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Originally Posted by crash9
This has all been said before for years, but the way I see it China is holding down our long term interest rates by buyig our long bonds in an effort to suck us into a debt bubble. They realize that at some point our ability to consume their cheap goods will be diminished by debt and by that point their internal economy may be strong enough for them to believe that they can grow much as we did after WWII - on their own internal consumption. By breaking us they will secure the oil they need to outlast us until they're able to develop alternative fuels that they are already putting a huge effort into.
I think we're in a kind of war where they sit back and just let us burn up our capital on military adventures and baubles while they save to buy up the bargins at the bottom.
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This goes back to the arguments made by Krugman at the beginning of the Iraq War. Wars of occupation, and military wars in general are obsolete. There are some very, very bright fellows in China, who truly believe China, not the USA, is the natural leaders of the world. They are perfectly capable of carrying out economic war against us, and if they have been planning it out, it does seem to be going perfectly to plan. If you wreck the American middle class, you wreck the United States, because that is where our power comes from.