Obama has slapped a 35% tariff on Chinese tires. They are retaliating with other small measures. Obama better be careful. If he angers the Chinese too much they may decide to stop buying US debt: the Chinese are one of the major financiers of the US government’s 1.8 trillion dollar deficit this year. The one who depends on another’s money is not ultimately in control of the relationship.
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Pento says that we need China’s contribution to our debt, and if they don’t buy it, we will be in trouble. This is exactly my point here, where I say that if we don’t borrow the money for the US budget deficit, we will be looking at hyper-inflation.
I have personally taken positions against the dollar by borrowing US currency to invest in a Canadian Oil Company (ERF) and a Caribbean utility company in Grand Caymen (CUP.U, Toronto).