China’s Economic Threat

This is another reason why the US government shouldn’t be spending borrowed money to finance extra-constitutional spending.

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning – for the first time – that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress.

Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China’s “nuclear option” in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

When the federal government is asked to do things the Constitution doesn’t tell it to do, and when more and more money flows through it, and with that more and more power, it’s hard to stop spending. And with that comes borrowing. And with that comes slavery. The same thing could happen even if spending were kept in the context of the Constitution, but once you escape its limits, there is then no limit.

The rich rule over the poor, and the borrower is servant to the lender. – Proverbs 22:7 (NIV)

Technorati Tags: China, debt, Communism, borrowing, deficit

Filed under: China • Conservative • Economics • Government

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