Watching the interviews this morning from China and the Far East on CNBC has me convinced my gut feeling will come true.
Last week, we had Hillary Clinton go to China and say she was glad they had “confidence” in the American economy. Well–China does not use that word confidence. China is the top holder of US Treasury bills, with 696.2 billion dollars worth of the securities in December followed by Japan with 578.3 billion dollars, according to the latest official data from Washington.
China’s economic growth is at its slowest rate in about two decades as foreign demand for its exports, including in the recession-hit United States, have dried up. http://www.breitbart.com/article.php?id=CNG.42a44b0f5d9cf5c9762e80574e79a3d5.831&show_article=1
CNBC showed a chart that pointed out that China made 13% last year by investing in US Bonds—so they did very well. Forget about how much they love us.
Many in Government and Congress keep saying they believe China will continue to buy our debt as usual. However, the real FACTS are alarming.
Because exports in China are down, they don’t have the dollars to buy as they did last year. Also, China announced they are spending their money on Stimulus programs for their own economy. Last year foreigners have increased their purchase of US debt from 30% to about 50%.
Even if everyone in the world buys as they did last year, which they can’t, it will not make a dent in the tremendous debt that we are spending in Bailouts, stimulus packages and domestic spending. How are we going to pay for this tremendous increase of debt and spending if the world no longer has the ability to buy it? Even though many think that China needs us, they will not have the capacity(nor will any other country) to buy our debt. Basic economics has to kick in.
Of course there is only one answer, we have to print money like crazy, the FED will buy its own debt, and inflation will approach double digits and higher.
I guess the only thing the common guy can do is be prepared for the double digit interest rates of the early 80’s. If you are in your 30’s , you have no concept of what to do because your parents were affected. So if you are young, call your parents.
If you own a home, be prepared to stay in it for another 10 years. Make sure you save money and pay off debts. If you don’t have a fixed 30 yr mortgage–get one soon. See how your industry did during the early 80’s, switch jobs if it got affected by high interest rates and high inflation. BE PREPARED!
