Saturday, August 27, 2005

China's most dangerous weapon

No, it's not a nuclear bomb. No, it's not the human wave attacks from the Korean War. No, it's not cyberwarfare. It's their US Dollar reserves. these reserves totaled roughly $610 billion US dollars at the end of 2004 and over $700 bln currently; click here or here. War is not just bullets and soldiers, not just propaganda and 'hearts and minds; it is also economies.

If China were to make a move on Taiwan, the US would move to assist Taiwan. Taiwan, with our assistance would most likely repel an attack made by China. But what if we could not help Taiwan, how would we look then? Weak. We'd be breaking a promise to Taiwan and make other countries nervous. This would be the case but Taiwan and China are a special case. The reason....China could economically blackmail us with their US Dollar reserves. If they flushed the market with their US $ reserves, we'd have a panic, market chaos, or some calamity in our economy. China could threaten us with this over an island in the Pacific. Would America defend an island in the Pacific if it meant an economic recession? I think that depends on the president.

Our free spending and loose purse strings have put us in this predicament; not just the government, but citizens. All of those low rate mortgages have been quietly underwritten by the Chinese and Japanese. I dislike Paul Krugman for becoming the shrill political hack he is, but he once wrote that our deficits were just making us more dependent on our Asian allies/competitors. I'm upset with the GOP control of the government because it is working against the very principles of conservatism. Where is the fiscal constraint? The energy bill...the transportation bill...nothing but pork in those bills. If there was a GOP prez and Dem Congress, we'd have head bumping, a presidential veto of those bills, and GOP politicians would have to show constraint so they could point a finger at free spending Dems. A Dem prez and GOP congress would be slicing projects (fat) down to the bone. Reagan is rolling over in his grave.

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