Its real easy, and simplistic, to look at China and see a juggernaut destined to overtake the US, if indeed it hasn't already done so. It really is a simplistic view. I'm not big on the logical fallacy of the appeal to authority (like quoting a Nobel laureate in lieu of actual argumentation) but I would recommend anyone interested pick up a book or watch a few videos with James Rickards or (if you think you have the financial chops) Kyle Bass.
First off neither China nor anyone else can just sell their Treasuries. The Treasury market is controlled by the Fed. (This fact like everything else I am saying is easily verifiable. DYODD.) Besides, even if they did, the way the bond market works is pretty much like everything else- you go to sell a lot, that sends the supply up and the price down. China can only sell so much without driving the price down. Would we take a hit? Sure. Compared to the hit China would take? Ha. They'd be screwed. And they know it, too.
I really cannot recommend enough - THINK don't just regurgitate!
Seriously. Most of what's out there is fake news. THINK! DYODD!
China has had a one child policy for decades. Combined with their preference for boys, China has a very VERY big demographic problem. Lots of single men. And that's just the tip of the demographic iceberg. As the massive legacy population grows older, One Child has left behind a huge drop-off, probably the worst in the world.
China is also a command and control economy. Very inefficient. Search the web for ghost cities. Entire cities- apartments, stores, - enough for millions of people, just sitting vacant. Go watch the videos on their construction quality. Built crazy fast, they crumble just as fast. There's tons of videos and stories. Check em out. DYODD!
Its one saving grace has been the lack of regulation that has allowed near unfettered private enterprise. This is why we see all these Chinese billionaires. Its not that they are so much better or smarter. Its that China allows them to do pretty much whatever they want (Permits? We don't need no stinking permits! Piracy? That's our business model!), and to keep pretty much whatever they can earn.
Is China hoarding gold? Hell yeah. Read your history. Unlike Americans who have never experienced hyperinflation the Chinese have a long history of paper money (possibly invented there) being hyper inflated to nothing. People who talk about the long history of China never seem to have learned this part of it.
Opium war. Heard of it? British sent warships, forced Chinese to accept opium instead of silver for payment in trade. If China ever acts like its got a great big chip on it shoulder, brother, they do.
Soon as they get some money they buy some gold. Soon as they get a lot of money they get it OUT OF THE COUNTRY! Why, if China is so great, would they do that? Because they know China has no rule of law and a long history of monetary debasement.
No rule of law. No faith in the currency. Not to mention a population so spied upon and controlled they already have millions who can't take a plane because the facial recognition software caught them stepping off the curb before the light changed. Not exactly ingredients for prosperity.
One more, as if the above aren't enough. Math. Sorry. But do the math. Yes China (and Russia, and Iran, and a bunch of other countries) are working diligently on establishing direct currency exchange outside the dollar. This is the REAL reason behind all the hoo haw about Russia, etc. But again, do the math. The USD market is beyond trillions. With derivatives it is into the quadrillions. Last I saw the derivatives market was 15 quadrillion, notional. Its truly astronomical. The Treasury bond market, just the T-bill part of it. is so vast as to be beyond their reach any time soon.
Almost forgot! Debt! Every country in the world is up to their eyeballs in it. And make no mistake- debt is not a problem. Problems have solutions! When you are in a plane and the pilot collapses you have a problem. When you are falling from the plane without a parachute then my friend you are in a predicament. Globally and locally, debt is a predicament! (Illinois, anyone? Anyone? Beuller?)
There is a range of debt to GDP that has been studied in many countries and shown that once debt reaches 105% of GDP its Game Over. Going by memory so could be 106, could be 110, but its in there somewhere. Like I said DYODD. Point is, from then on there's no coming back. No country of hundreds studied went anywhere from there but hyperinflation. Weimar Germany, Zimbabwe, Venezuela- those are just the ones you probably know about. There's a lot more. DYODD? Okay I will do this one for free: 28 countries just in the last 25 years!http://www.munknee.com/21-countries-have-experienced-hyperinflation-in-last-25-years-is-the-u-s-next...
So here's the thing. The US is right there. Depending on how you measure we are right there or a just over the line. But guess what? China is a whole lot worse!
