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Does China Own More U.S. Debt Than We Thought?

July 9, 2011 Market Updates, Politics No Comments

Does China own more U.S. debt than we thought?  It appears that the answer is YES.  If this is true (and it will be difficult to get a clear cut answer from the Fed or the U.S. Government), it could be a real game changer that might put the U.S. back in the drivers seat financially by giving the U.S. the upper hand in controlling China’s financial stability going forward.  At first this statement appears to be contradictory, but hear me out and it may make more sense as we get further into the question: Does China own more U.S. debt than we thought?

There are so many different points of view out there that make it really hard to find the truth, but if we start with the premise that China originally bought U.S. debt in an attempt to control  the U.S. by owning its debt, then it is not too big a stretch to assume that they would try to secretly acquire as much of it as they could.  The Chinese think long term and we usually learn about their plans long after they have been implemented.  They may, however, have been impaled by the same set of circumstances that have beset the American people:  the election of the first truly anti-American president, Barack Hussein Obama.

The “Obama Regime” has instituted so many financial controls that one would have to be Houdini to avoid their web.  The question today is did the rules put in place in 2009 limiting buyers of US Treasury debt to 35% of any given auction, provide the opportunity for China to purchase more by using primary dealers  (the required buyers for US Treasuries at auction) as a proxy?  If this was the intent of the Fed, than Ben Bernanke may have put the Fed in a position to “break” the bank of China through inflation.  This theory may be duplicitous by half, but it appears obvious that the “Obama Regime” wants to inflate its way out of its incredible spending spree and, if you can reign in China while destroying the U.S. economy, all the better for them!

It does follow that if the American investor expects a declining dollar, then it would be wise  to borrow dollars for investment in China’s Renminbi, which pays a higher rate of interest. Over the last few years this policy has forced China to raise rates in an attempt to slow its inflation rate and cool its economic growth.  On the U.S. side, a devaluing  dollar combined with rising Chinese wages means that manufacturing is now beginning looking to the United States, where high unemployment provides opportunity to lower costs in manufacturing.  What goes around comes around, if we can assume that Ben Bernanke was smart enough to orchestrate this!

An Opposing Opinion

The following video is really worth spending 10 minutes to view.  Sometimes clarity comes from unlikely sources.  This great discussion comes from the Dylan Ratigan Show on MSNBC. David Stockman, former Reagan budget director lays out the case for the end of the Bernanke Chairmanship of the Fed.

I have to go with Stockman, Ben Bernanke should go and he is in no way smart enough to have laid an elaborate trap to snip the wings of the Chinese’ ascent to power.  The American people have been sold a bill of goods by “The Community Organizer In Chief” and all of the Marxist minions that surround him.

If you examine all of the Obama Regime’s deficit spending stimulus programs, one thing becomes glaringly obvious.  No money was put towards helping hard working Americans.  The money was shoveled into protecting cronies in the banking industry and political friends of the “Potentate in Chief”, namely unions and big political allies (ie. Jeffery Immelt of G.E.). Never has America paid so much for so little.

The answer to the question: Does China Own More U.S. Debt Than We Thought?, is a resounding yes.  Was Ben Bernanke brilliant enough to have laid a trap for China, hardly.  China may have to fall on a sword of there own design, because the “Obama Regime” is hell bent on devaluing the dollar, but the fools in the White House and the Fed don’t have the common sense to get out of the rain if they are getting wet.

Now we are faced with the President crying about a default if the debt limit isn’t raised!  This is another fabrication from the “Prevaricator In Chief”.  The Federal Government takes in more than enough revenue monthly to meet its debt obligations, if it stops its additional spending! It is not a deficit issue, it is a spending issue.  The government squanders our money and then demands more and wants the tax payers, their children, their grandchildren and their grand-children’s children to pay for the “predatory legislator’s”  ineptitude and greed.  Wake Up America! It is about time we, as a people, start listening to wiser intellects and start to reign in, if not decapitate, the beast.

“When you see that in order to produce, you need to obtain permission from men who produce nothing; when you see that money is flowing to those who deal not in goods, but in favors; when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you… you may know that your society is doomed.
–Ayn Rand

Gold Gets It!

Through all the hype and the hoopla,  August gold posted strong gains this week, rising from the July 5 low $1,486 to Friday’s high of $1,546.00.  Next week, upside resistance is the June 22 high $1,559. If that is bested, gold would set its sights on a retest of the $1,577.70 high. On the downside,  support is at $1,522.  What a difference a week makes!  We are now sitting on the high end of the current trading range.

Keep in mind that the powers that be of the fiat currency side will fight gold’s rise tooth and nail, but to no avail.  I don’t care if the next new high is broken Monday or in October.  All I know is that it is coming and I will not be scared out of my positions by the froth that has been churned up by the media and all of the naysayers.  Nothing has fundamentally changed for the dollar, if anything it has gotten worse!  Gold is going to and through $2,000 per ounce soon.

Does China own more U.S. debt than we thought?  The answer is yes, and it means the gold bull will continue on.

Till next time, good luck and good trading!



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