[A-List] China's empty threat

[Todd Boyle]

Hi Bill.  Your first question is oddly framed; it seems to reflect a
value judgment that devaluation is bad, and Americans are bad
for their low savings rate, etc.   I can't deal with that framing--my
limitation,I guess.

In fact Americans are rational enough. Why buy an American
product when Chinese products cost half as much.  Why would an
investor build a factory in the US while labor is cheaper elsewhere. etc.

The savings rate (and the trade deficit, fiscal deficits, etc) are effects,
not causes. They are not the prime mover.  The prime mover is
the will and intention of global capitalists who run the U.S.

The dollar itself has no credibility.  Credibility is something that applies
to the sponsors and managers of the dollar.  That would be the Fed,
the Treasury, Congress and the President.

There will be no run on the dollar, I suppose, unless a substantial
consensus develops among global capitalists for such a run.
Since wall street largely controls who gets nominated or elected
to the Presidency and Congress, they control the value of the dollar.
You may have noticed a terrific deflation in 2008.  This proves they
can do deflation.  Obviously they can do inflation, any child could
do that, if you provide the password to the issuance computer at the Fed.

But who cares?  Many of us understand that working in the
money economy is not only morally wrong, environmental and
cultural suicide but ultimately, a dead end. There is not even
freedom waiting for you when you retire-- the rats are in the
granary, stealing your economic surplus, and your savings will
not be there when you're 65.

The corporate economy is very intimidating.  Very impressive.
But we are losing at least 90% of our lifetime economic output
to waste, and thieves in this system.  We cannot even accumulate
savings.  I think working outside the money system is a more favorable
proposition than ever before.   Most of this is informal, group
loyalty today, lubricated by a lot of P2P/bilateral barter and offbook
money transactions.  It will work a lot better with multiparty barter,
too bad there's no website for that.  It would be so easy to develop.

Todd

At 02:02 AM 4/3/2009, Bill Totten asked:
>.. various nations hold more three trillion dollars of US Treasury Bonds,
>denominated in US dollars. Japan holds 626 billion dollars of those
>bonds. All would lose severely from any significant devaluation of the
>US dollar vis-a-vis their own currencies.
>
>Wouldn't those losses cripple the credibility of the US dollar and the
>US's ability to make up for its paucity of saving and taxation by
>borrowing from foreigners?
>
>Would those losses spark a worldwide run on the US dollar?
>
>Bill Totten
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