The trade gap in the U.S. is shrinking, meaning that the difference between what we export and what we import is smaller. We are going to wind up in a trade war with China as we run the printing press 24/7 to buy our own Treasuries so we can pay off our own debt because China just doesn't have the appetite for U.S. Treasuries as it has in the past.
I read Obama's "The Audacity Of Hope" and he is very strongly against the artificially low yuan. He feels that it gives China an imbalance in jobs, and he's right. So, because China is holding so many of our Treasuries, we're going to pay them back in cheaper dollars, screwing them in the end.
China hates this, and is now looking for a new world reserve currency that is not dollar based. This will take the legs out of the USD, and inflation will crank, and the USD will tank.
The good news is we won't be buying imports, it may spur more job growth, and all of the Americans who are massively in debt will see their debt levels shrink in proportion to the inflation rate. That is all the gamble, and it's really obvious where it is going.
Hyperinflation.
Thursday, April 9, 2009
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