For sure China is a serious global competitor and not to be taken lightly. The way things were going until 16 we were on the road to being a wholly owned subsidiary of China, Inc. Not any more.
Just a little perspective. DYODD.
First off neither China nor anyone else can just sell their Treasuries. The Treasury market is controlled by the Fed. (This fact like everything else I am saying is easily verifiable. DYODD.) Besides, even if they did, the way the bond market works is pretty much like everything else- you go to sell a lot, that sends the supply up and the price down. China can only sell so much without driving the price down. Would we take a hit? Sure. Compared to the hit China would take? Ha. They'd be screwed. And they know it, too.
I really cannot recommend enough - THINK don't just regurgitate!
Seriously. Most of what's out there is fake news. THINK! DYODD!
China has had a one child policy for decades. Combined with their preference for boys, China has a very VERY big demographic problem. Lots of single men. And that's just the tip of the demographic iceberg. As the massive legacy population grows older, One Child has left behind a huge drop-off, probably the worst in the world.
China is also a command and control economy. Very inefficient. Search the web for ghost cities. Entire cities- apartments, stores, - enough for millions of people, just sitting vacant. Go watch the videos on their construction quality. Built crazy fast, they crumble just as fast. There's tons of videos and stories. Check em out. DYODD!
Its one saving grace has been the lack of regulation that has allowed near unfettered private enterprise. This is why we see all these Chinese billionaires. Its not that they are so much better or smarter. Its that China allows them to do pretty much whatever they want (Permits? We don't need no stinking permits! Piracy? That's our business model!), and to keep pretty much whatever they can earn.
Is China hoarding gold? Hell yeah. Read your history. Unlike Americans who have never experienced hyperinflation the Chinese have a long history of paper money (possibly invented there) being hyper inflated to nothing. People who talk about the long history of China never seem to have learned this part of it.
Opium war. Heard of it? British sent warships, forced Chinese to accept opium instead of silver for payment in trade. If China ever acts like its got a great big chip on it shoulder, brother, they do.
Soon as they get some money they buy some gold. Soon as they get a lot of money they get it OUT OF THE COUNTRY! Why, if China is so great, would they do that? Because they know China has no rule of law and a long history of monetary debasement.
No rule of law. No faith in the currency. Not to mention a population so spied upon and controlled they already have millions who can't take a plane because the facial recognition software caught them stepping off the curb before the light changed. Not exactly ingredients for prosperity.
One more, as if the above aren't enough. Math. Sorry. But do the math. Yes China (and Russia, and Iran, and a bunch of other countries) are working diligently on establishing direct currency exchange outside the dollar. This is the REAL reason behind all the hoo haw about Russia, etc. But again, do the math. The USD market is beyond trillions. With derivatives it is into the quadrillions. Last I saw the derivatives market was 15 quadrillion, notional. Its truly astronomical. The Treasury bond market, just the T-bill part of it. is so vast as to be beyond their reach any time soon.
Almost forgot! Debt! Every country in the world is up to their eyeballs in it. And make no mistake- debt is not a problem. Problems have solutions! When you are in a plane and the pilot collapses you have a problem. When you are falling from the plane without a parachute then my friend you are in a predicament. Globally and locally, debt is a predicament! (Illinois, anyone? Anyone? Beuller?)
There is a range of debt to GDP that has been studied in many countries and shown that once debt reaches 105% of GDP its Game Over. Going by memory so could be 106, could be 110, but its in there somewhere. Like I said DYODD. Point is, from then on there's no coming back. No country of hundreds studied went anywhere from there but hyperinflation. Weimar Germany, Zimbabwe, Venezuela- those are just the ones you probably know about. There's a lot more. DYODD? Okay I will do this one for free: 28 countries just in the last 25 years!http://www.munknee.com/21-countries-have-experienced-hyperinflation-in-last-25-years-is-the-u-s-next...
So here's the thing. The US is right there. Depending on how you measure we are right there or a just over the line. But guess what? China is a whole lot worse!
For sure China is a serious global competitor and not to be taken lightly. The way things were going until 16 we were on the road to being a wholly owned subsidiary of China, Inc. Not any more.
Just a little perspective. DYODD.