By Jerry Robinson
Imagine a sign on the Statue of Liberty reading, "Property of the People's Republic of China." Sounds like a bad joke, but it's not all that far-fetched when one realizes just how far in debt America is, and just who is buying up all this debt that will one day have to be repaid.
This month, Chinese Premier Wen Jiabao voiced his nation's growing concern over the safety of U.S. assets held by the Chinese government. In a March 13 press briefing in Beijing, Jiabao stated:
"We have lent a huge amount of money to the U.S. Of course we are concerned about the security of our assets. To be honest, I am a little bit worried."And "worried" he should be. Over the last several years, China has poured nearly $2 trillion into foreign debt instruments in an effort to diversify its capital. Most of that foreign investment has been placed in U.S. Treasury bonds. Now, with the U.S. economy in a virtual state of panic, fears are mounting that the U.S. may not be able to honor its massive debt obligations in the future. Unfortunately, for China and other foreign investors, our national government's debt levels have reached unbelievable proportions making debt repayment increasingly cumbersome. Even worse, the guiding economic policies of Washington are devoid of any real and lasting solutions.
Today, many are discovering for the first time that the U.S. has a "faith-based" economy that is dependent upon sustained consumer and investor confidence. These confidence levels can be manipulated by our leaders in Washington with mere whispers to media outlets. Knowing the power that they wield, top-level government officials tend to speak in circles regarding the U.S. economy, and never in too much detail (which is probably good since most of them are not economists).
But since coming into office, the Obama administration has bludgeoned investors and consumers with the brute force of powerful words regarding the economy. Their dire forecasts warned that the collapsing U.S. economy was facing a "day of reckoning." I couldn't agree more. America is in an economic downward spiral with few options to save it – short of massive sacrifice from Wall Street down to Main Street. I am not faulting the Obama administration for correctly recognizing the economic problems facing America. I am suggesting that their failure lies in not addressing the root problems of America's colossal economic crisis. Instead of tackling the real issues, they have scared the American public senseless with gloom-and-doom predictions and then have proceeded to act by throwing freshly printed money in every direction possible. This combination of government policy tools would be comical if it didn't involve our children and grandchildren paying the price. Too bad for them … and too bad for China.
So it came as a surprise on the following day, March 14, (the day after China expressed its dismay over America's fiscal irresponsibility,) there appeared to be a concerted effort by Washington to smear lipstick on the pig of the U.S. economy. Suddenly, positive words of "encouragement" began to emerge from the White House regarding the "glimmers of hope" that lie on the horizon for the economy. Suddenly, Obama began to recognize many areas of the U.S. economy that were "fundamentally sound." (Can anybody say "McCain"?)
But the economic smiley faces didn't stop with President Obama. Vice President Joe Biden gave an encouraging speech about the hope that lies ahead for the American economy.
In another move, White House economic adviser Larry Summers came out cheerleading for U.S. consumption levels that "appear to be stabilizing." (God forbid that Americans slow down consumption in favor of savings.)
A day later, on March 15, in a historic televised interview with the news magazine "60 Minutes," Federal Reserve chief Ben Bernanke stated that he believed that the U.S. economy would begin to stabilize in 2009. He then added that a recovery would be in full swing by 2010.
This coordinated cheerleading session by the Obama administration led to a healthy bounce in the stock market and provided a time of relief for frayed nerves around the globe.
What great news! It will all be over soon. The worst is behind us.
Enter the faith-based U.S. economy where money is worthless paper. When your money has no intrinsic value, like our fiat U.S. dollar, hype and false optimism are all you can hold onto. In my book, "Bankruptcy of Our Nation," I have warned that the U.S. would eventually face a major crisis in economic credibility, especially with foreign investors. Many nations have falsely believed that there is no safer place for their investment capital than the United States. One of those nations is China. When these nations wake up to the reality that America is all but bankrupt, the party will end. We are nearing that real "day of reckoning," and it will not be pretty.
So, China, thanks for loaning us money. We may never pay it back, but rest assured we will always throw a bone in your direction every now and then. It's the least we can do.
America's IOU not worth the dollar it's written on - WorldNetDaily
U.S. inflation threat worries Chinese, too - Dallas Morning News
Obama Reaches Out to the World With Op-Ed on Global Economy - Washington Post
China ‘Super Currency’ Call Shows Dollar Concern - Bloomberg