Extracted quotes from I.O.U.S.A:
In August 2007, China threatened to liquidate it’s 1.3 trillion in U.S. Treasuries continued to insist on placing tariffs on Chinese exports. This act would have destroyed the US dollar, according to some.
Since 2005 when China depegged the Yuan from the dollar, the USA has been after China to lower the value of the Yuan from the dollar being worth 8 Yuan to 5.5 Yuan. This would have made US products cheaper in China and China’s products more expensive in the USA. Most economists think this would eliminate the trade deficit.
It isn’t all bad for the U.S.A. however, as the dollar declines against other currencies, it makes the Yuan worth less in relation to those currencies. This effectively makes the dollar value of the T bills China holds worth less and thus our debt to China is somewhat lessened. However, the threat is that the ability of America to manufacture products may be approaching extinction. In other words, the U.S.A. might never regain a manufacturing base in this country. Another threat is that if China buys property in the U.S.A. in lieu of T bills, they will be purchasing the U.S.A. Eventually they may own the U.S.A. Paraphrasing Warren Buffett: “this is conquest by purchase rather than by war”.
If the U.S.A. creates, produces products, even infrastructure and property in the U.S.A., then the problem will be averted as the aggregate amount of property in the U.S.A. will increase. As long as the U.S.A. increases the worth and amount of property faster than it is purchased by foreign entities, then the U.S.A. will never cease to own their own country. The U.S.A. needs capital to do this. We can’t continue to give sub-prime mortgages. This squanders our credit for legitimate purposes.
Both parties have contributed to this crisis. Don’t entirely blame the Republican party and don’t think that Obama’s team of Democrats are your saviours. I have no complaints as of this time with Obama. I hope Obama does well. Most Americans hope he leads well.
Recommendation: Hope that Obama and the Democrats will solve this problem. Better yet, support a Utopian City State and move there.