I am including a link to a very important post on a blog I have been following for several months.  Please read it! It covers what currently is a very likely future scenario for America in regards to China, our borrowing, the value of the US dollar, and your family’s freedom and welfare.


China is trying to put pressure on Obama in regards to the excessive spending required by his new policies, and the decision to simply print more dollars as a response to our economic crisis, but he is responding defiantly. Why is this a problem?  If you aren’t aware–most of our national debt is owned by China, followed by Japan.

Japan is a friend of the US and I have not heard one objection raised, or warning given in relation to the amount of our debt that they hold.  China, however, is a communist country that does not share the same values as America.  While China has not acted aggressively towards America, that does not mean they are ‘safe’.

It is a peculiar American trait that we assume everyone to inherently have the same values, dreams and motivations that we have.  They don’t.  We tend to have a naivete towards others, imputing a character of loyalty, altruism, and generosity to them, until experience proves otherwise.  However, this assessment may  not be accurate.  We also assume that we are perceived, by others, to have those character traits, and that is often not true.

The result of this can be a very big  difference in the perception of our relationship, by the US and whoever the other party may be.  As anyone who speaks a second language knows, you cannot simply translate the words into the hearer’s language and get the intended message across.  It is important to have some understanding of the values, beliefs and taboos of the other party.  It may also be good to have an idea of how they perceive you.  Without taking these things into account, you blunder along like a bull in a china shop.

All that is to say, I don’t believe we should automatically trust the Chinese government (which is both communist and oppressive towards its people).  Especially not when the balance of power is not equal (such as us owing them HUGE amounts of money).  Nor should we assume they are our friends because they ‘were nice enough’ to loan us money when we wanted it.

As soon as we borrowed from them, the balance of power shifted.  They have leverage over us, proportional to the amount we are indebted to them, and compounded by our present inability to pay the balance in full.  Does that make sense?

Just in case, I’ll try to give an example.  Let’s pretend you have a guy you work with, that you get along fairly well with, but sometimes things are a little tense.  He’s quiet and a bit moody, and you have a feeling that you don’t see eye to eye on everything, but he never really comes out and says when he disagrees.  Let’s say that the positions you hold make you competitors within the workplace–not an outright contest, but an awareness that your superiors are always evaluating you against one another.  But, all in all, everything is on an even keel.

Now lets say you’re short on lunch money one day, and he offers to loan it.  You agree and pay him back the next day.  From time to time occasions arise that you borrow a little bit and repay it, then, over time, you find yourself borrowing more money and more often.  Eventually it becomes a habit, and you start borrowing in order to make investments, even gambling a bit.

Long story short, one day you borrow a lot of money from him and sink it into a VERY risky investment because the possible gain is incredible.  He finds out and expresses concern, because he expects you to repay him in a couple of weeks–like you promised.  An honest assessment shows that you are deeply indebted, to someone you don’t know well, who has the ability to undercut you or sabotage you in your career.  Hopefully you wake up and realize because, at this point, and difficult as it may be, you can restore the balance of power between you, and safeguard your career.

There are a couple of ways you can do this.  You can withdraw the money from the risky investment and repay him in full, or you can sell some of your company stock and use that money to repay him in full.  Just having the ability to do so makes the balance of power equal.

However, if you don’t have any stocks or other means to repay him immediately, and if you can’t withdraw from the risky investment, you are on very shaky ground.  EVERYTHING depends on the success of your risky investment.

That, obviously, creates a great deal of stress for you and between you, until you learn the outcome of your investment.  The longer that drags out, the more uncomfortable he may become, and the more pressure he may put on you.  Because you both know you presently have no means of getting out of the deal between you (the short-term loan), he has all the leverage and can change the terms as he chooses, threaten you, or pressure you to do other things. (Blackmail is another illustration of an imbalance of power).

Living with that level of stress, and worry over any number of unknown actions he can take, really can make your life unbearable.  And God forbid that your investment not pay off as you had hoped. . .

That is what it can be like to live with an imbalance of power, in a relationship with someone you don’t know you can trust.  And that is where the United States currently is in her relationship with China–if an honest assessment is to be made.

Selling Out Poland
Oh Yes He Does Get It!


update 1/7/11:

USA, China, Russia and the New START  Treaty