Mutual Assured Destruction Behind U.S. Debt?

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China's Bargaining Chip Excerpt:
"There is surely something odd about the world's greatest power being the world's greatest debtor," Mr. Summers told the audience gathered at the Peterson Institute for International Economics in Washington.

But the pro-growth folks don’t look at the greatest exchange in wealth as being a debt situation. They view this as a “stakeholder” position for countries like China, India and Saudi Arabia. This is the first commandment of globalization. If we collapse, they collapse right along with us. They don’t want us to collapse, so they buy our debt. The more they buy the more they become a vital stakeholder in a bankrupt country. In theory, countries buying into America don't want to hurt their own investment.

When Hugo Chavez cashed in some of his country's notes on American debt, it was said Bush was fuming. Our government views that as almost an act of war. When America eventually goes belly-up and is declared officially bankrupt, a country like Venezuela now might not be as greatly effected.

The power players in American government either don’t care too much about the debt, or don't take it seriously. Have you ever noticed how Congress racks up more debt every year - but only brings it up on their opponent during election time? In fact, a national budgetary surplus (Clinton) is considered illegally kept money by many so-called conservatives.

Democrats are not exactly innocent, but this White House, the republican platform, conservatives and Wall Street/Fed policies WANT to borrow and spend, this is one of the main reasons why they are so dead set against taxing and spending. In government, you're labeled as a anti-growth socialist democrat commie if you actually want to support a government expenditure with a tax revenue mechanism.

"What's most disturbing about the U.S. situation is that as America's debts rise higher and higher, the less influence the American government will have over the critical decisions" that will need to be made to address these imbalances," Mr. Tonelson said.

And do you know how they’ll make up for these imbalances? By using mechanisms like interest rates to induce inflation and playing games with currency exchange rates and whatever else the monetary standard is based on. Currently it is oil. The gamble here is that by the time China decides to cash in $2 trillion in notes, the U.S. dollar will be worth only 1/10 what it was worth during the duration of the note. Don’t believe me? The dollar has dropped almost 50% in value since Bush took office and it is still trending downward. When asked about the value of the dollar and what his plans are to strengthen it, Bush (wink-wink) just says he favors a strong dollar. End of story.

And this is the same pro-growth stakeholder scheme they use on everybody. Want to buy a house? If you can’t buy it outright they are more than pleased to encourage you to go into debt. A key talking point is this – don’t worry too much about the actual debt or duration, just get a good interest rate and worry about the details later. You’ll be a stakeholder and by the time you near the end of the loan, you’ll be making much more money – it’ll be easier to pay off. How many times have you heard that line? Why? Because by then, the dollar WILL be worth much less than it was. Simple rampant capitalism. Nobody ever asks “what is the goal or endgame of the pro-growth scheme? or "what happens when the chips are cashed in?”

If it weren’t so true, this all would be very funny.