The End of the Free World
I'm not one to be a doomsday prophet, but this could be very bad:
Now, if the U.S. gives the Chinese a reason to stop buying our debt, like endorsing Taiwan as a legitimate political entity, or defending them from Chinese invasion, Boom. Right now, it is in China's interest to keep buying our debt. I hope we keep it that way (until we balance the budget).
"Modern Taiwan is free and democratic and prosperous. By embracing freedom at all levels, Taiwan has delivered prosperity to its people and created a free and democratic Chinese society," Bush said in prepared remarks for a speech in KyotoWell. Those words could cause World War III. How, you ask? China keeps buying our Treasury bonds, which fund our massive budget deficits. Should they choose to stop buying them, suddenly it becomes harder for us to keep selling this enormous debt.
Now, if the U.S. gives the Chinese a reason to stop buying our debt, like endorsing Taiwan as a legitimate political entity, or defending them from Chinese invasion, Boom. Right now, it is in China's interest to keep buying our debt. I hope we keep it that way (until we balance the budget).
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