I believe it to be the other way around, I hope we don't have to find out. Russia may not have money YET. But I don't see them being down for long, they have oil, they have some natural resources.
I see the scenario as follows:
We attack Iran
Iran and us war
China cuts ties and sells off all their dollars, flooding the market and killing us with inflation.
China sells their T-Bills and all investments in the US for whatever they want, basically devaluing our money to whatever level they want. Who's going to stop them?
They just dump the product that was going to come here to countries that can pay.
I don't see how you can say China doesn't have us by the balls when they do. All they have to do is squeeze just a bit to get whatever they need from us.
In other words let's say you and I are trading partners. I supply you with more than you supply me with. In fact you start closing widget factories and start relying heavily on my widgets as your sole source. So you are running a deficit. So deeply that you start having to collaterolize everything heavily and you have to work to keep the your value where it is so that you don't end up owing me far far more.
I keep loaning you money to buy my widgets. In the meantime I start opening trade with others and sell more widgets to other countries that actually pay and don't owe me as much.
Now, you go and run over my dog. I get pissed and demand you pay for all the past widgets you have of mine, I cash in your collaterol and finally I say, "Fuck you no more widgets, until you pay for the ones you already have."
You can't make widgets because you became dependant on mine and closed enough of your widget factories that you could never keep up with demand, nor do you have the money to build new widget factories. You don't have the market that can pay either since I devalued your money, your workers aren't making enough to pay for the increase in widget prices.
And your workers are in debt to their creditors, who feel they need to start collecting before everything crashes so your workers are basically working just to pay for past debts. There is no way they can buy new widgets because noone will give credit to people that are already maxed out and are having a hard time paying their creditors off.
If you go to another company and try to buy their widgets, I totally cut back my widget production to create a widget panic and other more financially stable companies buy those widgets and drive up the price to where you cannot afford them. Plus, I own your debt and I demand payment first, so you aren't getting widgets from anyone else because you have to pay me first.
Then I go to companies that don't have much but are wanting my widgets and I want to strengthen so I sell my widgets dirt cheap to them, so they can use those widgets to develop a better financial footing and replace you as my trading partner. It may take awhile before they can, but I have your money paying for their widgets.
Now, you think someone will back you so that you can buy widgets. Wrong, if anyone comes and makes offers to you I demand that as soon as they pay you I get that money until your debt is paid off.
Or I simply go to other companies and ask them if they want to buy some of your debt from me. They ask what's the selling price I say pennies on the dollar, because I'm not getting paid from you so I may as well make something. These companies jump at it, knowing that the product they buy from you now is dirt cheap because I devalued your money.
And if anyone does decide to sell to you, I tell them I'll pay cash, no debt and buy their widgets. I'll just turn around and hold onto those widgets until your are completely without any purchasing power.
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I just love people who use the excuse "I use/do this because I LOVE the feeling/joy/happiness it brings me" and expect you to be ok with that as you watch them destroy their life blindly following. My response is, "I like to put forks in an eletrical socket, just LOVE that feeling, can't ever get enough of it, so will you let me put this copper fork in that electric socket?"
Last edited by pan6467; 01-15-2006 at 07:16 PM..
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