How long will China invest in US Debt


 

China is raising rates but long term its economy may speed up again. China and India economies  promise to be very strong over the next decade.  How does this challenge US?

 

US Budget frightens foreign investors.


Per Gordon Brown, Asian middle class (not including Japan) will proportionally increase global consumption from 12% to 32% by 2020. What will China do if:


1 – its middle class consumes more


2 – US debts escalate and prints $’s.


Answer:


China may opt not to finance our debt.


What can US do to pre-empt this?


1 – drastically cut $900 billion in government spending


2 – keep taxes low so entrepreneurs will create jobs, significantly adding Treasury revenues


3 – promote exports to the maximum extent possible by promoting free trade.


China would then invest in our debt.


The Urgency:


We must act in 2011. Window to avert economic Armageddon may be less than 1 year. References – recent statement from a Chinese Finance official; books – Aftershock by Robert Weideman, The Great Super Cycle by David Skarica.

Advertisements

About economics501

1 - free market Capitalist; 2 - Fitness Entrepreneur; 56 years old, VP at an Investment Bank in NYC, ex Venture Capitalist, happily married with 2 girls. Education: Rutgers and NYU. I allow Ted Hruzd, my friend to blog at will here. He has many posts here. I have known Ted since we were both students at NYU. Ted also works for an Investment Bank as a VP in Equity Global Markets. ------------------------- I was very very Socialist leaning as a 22 year old. I then strongly believed in Gov role in helping the poor. However, as a USDA Child Nutrition Programs, I personally accounted for millions of fraud, abuse, and waste of tax payer money. I came to believe that the poor would be best served with less Gov programs and more with direct aid via tax system. Then after 5 years I became a free market capitalist, was a venture capitalist in 2007 and helped start 2 high tech companies. I dedicate this site to champion free market capitalism as the best road to Prosperity. Please join in. If you disagree, fine, but please post with dignity and class and be civil. Argue with facts always.
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s