Chinese Democracy

Is it just me, or is anyone else concerned about China buying large amounts of US debt? This absolutely scares the heck out of me. Considering how much money China has currently bought from us, if they ever decided to ask for their money back, it would absolutely cripple our nation financially.

China has historically owned large amounts of US debt. The idea of them taking on more debt would only help further solidify their interests in having the US succeed economically. Our success is vital to China getting their money back.

In our global economy the economy of other nations is directly tied to the success of the US. If we fail economically, then as we have most recently seen, the economies of other nations fail as well. This is why it might be argued that buying US debt is in the best interests of foreign nations. If we can't pay our bills, and spend money in the global economy, then we can't buy foreign goods. America is a consumer nation; if our demand drops off signifantly (or entirely) because we don't have any money to spend, then other nations suffer as well.

So America is essentially becoming one large publicly traded company. Think about that. We have foreign investors who have bought a large stake in "America Co".

The other fear that I have regarding China's new purchase of US debt, is that they may use this debt as a bargaining chip in foreign relations negotiations. Just the other day, the media reported that China had began increasing their military. For what? What could China possibly have planned?

I would think that China's purchase of more US debt could be used either as (a) leverage to keep the US at bay or (b) would indirectly influence negotiations between Secretary of State Clinton and Chinese diplomats. That's just my take on it. But like I said earlier, one reassuring point is the the US must succeed in order for China to get their money back.

In my opinion, we could be in a precarious position to negotiate with China to stop their military build-up, especially if China decided recall the loans they have provided the US. We would be financially bankrupt and there are no other nations in a position to absorb that kind of debt. This also provides some solace because at least China knows that no other nation could provide us a loan to pay China back.

And that's a great reason to push our legislators for fiscal responsibility. We have made ourselves entirely too vulnerable to outside economic threats. The "War on Terror" is scary enough without adding the possible threat of national bankruptcy. Simply put, we should not be spending the kind of money that are in the bailout package, the current budget, and the American Recovery and Reinvestment Act.

We have spent so much money and have such a large deficit that currently we can't even make payments on the principal of those loans. Our entitlement spending continues to grow as the Baby Boom generation reaches retirement and requires more medical treatment from Medicare. Coupled with our defense spending, entitlement program spending and interest on foreign loans makes up most of our budget. If we want to see our taxes go down sometime, we need to make radical adjustments to the way we construct and execute our budget.

What would John Maynard Keynes think regarding our "free economy"? What about Alexis de Tocqueville? What happened to the idea of a free market where the businesses that were inefficient were replaced by ones that were? I know it's been argued that we should not allow these companies to fail because it would be detrimental to the US. But to be honest, allowing these companies to fail would mean that we use less deficit spending and wane our foreign investment. The more foreign investment we have, the more likely the chances are of the US failing; and the US cannot (emphasis) fail. Ever. If we do fail, it would most certainly mean "Chinese Democracy" for us all.