read Replies (1) \| Respond to of 71456

>>>>This kind of thing will further push the Chinese for ways to get out. >>They have no choice but to keep on buying because: >>1) If they don't, it will crash the dollar and we will no longer be able to buy any of their output. So the logic of this is: I'm broke cause I used to make stuff, but I don't any more, cause you make it for me and I buy it from you. So, if you keep lending me money (at larger and larger amounts) I will keep buying your stuff with the money you lend me. Of course, if you ever want me to pay you back in full, forget it, I cant. And your argument -- if you do make me, it will ruin both of us. Kind of the Wimpy argument -- "I will gladly pay you Thursday for a hamburger you lend me today..." My simple argument is -- this is not an infinite feed back loop. It will end. The only question is how it will end, and will it be pretty or not? 2) It will devalue their huge U.S. holdings. You can make that argument. You can also argue that it will make other US stuff they want to buy much cheaper, a real bargain. The whole country will be on sale. Who doesn't like a bargain? So while 1 & 2 have some merit, IMHO they will fail. The failing fiat thing repeats throughout history, details not always exact, but same story, with same lessons, which we are all about to learn again. Furthermore, who makes the rules -- the borrower deep in debt or the wealthy lender? Ditto re energy glutton or energy producer.