Thursday, August 09, 2007

China's "nuclear option"

Even while many U.S. conservatives and neo-conservatives still refrain from taking individual responsibility for the massive death, destruction, mayhem, and chaos their foreign policy has wrought in Iraq, one would think that they would at least take individual responsibility for trading our freedom for security here at home, including the enemy-combatant doctrine, the loss of habeas corpus, the wiretapping, and the monitoring of email and telephone calls.

Unfortunately, not so, once again confirming that holding the concept of individual responsibility up to a conservative or neoconservative is like holding a cross up to a vampire.

The same, of course, holds true for what they have done to America’s monetary system with their out-of-control federal spending to finance their overseas imperial adventures. As most everyone no doubt knows, the dollar has been crashing in international markets, and my hunch is that we haven’t seen anything yet. Of course, many people blame it on the feds because they think that inflation, like terrorism, is unrelated to federal policies.

Ever since the federal spending spree began, The Future of Freedom Foundation has been warning about the monetary dangers arising from out-of-control federal spending. As they have been repeatedly emphasizing, what the feds have been doing to pay for all this federal adventuring is borrow the money rather than raise the taxes to finance it. After all, taxpayers get angry over rising taxes but have no idea that rising prices are a direct result of inflating the currency to pay the bills.

This week, U.S. officials and the American people received a brusque and blunt reminder of the results of U.S. monetary policy (this and this). If U.S. officials don’t stop pressuring China to change its trade policy and its monetary policy, Chinese officials are threatening to dump their entire holdings of U.S. debt instruments. China, whose economy has been booming during the entire time that the U.S. government has been obsessed with building its military-industrial complex, has been using its reserves to purchase massive quantities of U.S. Treasuries, making China the second-largest holder of such securities in the world, after Japan.

Here is what a Chinese official stated in regard to what is being termed the “nuclear option”:

"The Chinese central bank will be forced to sell U.S. dollars once the [yuan] appreciates dramatically, which might lead to a mass depreciation of the U.S dollar against other currencies."

As many people will recall, conservatives and neo-conservatives used to crow about how they supposedly brought down the Soviet Union by making the Soviet government spend the nation into bankruptcy. They still claim that they brought down the Soviet Union but they no longer say how. It’s not difficult to understand why. But wouldn’t it be nice if they at least accepted individual responsibility for the debacles they have wrought, both abroad and here?


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