With the way the US government is spending money you can’t really blame our largest creditor from getting nervous.
Premier Wen Jiabao voiced confidence in China’s economy, saying his government’s finances give it room to spend even more to support growth if needed, but expressed concern about the outlook for the U.S. and the safety of its Treasury bonds.
The forceful comments from Mr. Wen’s annual press conference — a rare opportunity for domestic and foreign reporters to ask a top Chinese official questions directly — helped depress the U.S. dollar and prices of U.S. Treasurys in Asian trading Friday.
“We have lent a huge amount of money to the U.S., so of course we are concerned about the safety of our assets. Frankly speaking, I do have some worries,” Mr. Wen said in response to a question. He did not offer specific suggestions on economic policy to the U.S. government, but called on it to “maintain its credibility, honor its commitments and guarantee the security of Chinese assets.”
It’s too bad those in government are more interested in borrowing and spending than they are in paying down some of this debt. Sooner or later the bill is going to come due. Then what?
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China should be worried about their dangerous over investment in US Treasury obligations. Washington ’s long-term choice is either repudiation or monetization. For monetization to be effective, the depreciation in the dollar would have to be substantial and this in turn would dramatically raise prices of imports for American consumers which would mean a tremendous drop in foreign imports. Debt monetization would cause more disruption to exporting nations than selective repudiation of Treasury debt.
Washington has bailed out the banks, Wall Street & their Washington special interests and much of the cost is added to the national debt to by paid by this and future generations while real estate and investments continue to fall. Find out what a growing repudiate the debt movement could mean for treasury bonds, the dollar, gold and the stock market.
The Campaign to Cancel the Washington National Debt By 12/22/2013 Constitutional Amendment is starting now in the U.S. See: http://www.facebook.com/group.php?gid=67594690498&ref=ts
Thanks,
Ron
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