Cheng Siwei, former vice-chairman of the Standing Committee and now head of China’s green energy drive, said Beijing was dismayed by the Fed’s recourse to “credit easing”.

“If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies,” he said.

The Austrian School of Economics has been saying this would happen for years, and now I think it might. Here in Brazil there are talks about our government stop stocking US dollars, and they are probably discussing it all over the world.




  1. Faxon says:

    Let the chips fall where they may. I am ready for it.

  2. igor says:

    China wont let the dollar fall. They dont have any choice but to keep buying dollars

  3. DA says:

    Yea, looks like we’re fucked. If only more people would have listened to Ron Paul…

    …Maybe more people will listen to Ron Paul. He’s the only person in Washington who says exactly what he believes no matter what the question is. He also has been predicting this for just as long as all the Austrians have, probably because he follows the Austrian school of economics.

    Seriously, maybe we should start listening to the people who have predicted all this and stop listening to all those idiots who couldn’t see it coming.

    Oddly enough we’re still listening to the same people who said “everything is fine” and “we have a bright economic future ahead of us.”

    Wake the fuck up.

    Buy gold and silver, and pressure your representatives to allow competing currencies because it looks like it may get a little bumpy.

  4. Amsterdamned says:

    Deflation is what’s happening now and it will continue for the time being.

    More

  5. DA says:

    Price deflation is whats happening right now although that trend is changing in many markets.

    Price deflation will continue if other countries decide to buy up all our dollars. However, we have and will continue to see monetary inflation. Those effects can only be ignored so long until it all comes crashing down.

    If they stop buying our dollars and start dumping their dollars for other currencies and commodities then that “price deflation” is going to turn into rapid “price inflation”.

  6. deowll says:

    #1) You are by no means ready for all the pain this will cause. Nobody is.

    #2) China can’t prevent the $ from falling. The American government has to do that and it isn’t. All China can do is try and protect themselves from the results as much as they can.

    At which point in time Walmart and friends are going to find it’s not cheaper to buy things outside the states because the value of the dollar just tanked.

    Fuel prices will go sky high because the dollar has tanked. Of course this will be true of everything we import such as appliances and electronics, even cloths and Obama and the Dems will have committed Obamascide on the US economy.

    Of course the Republicans were heading the same way but this administration sped things up by several years.

    Of course I’m sure they will blame it all on the privious adminsitration.

    Fact 1) Congress does the spending and it has been Dem for many years now.

    Fact 2) You play the hand you are dealt. If you had the brains to know you had a problem you act to prevent the worst possible outcomes and they aren’t/haven’t.

    Congress has always acted on the assumption that future generations would be the ones to bare the pain and now it turns out to be us. When it comes to this overspending I’d say both parties are to blame but the Dems have a record of being absolutely demented rather than just completely irresponsible like the Republicans.

    I’d say get rid of both parties but I don’t know how to do it.

  7. DA says:

    #7, Alred1

    Exactly.

    Deflation is not inherently bad. In fact, deflation is a good thing. To put it simply, deflation is what the market does to correct the imbalances. The fed has been inflating the dollar relentlessly to make sure we don’t have any deflation for about 2 decades now. They are essentially trying to fight the market with a printing press.

    What the Federal Reserve has been doing is the definition of economic suicide.

  8. st.francis says:

    Actually, China changed over to this policy a few months back.

    You didn’t notice, eh?

  9. jbenson2 says:

    #3 – Alfred1 omitted the most obvious criminal in this entire fiasco. The man who turned on the printing presses to pay for his leftist unicorn boondoggles: Obama

  10. RSweeney says:

    Pretty bad when Communists are teaching economics to the idiot Democrats running American government.

    And it seems the Dem’s aren’t learning anything.

    Heaven knows that Bush didn’t figure it out… but he was a amateur spender compared to Obama.

    Remember this when oil returns to $150 a barrel, but only 50 Euro/barrel, not because of a recovery, but because the US dollar isn’t worth it.

  11. amodedoma says:

    I remember reading about south american countries with runaway inflation. The impression from the news sources was that these people’s governments were so rife with corruption that they were sinking under their own greed. To think that the US is immune to runaway inflation is just as stupid as thinking that foriegn interests won’t lose faith in the dollar. Get ready boys and girls, the hard times are only just begun.
    It’s still not too late to emmigrate.

  12. Buzz says:

    Caption this image:

    “Make big money in your spare time.”

  13. Unimatrix0 says:

    I won’t be long until the oil producing nations switch from basing a barrel of oil on the dollar to the euro. And when that happens you can expect the price of a gallon of gas to double, maybe even tipple. Price of electricity would soon follow that increase along with the price of food. We are not far of from having to spend ever dollar we make just to pay for fuel, heat/air, and food.

  14. Ah_Yea says:

    And we think Obama’s “Stimulus” is free money sent from Heaven.

    When all is said and done, we will be so horrifically hurt (I give it a year) that we will all with the stimulus never happened.

    Why? Because the value of the dollar will have tanked so badly (due to printing money to cover the stimulus) that everything will cost more:
    Like Unimatrixo said.

    The result of all this is an undeclared tax on all of us. Every one of us will pay more for food, gas, shelter, etc.

    And it will hurt the poor the most. Those who can least afford the increase as a percentage of income.

    Welcome to true cost of living in ObamaLand!

  15. Ah_Yea says:

    We will all wish the stimulus never happened.

