World War 3; Will China take over the USA?

So when WW3 comes, do you think china will gang up on the USA and ask for its money back?

 

You don't have to wait for WWIII to find out. When the Fed announced they would be printing 600 billion fiat dollars, it was the same as telling China(and the rest of our creditors) they would be getting only half their money back. They condemned the move, of course, but I suspect there may already be too many educated capitalists in China to try and recover the money by means of military force. Such a move wouldn't make much business sense.

 

One question: Does America borrow money from China in American dollars or Chinese dollars?

If it was Chinese dollars then wouldn't that mean more American dollars are needed to pay back the same loan? ie: the USD goes down so the Chinese dollar goes up? In that case China would love you printing money.

 

All U.S. debts are in U.S. dollars.

That's why the Chinese are not so happy that we're deflating our debts (i.e. their assets).

The Chinese can ask for their money, but there's not much more they can do. They don't have any real leverage. What are they going to do, stop sending the U.S. cheap plastic shit?

 

I hope will not by any war.Look in the past what kind of damages makes an war.

 

Okay, i'm naive with complicated finances and things are purposefully very complicated to keep most of us in the dark so forgive me in advance but I always thought a money exchange went something like this.

There's a great big room somewhere secret where the world's gold gets moved from country to country within the same room. When China lends money to America their gold is simply moved from the Chinese pallet to the US' pallet, within the same room (ok, it's probably all done via computer now).

If your country has 200 billion worth of gold then you can print out a whole pile of money or 'IOU's for that gold. You can print as much money as you like but the amount of money you do print sets the price your gold is worth. The more money you print, the less your money is worth compared to other countries.

So, America says can I have some money.

China says okay but I want 5% interest. America says fine, they get a billion dollars of Gold from China. - Chinese gold based on the (US?) gold standard price (I guess).

3 billion yen = 1 billion US = 6 tonnes of gold (all hypothetically).

If America starts printing more money then that lowers the value of their currency because the amount of gold they own to back it up remains the same. Correct?

Now if the US loan was based on gold price then I would have thought you now need more money to pay the same loan back, ergo you now owe more USD to China to cover the same amount of gold you borrowed.

 

It's sort of like that, but without the gold -- and without any other objective measure of value. Dollars are denominated in dollars.

If the Chinese borrow ten trillion dollars, they get ten trillion dollars back. If a Big Mac costs 12 trillion dollars by the time that the Chinese finally get paid back... well... sorry.

 

As far as I know the money people decided to do the same thing with their other resources too, ie: gold, steel, coal, corn etc to expand upon the gold principle but I haven't heard of a loan without collateral.

I didn't think it would be possible to do that (internationally) using actual dollars as it's the countries' resources that gives the dollar any value. How can there ever be a guarantee of its worth?

 

There are no real guarantees in life.

The collateral for these loans is... wait for it... U.S. dollars. As the dollar bill says "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE."

It's Fiat Money. The guarantee of it's worth is the good faith of the U.S. government. With that and $6, you can get a small coffee at StarBucks.

I'd be laughing a lot louder if I didn't own millions of these soon to be worthless things myself.

 

So if US owes China fifty billion, what's to stop it just printing it now & giving it to China? Or why does it need to borrow it in the first place if it can just print out money when it needs it? There's got to be more to that.

 

In the old days, we would not just print out money -- because that causes inflation and destroys economies. We didn't do it, because of the damage it would have caused to us.

But really... what is quantitative easing - but electronically printing out dollars?

[video=youtube;PTUY16CkS-k]http://www.youtube.com/watch?v=PTUY16CkS-k[/video]

Here are some images from other nations that have been down this road.

 

Why is everone so crazy about WW3. Do you know how much destruction it creates. The craze will be wiped out when you witnesss its consequences.

