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Various efforts by the US to resolve the country's financial crisis by selling ever more debt to pump money into the financial system are raising concern that this will drive up inflation and pull down the value of the US dollar, which would cut the value of debt held by China, the largest creditor of the US.
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"We are very concerned about the economic developments in the US economy," Wen said....
Wen called on the US government to ensure that the value of Chinese assets in the US is maintained amid the crisis.
"We have lent a huge amount of money to the United States and of course we're concerned about the security of our assets and, to be honest, I am a little bit worried"....
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As the global financial crisis sends asset values plunging, mainland leaders are under growing pressure at home to diversify the country's foreign exchange reserves.
TRANSLATION:
"China must get rid of its dollar assets as quickly as possible, but without precipitating a collapse of the US dollar." Good luck with that!
When the dollar collapses, what happens to US treasuries? If no one touches our treasury bonds, where do we get the money for all our grandiose spending? We may find that we have champagne tastes for spending on a beer budget. On the bright side, that would also include spending on the pentagon and the military-industrial complex --- the main cancers on our body politic, as President Eisenhower predicted.
The only answer would be re-tooling the US for an emergency command economy.
I predict that those who have been shrieking about "socialism" for decades will be the biggest and most fervent supporters of centralized planning --- they will be too worried about saving their butts to be concerned with ideology.
