Comments on: Another Sign of Too Much US Debt: India Trades Dollars for Gold http://capitolcommentary.com/2009/11/05/another-sign-of-too-much-us-debt-india-trades-dollars-for-gold/ A smaller government is a better government. Wed, 08 Feb 2012 22:56:30 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: vulcanhammer http://capitolcommentary.com/2009/11/05/another-sign-of-too-much-us-debt-india-trades-dollars-for-gold/#comment-2410 vulcanhammer Sun, 08 Nov 2009 01:04:48 +0000 http://harrisonprice.com/?p=2983#comment-2410 Great post, Burro. I would also like to add that the credit rating agencies, which are government approved, contributed to disguised risk you correctly mention. .-= vulcanhammer´s last blog ..<a href="http://vulcanhammer.blogspot.com/2009/11/pain-goes-on.html" rel="nofollow">The Pain Goes On</a> =-. Great post, Burro. I would also like to add that the credit rating agencies, which are government approved, contributed to disguised risk you correctly mention.
.-= vulcanhammer´s last blog ..The Pain Goes On =-.

]]> By: burro http://capitolcommentary.com/2009/11/05/another-sign-of-too-much-us-debt-india-trades-dollars-for-gold/#comment-2409 burro Sat, 07 Nov 2009 15:03:40 +0000 http://harrisonprice.com/?p=2983#comment-2409 A "basket" of currencies won't solve the problem either. The current financial crisis was a result of financiers creating "baskets" of loans in the form of Asset Backed Securities and Credit Default Swaps. They believed that by spreading the risk across a range of debt instruments that these financial products would be sheltered from major decreases in value. Uhhh, this proved to not be the case. The opposite is true, the spreading of risk actually disguised the risk causing this great project in risk aversion to become one of the riskiest things we have ever done. On the other hand, what is stopping these countries from just buying a variety of foreign currencies for their own reserves, thus filling their own "basket"? Why wait for the IMF, if this is such a significant problem? China's fiscal policies are as bad as ours, just in a different way. We are trying to finance our growth by borrowing against future growth. China finances their growth by borrowing against the future rise in their currency. Both scenarios lead to collapse if pursued with reckless abandon. It seems like when people bring up China and our debt, everyone assumes that they are on some kind of fiscal high ground. They are not. If a bout of massive inflation wasn't going to be so painful for us, I would almost wish it on the Chinese, because they deserve it. .-= burro´s last blog ..<a href="http://feedproxy.google.com/~r/TheIndependentBloghorn/~3/kbpv0z8DALs/" rel="nofollow">Another Messiah in the Making</a> =-. A “basket” of currencies won’t solve the problem either. The current financial crisis was a result of financiers creating “baskets” of loans in the form of Asset Backed Securities and Credit Default Swaps. They believed that by spreading the risk across a range of debt instruments that these financial products would be sheltered from major decreases in value. Uhhh, this proved to not be the case. The opposite is true, the spreading of risk actually disguised the risk causing this great project in risk aversion to become one of the riskiest things we have ever done.

On the other hand, what is stopping these countries from just buying a variety of foreign currencies for their own reserves, thus filling their own “basket”? Why wait for the IMF, if this is such a significant problem?

China’s fiscal policies are as bad as ours, just in a different way. We are trying to finance our growth by borrowing against future growth. China finances their growth by borrowing against the future rise in their currency. Both scenarios lead to collapse if pursued with reckless abandon. It seems like when people bring up China and our debt, everyone assumes that they are on some kind of fiscal high ground. They are not. If a bout of massive inflation wasn’t going to be so painful for us, I would almost wish it on the Chinese, because they deserve it.
.-= burro´s last blog ..Another Messiah in the Making =-.

]]> By: Harrison http://capitolcommentary.com/2009/11/05/another-sign-of-too-much-us-debt-india-trades-dollars-for-gold/#comment-2408 Harrison Sat, 07 Nov 2009 05:55:19 +0000 http://harrisonprice.com/?p=2983#comment-2408 I think the idea is to have a "basket" of currencies... perhaps a PC way of cutting some influence from the dollar and our bad fiscal policy. China is in a bind because they need our spending but at the same time we're killing the value of their dollar reserves. I think the idea is to have a “basket” of currencies… perhaps a PC way of cutting some influence from the dollar and our bad fiscal policy. China is in a bind because they need our spending but at the same time we’re killing the value of their dollar reserves.

]]> By: burro http://capitolcommentary.com/2009/11/05/another-sign-of-too-much-us-debt-india-trades-dollars-for-gold/#comment-2407 burro Fri, 06 Nov 2009 07:27:18 +0000 http://harrisonprice.com/?p=2983#comment-2407 An alternate reserve currency? Why will a different reserve currency be immune from the same problems? Nothing is more likely than the cyclicality of economic cycles. The Chinese can whine all they want. They get what they deserve. If they are so worried about the dollar, then why don't they propose that their currency be used as the reserve currency? Oh yeah, if an institution other than Beijing was able to influence the demand for the Yuan and therefore increase its value, China's export driven growth model would be done. I predict China's economy collapses before the dollar is permanently damaged. .-= burro´s last blog ..<a href="http://feedproxy.google.com/~r/TheIndependentBloghorn/~3/kbpv0z8DALs/" rel="nofollow">Another Messiah in the Making</a> =-. An alternate reserve currency? Why will a different reserve currency be immune from the same problems? Nothing is more likely than the cyclicality of economic cycles. The Chinese can whine all they want. They get what they deserve. If they are so worried about the dollar, then why don’t they propose that their currency be used as the reserve currency? Oh yeah, if an institution other than Beijing was able to influence the demand for the Yuan and therefore increase its value, China’s export driven growth model would be done. I predict China’s economy collapses before the dollar is permanently damaged.
.-= burro´s last blog ..Another Messiah in the Making =-.

]]> By: vulcanhammer http://capitolcommentary.com/2009/11/05/another-sign-of-too-much-us-debt-india-trades-dollars-for-gold/#comment-2406 vulcanhammer Thu, 05 Nov 2009 20:15:15 +0000 http://harrisonprice.com/?p=2983#comment-2406 The Obama regime's attempt to reflate the economy out of the doldrums is going to have some serious consequences. Banks are sitting on large reserves and when they start to lend out en masse, inflation will rise, the dollar will spiral down further, and interest rate will rise. God help us. .-= vulcanhammer´s last blog ..<a href="http://vulcanhammer.blogspot.com/2009/11/you-can-kiss-23-billion-bye-bye.html" rel="nofollow">You can kiss $2.3 Billion bye-bye!</a> =-. The Obama regime’s attempt to reflate the economy out of the doldrums is going to have some serious consequences. Banks are sitting on large reserves and when they start to lend out en masse, inflation will rise, the dollar will spiral down further, and interest rate will rise. God help us.
.-= vulcanhammer´s last blog ..You can kiss $2.3 Billion bye-bye! =-.

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