China threatens 'nuclear option' of dollar sales

Beijing hints "that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation."

Its $1.33 trillion of foreign reserves now constitute an overt political weapon. "He Fan, an official at the Chinese Academy of Social Sciences, went even further today, letting it be known that Beijing had the power to set off a dollar collapse if it choose to do so."

Story here.

For an excellent layman's read on our current incoherent fiscal policies, see: Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It , by Peter G. Peterson of The Concord Coalition.

Peterson tells the sad truth about our "faith-based" economic situation: we cannot tax (or tax cut) our way out of deficits, and the cost of entitlement programs will exceed all fed spending by 2030. He outlines how we heavily turn to other countries to finance our mortgages, credit card balances, business investments. "Thus, if foreigners stopped providing us with so much easy money, interest rates would likely shoot up, the dollar would likely sink, and the economy would likely stall."

Apart from marshaling key numbers, Peterson points to the underlying dynamic of "growing extremism of our political leadership" and "growing disengagement" of the citizenry. We "don't see statesmen working together and don't hear voices of moderation or common sense." We are instead, "accosted by ideologues and operators who play on fears and resentments, making big problems out of small ones and small problems out of big ones."

Independents are no the largest single party, Peterson notes.

"The public debt is the greatest of dangers to be feared by a republican government." -Jefferson
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