China is Scared

Of course we owe China some money. Of course they are getting worried that we are going to just pay them back with printed paper. Now this headline in Bloomberg is saying that China is scared about how we are planning on paying them back.

Policy makers in China, which holds $883.5 billion in U.S. Treasuries, are concerned the nation with the world’s biggest economy is debasing its currency, according to Kenneth S. Rogoff and James Rickards.

The world is in the early stages of a currency war, said Rickards, chief financial and administrative officer of Oro Capital Advisors LLC. Rickards, Rogoff, a professor of economics and public policy at Harvard University, and Laurence H. Meyer, co-founder of Macroeconomic Advisers LLC, spoke today at the Bloomberg Hedge Funds 2010 conference in New York.

“The idea that China is this monster, gorilla in the world economy, is not true -- they are very scared,” Rickards said. “They made one very large mistake, that they trusted the U.S.”

See it here; http://www.bloomberg.com/news/2010-12-02/china-is-scared-u-s-policy-is-debasing-currency-rogoff-rickards-say.html

Did you catch that "currency war" comment? Remember what history teaches us.....currency wars lead to trade wars (tariffs and import taxes), trade wars lead to real wars.