  16. bill says:

    Borrow real money,

    Pay it back with Monopoly money…

    Oldest scam in history…

    I’m surprised the rest of the world didn’t see it coming. Only they are probably in worse shape that we are…

    I wonder who will eventually get left ‘holding the bag’.

  17. tomdennis says:

    China has been printing better US dollars for years now. Now they are complaining because we are now printing dollars?

  18. ECA says:

    GO LOOK at what the USA did the last few wars..
    AFTER the war, we MADE things worse for about 10 years..WHY.
    BECAUSE we had bonds with other countries, and made our money WORTH NOTHING.

  19. DA says:

    #22

    The blame for this depression cannot be placed on just one political party. The blame should be placed where it truly belongs, the federal reserve. Sure, both parties played their part in causing this depression, but neither have done nearly as much harm as the fed.

    Audit the Fed, then end it.

    #23

    What the flying fuck are you talking about?

  20. C.S. says:

    Obama or McCain or Bush or Clinton, wouldn’t make significant difference – they aren’t really in charge. Sad fact is the financial markets figured out the game was up on the creation of credit, and blackmailed the US govt to forking over the future earnings of generations or face the meltdown of the foundations of Wall St.

    A well regulated system like we had in most of the 20th century would have weathered the downturn in housing but a series of changes to laws made to benefit the already-wealthy knocked all resilience out of the system and the US govt blinked, dooming the US to former world power status. The US government cannot issue enough credit to reignite an economy that has sent its most powerful engines overseas. Like most of the posts have said, we’re fucked.

  21. Carcarius says:

    No shit..

  22. Hugh Ripper says:

    You can blame this on the Government all you like but this has all come about by unrestrained greed on the part of the banks and corporations.

    The government is culpable in that they are in the pockets of these institutions, with the elected representatives and their staff repackaging and selling policies favourable to these institutions to the public, and then acting as the ultimate in unaccountable fall guys.

    What we are witnessing is the logical extension of unrestrained capitalism, where government corruption and corporate infiltration is so endemic that it is now accepted as status quo.

  23. MikeR says:

    To those who think China will not allow the US dollar to tank:

    China has quietly divested itself of US dollars over the past couple of years. They are buying stakes in mining and agriculture concerns all over the world.

    Be afraid.

  24. right says:

    At costofwar dot com they estimate the Iraq war at nearly 700 Billion dollars to date. Quite the sum of money spent on a lie.
    Combine that with the 226 Billion spent in Afghanistan and the total is nearly 1 Trillion dollars.
    Way to go Bush/Cheney, this is all your fault.
    If this money was not spent on this lie of a “war”, the US would be in much better position financially, don’t you think?

  25. Qon Quixote says:

    I believe the US should stop sending dollars all over the world. Quit buying all that shit made in those obscure little pieces of crap that depend on the US for everything. Lets instead start making things here, Let Wally’s China-Mart go out of business when it has to pay people producing the products they peddle a decent wage.

    This could be the best thing that ever happened in the US. When our dollars are worth nothing in trading with the rest of the world, they will be very valuable in trading with ourselves. Now if we could just arrange for never again to have some shit head from Texas getting us into a war, we would be in great shape. I know lets throw Texas the hell out of the Union.

  26. ECA says:

    33. Quixote,
    I can do 1 better..
    SHIP the boss’s OVER THERE ALSO..
    Let them live by the laws of the other countries, that they sent our WORK TO.
    Its not Asia, china, japan, Indonesia, Taiwan, or any of the rest.
    US companies ASKING these countries for goods, BRING them to the USA and sell them at GROSS prices. GROSS= 3-10 times the MAKERS COST.
    Even the AUTO makers in the USA, have most of the parts MADE outside the USA, and shipped in. The cars PUT together IN THE USA.
    Import tax is on goods Made Against USA Made goods..we dont MAKE ANYTHING, anymore. except Underwear.(fruit of the loom).
    If they want to do business in those other countries, SEND the BOSS’s and CEO over THERE. Let them LIVE under those LAWS and regulations. and get paid 1/10 what they are in the USA. Its only 10 times the COST, BECAUSE they charge so much FOR GOODS.

    A few of those companies Are jumping to the USA. and STARTING to sell direct in the USA. think about that. They are trying to undercut USA sales. Which could be great, if the products are WORTH the time.

  27. Somebody says:

    I guess they don’t block mises.org over there.

  28. Somebody says:

    #29 Hugh Ripper

    “You can blame this on the Government all you like but this has all come about by unrestrained greed on the part of the banks and corporations.”….

    (Sigh) Once again it falls to me to bring clues to those who have none. Hugh, the relation between “Government” and “banks and corporations” is identity.

  29. Glenn E. says:

    I think part of the US’ economic problem, IS all of its dollars being used all over the world. The US has to print more of it, so every country, large and small, can use it in place of their own crappy currency. Mainly because in the past, their citizen had no confidence in their nation’s currency. In many cases, it was justified because of their inflationary spending. Now, after a decade of inflationary spending by Congress and a republican administration, on a costly war. The US currency is feeling the effects of over supply, and far too distant use, abroad. It’s probably keeping the Chinese economy stable. Even though they’ve been stealing jobs from the Americans. Now, they’re griping that all this import dumping, by them, on the US, is causing Dollar instability and depreciation. WELL BOO HOO CHINA!

  30. right says:

    Well, it is one of the worst looking, and least lasting, pieces of paper money in the world.
    You’d think that with a big economy as the US has they’d be able to produce better quality money.
    Like the Scots say “It’s crrraaappp.”


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