Generational Dynamics Forum - New Site

The people I've talked to actually find it quite possible, even though they aren't familiar with GD theory. Economic connections only matter during good times and sometimes not even then. In addition to Taiwan, they will likely blame us for their economy collapsing. Hell, they're already blaming us for the problems they're currently having. It's going to get a lot worse once things fall apart over there.

What I'm also expecting is a 21st century version of Smoot-Hawley. It's about the only thing that our leaders can agree on at the moment. That will only make matters worse, especially since China has warned that they will hit back and I would suggest that we take that threat seriously. Even if it harms them, their pride will not allow such a slight to go unpunished. I also expect them at some point, either during the war or collapse to say: "Okay, we're going to dump American bonds on the open market." Just imagine what that would do to our economy.

I'm not what I'd call an expert on China, but that much I do know about them.

Trevor wrote:The people I've talked to actually find it quite possible, even though they aren't familiar with GD theory. Economic connections only matter during good times and sometimes not even then. In addition to Taiwan, they will likely blame us for their economy collapsing. Hell, they're already blaming us for the problems they're currently having. It's going to get a lot worse once things fall apart over there.

What I'm also expecting is a 21st century version of Smoot-Hawley. It's about the only thing that our leaders can agree on at the moment. That will only make matters worse, especially since China has warned that they will hit back and I would suggest that we take that threat seriously. Even if it harms them, their pride will not allow such a slight to go unpunished. I also expect them at some point, either during the war or collapse to say: "Okay, we're going to dump American bonds on the open market." Just imagine what that would do to our economy.

I'm not what I'd call an expert on China, but that much I do know about them.

You might not be a China expert, but you've got a good feel for the situation. It's too bad it will go that way, but you're right, it will.

If the Chinese picked a war with the United States, I would think that a quick retaliatory measure that the US would carry out is the nullification of all US bonds that the Chinese held, thus removing the potential economic weapon of the Chinese dumping massive quantities of US bonds on the open market. That's just my guess —Best regards, Marc

Assuming of course that they haven't done that before the war starts and I think it'll occur when they get fed up with the trade war and decide to really turn the screws on us. The United States is not going to be bailed out, no way in hell. We're 25 percent of the world GDP, or just about, and it just wouldn't be possible to do. We'll continue bailing them out as long as we can. Sad to say, compared to the European countries, we're actually doing pretty well.

Well, that's just because I'm paying attention. I considered the possibility of a Sino-American military conflict even before I found this website, but after reading what it said and doing my research independently, it convinced me of what's going to happen. Remember, most analysts are boomers and x-ers, meaning that they can't conceive of something like that happening.

Trevor wrote:Assuming of course that they haven't done that before the war starts and I think it'll occur when they get fed up with the trade war and decide to really turn the screws on us. The United States is not going to be bailed out, no way in hell. We're 25 percent of the world GDP, or just about, and it just wouldn't be possible to do. We'll continue bailing them out as long as we can. Sad to say, compared to the European countries, we're actually doing pretty well.

Well, that's just because I'm paying attention. I considered the possibility of a Sino-American military conflict even before I found this website, but after reading what it said and doing my research independently, it convinced me of what's going to happen. Remember, most analysts are boomers and x-ers, meaning that they can't conceive of something like that happening.

I respectfully feel that if the Chinese did that (i.e., massive US bond-dumping), they would annihilate the currency peg they have in place, which would be apt to harm the Chinese far more. And again, there's the Fed at the ready: it can probably deal with a couple extra trillion it has to mop up if it had to. Just my further guess.... —Best regards, Marc

Marc wrote:

Trevor wrote:Assuming of course that they haven't done that before the war starts and I think it'll occur when they get fed up with the trade war and decide to really turn the screws on us. The United States is not going to be bailed out, no way in hell. We're 25 percent of the world GDP, or just about, and it just wouldn't be possible to do. We'll continue bailing them out as long as we can. Sad to say, compared to the European countries, we're actually doing pretty well.

Well, that's just because I'm paying attention. I considered the possibility of a Sino-American military conflict even before I found this website, but after reading what it said and doing my research independently, it convinced me of what's going to happen. Remember, most analysts are boomers and x-ers, meaning that they can't conceive of something like that happening.

I respectfully feel that if the Chinese did that (i.e., massive US bond-dumping), they would annihilate the currency peg they have in place, which would be apt to harm the Chinese far more. And again, there's the Fed at the ready: it can probably deal with a couple extra trillion it has to mop up if it had to. Just my further guess.... —Best regards, Marc

I believe one of the reasons China has been quietly hoarding gold and silver while forming a close alliance with the BRIC nations is part of their plan to "not care" if the USD collapses. Remember, the USD is only really worth the paper it's written on. China would survive... no matter what, along as they have the right alliances formed.

True, it would be an economic version of MAD, but remember the pride factor. If they feel like we've wronged them, they could do it anyway, just out of a desire to get even. Course, they'll end up realizing what a stupid thing it was to do, but that won't help us much. They can really cause harm to us should they choose to do so and have in fact threatened it on multiple occasions. China's already having massive problem with riots and their economy, since their housing bubble is beginning to fall apart, same as ours did 3-4 years ago.

In terms of economies, though, I'm concerned about Italy; they're falling apart pretty fast and they're too big to be bailed out, although an effort will probably still be made.

Well, what happens to China if they dump US bonds as fast as possible?

No matter what they do afterwards, the cost of Chinese money will go up. If they do that during a Chinese recession or depression, then they've essentially committed economic suicide to get the US to buy a bunch of bonds back through the FED. And not all of them by any means, this is no secret that China would be cutting its own throat, and there would be a lot of hunger for those bonds as investors fled China. Any investor would know the end game of that mess would be nationalization of foreign interests in China.

If China dumps US bonds, it will happen because of something outside China, such as war with India or Turkey.

Italy can't be saved, and it can't go under without taking the EURO with it. By now, the unthinkable must be on the table in private meetings, how to get the PIIGS out of the EURO without destroying it in the process. If that can be managed, then the eurozone may survive. Otherwise, it is just a matter of time.

The US stock market is not going to stay up for much longer. The crazy swings are clear markers of people who are trying to outguess market bottoms and tops. The next market surprise will cause them all to bail at once, and there isn't going to be enough room for the exits.

It's not just the PIIGS countries now; Belgium looks like they may be on that list soon, considering that their rating was cut 2 grades a few days ago. Once their bond rating go above 5 percent, either the 2-year or 10-year bonds, I'm going to put them on the list.

What would motivate China to dump our bonds is either their pride, or their rage after a trade war. It wouldn't be a rational decision.

Once Greece defaults, i don't see the Euro collapsing immediately, since they are a small economy and something that can be survived even if it would harm them and us. Italy, though, is the 8th largest economy in the world and cannot be bailed out, nor can the Euro survive their default.

I'm still amazed the stock market hasn't dropped more than it has. I'm beginning to think it may just end up dropping 70-80 percent over the course of just a month or two.

While I cannot be sure, I think that before there is any concerted effort on the part of the EU (especially its strong, Northern European members) to jettison Italy, that there will be frenetic efforts to bail out Italy by some sort of means. This may well mean the Fed doing all sorts of backdoor swap stuff to save Italy as well as the rest of the faltering EU countries. I think that the Fed could probably "bail out" Italy mostly by itself somehow if it had to, at least in terms of the immediate debt that Italy needs to roll over along with new debt it needs to incur in the short-term. What the Fed can do amazes me, even though I realize that it is already stacked to the gills with assumed debt from the private and public sectors. —Best regards, Marc