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That gets back to the window of opportunity that I referred to previously ... as long as China is rushing headlong through this stage of its demographic transition, its focus will remain fairly short term.

Once the bulge created by the pro-population-explosion policies of Mao begins to pass out of child bearing age, the need to grow employment at this massive pace will begin to ebb with it. And unless the US gets its economic house in order, there's a good chance that that will be the end of the Chinese propping up the US$.

Now, under much of the conventional wisdom, the economic threat to the US of the Base Network Empire does not appear to be a short-term problem, though it clearly undermines the strength of the US Economy long term.

Now, certainly, if the US$ appears to be not worth holding in the short term, then obviously the Chinese will abandon it. But if the US government has bungled economic management that badly, it would also be a poor risk in terms of making a "we'll keep financing you if you deliberately adopt a peace-time economy" deal. The pragmatic focus would be on Europe and Japan among high income nations, probably also including Australasia for its resources.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Sep 24th, 2008 at 02:14:43 PM EST
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