Modeling in China: $trap

Foreign exchangeThe safety of threat to reserve is more and more serious ed hardy . We have to ask: becausedollarDevaluation and the subprime crisis led to the Chinese securities breach of foreign-exchange reserves value is flat or may volatilizes quickly.By default, the U.S. dollar and can easily get rid of its debt.China's growing trade surplus obtained, who is worth more to exchange the green paper? Whether the United States to pay? First, the dollar will lead to loss of capital of China's foreign exchange reserves.Since April 2002 start at the end of 2009, the dollar index (according to a basket of currencies, the dollar has depreciated) percent.Although some time in a stronger dollar could, but the dollar's long-term trend should not change. Secondly, America's inflation would erode the value of China's foreign exchange reserves.In normal, America's inflation rate of 2% ~ 3%.Even if the normal period of inflation is enough to automatically wipe the interest income outside China reservoir and erosion of China's foreign exchange reserves, a fortiori, the principal economic once back to normal, during the crisis of the currency back additional financial markets and economic entity, America's inflation could lose control. So far, the dollar's decline trend and the possibility of worsening inflation is mainly global imbalances and U.S. government executive supernormal expansionary fiscal and monetary policy.But the more serious is a long-term, and difficult to escape the question: if the United States to pay? American financial situation has deteriorated is not completely is periodic, with swimsuit trends 2010 economic growth will not automatically improve recovery.2009 fiscal deficit America 1.42 trillion dollars, to 9.9% of GDP,More than 12 trillion dollars in debt balance for America's GDP, 84%. Fiscal 2010 fiscal deficit is expected to reach us $1.56 trillion, national debt can balance than 14 trillion dollars.2011 fiscal deficit expected us to 1.27 trillion dollars.Us Treasury balance GDP than in 2015 could reach 100%.Obama says U.S. government fiscal deficit, 2013 than GDP will fall by 4%.But, according to the government's own calculation, from 2010 to 2019 America will increase 9 trillion dollars, an average annual budget deficit of $1 trillion, the average annual budget deficit than 5% of GDP.Moreover, the American government to establish the financial situation is in American economic growth will be able to maintain a higher growth rate of over the optimistic forecasts. The long-term prospects of American financial situation is worrying.America's government accountability office (GAO) thinks, because population factors, American societyInsurance,Medical and health/grants the growth rate will be spending than GDP growth rate, the future growth of America could not solve the problem by finance.In the U.S., in 2040 GAO Treasury than GDP will double.If consider social security and medicare/medical helpFund,Future funding gap, America's total debt, namely the dominant debt and implicit debt in 2007, as 52.7 trillion dollars, the full-time workers as 17.5 million dollar debt burden, whereas America's per capita disposable income only 3.3 million dollars.The U.S. government must rely on debt. Alert us inflation out of debt China's foreign exchange reserves is China's economic structure, with the savings of ed hardy clothing changes, such as population, China's foreign currency reserves in one day in the future is to bring in.Despite China's foreign exchange reserves value for the dollar and us inflation losses, we have to put this question: in the future, when we need to store, and the actual cash to buy the resources, intend to pay its huge debt? With the financial situation worsened, American by various means to get rid of the debt burden will become increasingly intense.Especially, the first of may is to get rid of the debt.In the history of American not completely depend on the repudiation (default), but the payment conditions (change) is a precedent. For example, in 1933, 41% of the dollar, the Treasury to abolish the congressional gold (thegoldclause).Us Treasury buyers can no longer according to the original contract obtain corresponding gold.1971 American unilaterally terminate dollars for gold convertibility, and is also a breach of contract.Since the 2009, more and more economists began to discuss the possibility of Treasury bonds default.So far, in the opinion of most people's Treasury bonds default is unlikely, but cannot be ruled out the possibility, with inflation reduce or get out of debt burden is common in history. The IMF's former chief economist, Harvard University professor, the famous American economist, Kenneth rogge has repeatedly pointed out that if the captains of the U.S. deficit continues to rise, debt balance GDP over 90%, long-term interest rates than the U.S. will rise, economic growth will be affected, but U.S. debt burden will further sharply.At that time, "with the temptation of inflation will be out of debt is irresistible." According to the calculation of the American economist, if the inflation rate reach 6%, just after four years of ed hardy caps American Treasury bonds than GDP balance can be reduced by 20%.American Treasury bonds, the proportion of foreign investor holds higher inflation, through out the temptation of the debt burden.But in fact, the American Treasury bonds sold to foreigners 30% of American Treasury bonds, China is the biggest foreign buyers already held by the end of 2009, of 24%. The dollar and how it can help us get out of debt burden?America's overseas assets (creditor) mainly based on local currencies, while the American foreign debts are mainly dollar-denominated.U.S. dollar will not change the debt burden.But America's overseas assets value and investment income will increase by the weakness of the dollar.The overseas assets and investment income increase, will greatly enhance the ability of the U.S. debt.Theoretically, as long as the dollar devaluation, America's full of investment income and assets overseas growth can offset its debt burden.In some years, the American current-account deficit is quite large, but the external balances (or more strictly, net international investment positions, but NIIP) has not is this truth. How to protect their interests? American nations, especially China, what effective measures to protect their interests?He once said that exists between the east and the so-called "finance terrorist balance."In fact, this is very unbalanced, the United States, and it is completely dominated the opponent is in a dilemma, $trap. Nowadays, in addition to America to "honor", China knows not what card hands can ed hardy t-shirts play.If China now sell the dollar assets held by hand, China will soon suffer a capital loss,If China continues to hold hands dollar debt assets, China will probably suffer more capital losses.China's foreign currency assets will eventually was much loss, nobody knows.More), even though we have self-knowledge, but cannot extricate trap.Until now we still continue to increase our dollars in foreign exchange reserves, trap deeper. In the 1960s, a famous French economist Jacques goey kauf (Jacques Rueff) has told a tailor and customer's story.Tailor made clothes for the customer, clothes sell customer, and then the customer pay as a loan to return customers.The latter with the money to buy new clothes to tailor.So that is supirior.Steve: if I asked goey is the customer, so why not good I! The monetary system, the bretton greenback) instead of gold dollar (as standard.What is dollars?Even the credit currency ($fiduciary money) are not FaBi (fiat money, but it can be used as), the country's currency is completely compulsory.Add $the free flow of capital standard, the essence of bretton system is a global PangShi Ponzi game (please). We (for us) to produce, tailor states (the customer), we pay $$buying American bonds or other dollar assets (tailor the customers to buy clothes money to lend to customers), the United States (the customer) with our (tailor) loans to America (customers) money to buy our products (cloth).Since 1980 in the world will play this game.American managers spun fast, many of us are getting worried, because the people they didn't want to depend on.If the United States hopes to increase the export, reduce debt, China should be welcomed. If you like to play, the United States had a day (such as when China intends to use their own purchases of commodities and outside storage resources) will be facing default or default of the difficult choices.Here does not need any conspiracy theory, it is a simple economic logic. We may have little choice but to still want to.For China, it is imperative to ed hardy clothes avoid further fall into trap, secondly is $existing stock exchange to minimize the losses may occur.