LEADERS

International LEADERS Calling Market Crashes Years Ahead
Second to None, Anywhere...

'Warned 2000 tech slide; predicted 2008 meltdown in 2007. Forecasted 2020 global economic collapse in 2011, AND NOW- BY 2050 - THE MOTHER OF ALL CRASHES"

THE #FUTURE #OUTLOOKS - KEY AREAS OF #CONCERN AND #RISK

  Economic and Markets 2023 Outlook WARNING  What Worked for the Past Decades Will Not For The Next WHAT'S COMING - GLOBAL RECESSION? DE...

GLOBAL MARKETS


Live World Indices are powered by Investing.com

Champion, Lead, Inspire

Search This Blog

GREAT BARGAINS; FUN IDEAS

Tuesday 23 July 2013

The Jim Rogers Blog : I would rather be a Creditor than Debtor

The Jim Rogers Blog : I would rather be a Creditor than Debtor (read more)

Lets see if we can make sense of this. Now let's say China holds 1trillion in 10 year bonds and decides to cash or redeem their whole position. What could possibly happen? The Fed wires a one trillion freshly printed electronic dollars to China and takes back the bonds. So instead of holding an IOU due in ten years it now holds an IUO that is due on demand - albeit it is less less than 10% of  US's GDP or in other words all the goods and services output of the US economy for one month.Not much by some measures.

Anyway, now if China decides to convert these dollars immediately to other currencies it actually shoots itself in the foot because by depressing the US dollar they make their exports substantially more expensive to American consumers. Demand for Chinese goods would collapse in the US, that could shut down China's domestic manufacturing causing massive unemployment, and in turn social unrest followed by political change. Somehow it is hard to find a winner in such drama and both sides are thus inter-dependent - strange bedfellows indeed! .

There is a lesson - the best credit terms maybe negotiated by the creditor's biggest debtor - so borrow a lot! But somehow, Ben Franklin and Shakespeare's  wisdom also seems to ring true: neither a borrower nor lender be...

INVESTORS' INSIGHTS
First Financial Insights


Or, just tell them to go fly a kite

Popular Posts All Time

Learn, win achieve