 

Chinese don't have any leverage? That's funny.....if they wanted too they could easily ruin the US economy in two ways...float all the US dollars they are currently holding (end result....bring your wheel barrow of money to the supermarket) or simply stop lending the US money (think the recession was bad...imagine how much worse it will be when the US government can't get credit)

The likelihood of this ever happening is small though as both scenarios would ruin Chinese investments. My prediction for the future..just like the Japanese did in the 80's...the Chinese are going to start gobbling up US assets, since they are going to have to use those US dollars on something. So kids in the future will most certainly enjoying going to Haier Yankee Stadium, visiting ZTE World and ZTE land and drinking Hanghzou Wahaha Coca-Cola.

Brother can you spare a yuan?

 

They aren't holding U.S.D., they are holding a big fat IOU.

The investment market is fluid because currencies are fungible. If the Chinese choose to invest somewhere else, someone else will choose to invest in U.S. treasuries.

Japan should be a much larger worry for the U.S. than China. The Japanese own a lot of U.S. treasuries and their aging population is starting to switch from saving money to spending money.

 

Costa Rica just built an enormous new football stadium in the nations capital. It was built with Chinese money by Chinese labor who retained residency after the construction. Not knowing the specifics, I would imagine there will be a lot of tangible assets within the US sucked up by investments from stronger currencies as we continue to deflate our dollars. One ticket to Disneyland, $40,000 or 50 Yuan. If it ever gets that bad, I imagine most other world currencies will sink with us. They are all invested in us in some way or other.

 

The Chinese economy was built on U.S debt, and yes they will try and gang up on the U.S if WW3 broke out, but they will only succeed in getting blown back into the Ming dynasty... Then they won't have to worry about the USD, they will be counting money in the form of shells...

 

Yes, China does have plenty of IOUs (and not just from around the US), however aside from that they ALSO have 2.5 TRILLION dollars in foreign currency reserves, the majority of which consists of US DOLLARS. So yes they are holding on to US dollars....and plenty of them!

And I have to disagree with notion that other countries are clamoring to invest in the US if China pulls away....while yes the US is still the biggest buyer of everything, it is also the biggest debtor on the planet...something that became evident in the past recession...living beyond your means cannot be sustained. I don't foresee a surge of creditors looking to lend money to someone that has already proven they can't pay their debts.

If history holds the answer....the US needs one of two things to happen in order not to get eclipsed by the BRICs.......#1 manufacturing has to return to the US and people have to stop buying the $2 pack of socks at Walmart (actually cease going to Walmart would actually help more) and instead pickup the $12 Made in USA brand.....#2 option and this is the one that has helped the most (TWICE)...... enjoy world wars that devastate everyone but you. It is easier to be number one when you no longer have competition.

BTW...who is John Galt?

 

So you're saying that if America defaults on its debt it will just blow up China to forget the debt? I don't think so. You're not that silly to believe that surely.

Plus what makes you think you won't be counting Chinese shells first, assuming you're the defaulting nation of course.? We have no idea what they have tucked away.

 

No I'm saying that if China decides to team up against the U.S if war broke out, then they will get blown back to the stone age. The U.S will continue to pay its debts, but if China decide to attack the U.S over that debt, then all hell will break loose. You must have interpret my comment wrong... The OP is saying that he thinks China will go to war over it, and that's not how it works.. This is not a street corner where you can go to someone that owes you money, and say "Hey pay me my money, or I'll break your legs" This is the U.S you're talking about here...

China needs to calm the hell down, The U.S has built up China's economy by buying the bulk of the crap they export , and selling them U.S debt. They need to collect their money on time like they always have, and don't try to test the U.S over it...

 

China doesn't need to attack the US with bullets and bombs....that just stupid.

They simply have to look at what the US did to the UK (it's ALLY) during the Suez Crisis in 1956....which simply was.... do what I say or I will devalue your national currency. A devalued currency isn't the end of the world.....its just going to get rather annoying to carry so many bills in ones wallet to pay for the $50 loaf of bread.