"...How does the U.S. try to counter the danger represented by foreign borrowings? After exporting our profligate spending to China with no intention of reform, we wield the implied threat that if China doesn’t continue to lend to us, it will go down with us. The Chinese may not see it that way as they feel the pinch of inflation, experience inevitable cyclical growth slowdowns, and develop new trading partners.
Foreign borrowings of the United States represent a clear and present danger to the U.S. dollar and to the U.S. financial system. Potential dumping of U.S. dollars would start a run on the currency and a financial panic that would tip our already precarious economy into a deep depression. No matter how much currency central banks use to try to manipulate exchange rates, the market always has more. The U.S. needs contingency plans against a large scale withdrawal of funds from the U.S. and from U.S. financial institutions. In the gravest extreme to avoid a run on the U.S. currency and a collapse of the U.S. economy, the U.S. requires a standby plan to sequester a foreign nation’s funds, just as we have done in the past."
at http://www.businessinsider.com/clear-and-present-danger-foreign-borrowing-poses-an-imminent-threat-to-the-us-dollar-and-us-financial-system-2011-10?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+clusterstock+%28ClusterStock%29#ixzz1cIYpOln7
Foreign borrowings of the United States represent a clear and present danger to the U.S. dollar and to the U.S. financial system. Potential dumping of U.S. dollars would start a run on the currency and a financial panic that would tip our already precarious economy into a deep depression. No matter how much currency central banks use to try to manipulate exchange rates, the market always has more. The U.S. needs contingency plans against a large scale withdrawal of funds from the U.S. and from U.S. financial institutions. In the gravest extreme to avoid a run on the U.S. currency and a collapse of the U.S. economy, the U.S. requires a standby plan to sequester a foreign nation’s funds, just as we have done in the past."
at http://www.businessinsider.com/clear-and-present-danger-foreign-borrowing-poses-an-imminent-threat-to-the-us-dollar-and-us-financial-system-2011-10?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+clusterstock+%28ClusterStock%29#ixzz1cIYpOln7
