China Threatens "Nuclear Option" of Dollar Sales

[Galloglaich]

Unfortunate that we have invested so much power in the hands of foreigners.

http://www.telegraph.co.uk/money/mai...nchina107a.xml

[Æmeric]

Yes, I saw this earlier. But if the Chinese try to destroy the dollar, who is going to buy all that junk coming out of Chinese factories. I think it is an empty threat. Creating economic problems in the US would eventually cause unrest in all those prosperous Chinese factory towns.

But it is dumb that we've allowed ourselves to get into this position.

[Galloglaich]

Yes, I saw this earlier. But if the Chinese try to destroy the dollar, who is going to buy all that junk coming out of Chinese factories. I think it is an empty threat. Creating economic problems in the US would eventually cause unrest in all those prosperous Chinese factory towns.

That's the hope. I'm more from the Austrian school that sound money is more important. Yes, the Chinese have a history of sabre rattling, but Chinese officials have stated openly for years that they would destroy the U.S. economically before they did militarily. Just say that at some point they thought that the sum/loss advantage of destroying the U.S. economy would be to their benefit. Bad mojo.

But it is dumb that we've allowed ourselves to get into this position.

Yep.

[Ægir]

The way I look at it who cares…an oath to a liar is no oath at all. We should just default with China. That is much more desirable than defaulting on debts with our kin-related countries. If I were calling the shots we would have already isolated ourselves form China anyway. Sure if they called our debt and we did not pay it would mean a short term collapse of the dollar. But it would hurt the Chinese economy at the same time and it is not as if the Dollar is strong right now anyway. A short term depression is just what we need to kick us in the ass and strengthen our former trade bonds with countries that are worthy of our trade. Now this is easy for me to say as I am ready for a depression with modest reserves in gold and silver. But I tell you all kinsmen that I encourage you to do the same.

[Dr. Solar Wolff]

If the Chinese dumped dollars we would have a round of inflation which we have not seen since the Carter years. All the more reason to invest in real estate or at least assets of hard value. Also, the stock market would take a huge hit since it is just a speculative branch of the Federal Reserve and the Fed. would be on the ropes during such inflation.

[Outdoorsman]

I'm already positioned to protect against a big round of inflation, but it'll still hurt if it happens.

At least my debt would be really "inexpensive" to pay off.

I read somewhere that China is nearly at the point where their middle class is large enough to buy everything that China sells to us. Meaning, if they tank us by selling dollars, they may still have a decent market for their goods - their own middle class. The idea seems a little thin to me, but I see the point.

[Ægir]

If the Chinese dumped dollars we would have a round of inflation which we have not seen since the Carter years. All the more reason to invest in real estate or at least assets of hard value. Also, the stock market would take a huge hit since it is just a speculative branch of the Federal Reserve and the Fed. would be on the ropes during such inflation.

It’s good to have land…but real-estate? Come on now, that is just one more thing the government can tax you on when the economy is real bad. And if you are expecting the economy to turn that south then you have to be prepared for anything…and the includes possible rapid decreasing of value of land in general…much less land in an urban or suburban environment. The beauty of gold and silver is that it is like liquid, never worth zero, and easy to hide if you really have to.

[Boche]

Thread already exists:

http://forums.skadi.net/showthread.php?t=412


My opinion can be read there - maybe a Moderator should move my post into this thread.




Gruß,
Boche

[SwordOfTheVistula]

I think real estate/land would be better in an economic downturn than gold or silver. Real estate/land fulfills 2 basic needs of people, shelter (homes) and food (growing crops/gardens). Not only would your own needs be certain to be satisfied but they would supply a source of income. Gold and silver on the other hand are good hedges against inflation but have not much practical value, if the economy collapses you will have a much easier time trading food or collecting rent for the items you need than trading gold or silver for it

[Æmeric]

At the end of WWII, didn't people in Europe use cigarettes in place of money? In a hyperinflationary scenario I think gold & silver would useful as means of exchang - if it was held in coins like silver dollars or gold krugerrands & maple leafs. And with internet banking your could open up an offshore account in Euros, Swiss francs or yen, and conduct all of your financial transactions electronically.