LOOK TO THE EAST- CHINA AND THE FUTURE WAR

We are in a depression. It was caused by the bursting of bubbles and the creation of new bubbles to offset the effects of the last bubble's burst. Each bubble in succession has burst ratcheting our debt to unsustainable levels. We cannot pay down our debt so we have to make a choice; inflate our way out or collapse. To this point we have increased the money supply to affect Keynesian economic policies in the hopes that we could stimulate the economy back to life. It hasn't worked and will have the effect of causing massive inflation, ratcheting up the cost of goods as the deflationary pressures of a depression drive wages down.

A war would be just the thing to take our minds off the problem, wouldn't it? It would also be a dandy way to wash the excess capital out of the system while creating high paying manufacturing jobs. The only thing holding us back is that we are a Christian nation and the immorality of war started for economic reasons (most are anyway) still rubs us the wrong way.

I wonder if China would have the same qualms?

"While communist China’s growing hostility toward the free world (as represented by the United States) is becoming more and more difficult to conceal, the trade and financial ties between the two countries are nevertheless stronger than ever.

Some wonder why China, as resentful as it is toward the U.S., has spent so much on purchasing U.S. treasury bonds.

The question remains whether and when China will dump American bonds as an extreme financial weapon. Chinese military officers once threatened to do so in the aftermath of earlier threats to fire 200 nuclear bombs at the U.S.

Beijing’s think-tank and pro-communist overseas media believe that dumping a small portion of the $800 billion in American bonds would cause economic turmoil in the U.S.—a blow almost as great as a nuclear bomb. Should that happen, they have speculated that the U.S. would be brought to its knees."
Epoch Times

"China retained its spot as the biggest foreign holder of U.S. Treasury debt in January even as it trimmed its holdings for a third straight month. The string of declines underscored worries that the U.S. government could face much higher interest rates to finance soaring budget deficits."
AP News

"China has succumbed to hubris. It has mistaken the soft diplomacy of Barack Obama for weakness, mistaken the US credit crisis for decline, and mistaken its own mercantilist bubble for ascendancy. There are echoes of Anglo-German spats before the First World War, when Wilhelmine Berlin so badly misjudged the strategic balance of power and over-played its hand."
Telegraph

"Nervousness is growing in the financial markets about China, which might seem odd when there are so many other places to worry about.

There’s still Greece, for example, which is likely to be the focus of this week’s meetings of European finance ministers. There’s Germany, and its trade surplus. And there’s the U.S., the U.K. and all the other places with triple-A-rated debt that may not be rated triple-A for much longer.

So why the focus on China, where shares closed Monday at their lowest in five weeks, with the benchmark Shanghai Composite ending below 3000 at its weakest since Feb. 9? Well, as one bank put it on Monday: “Are we facing a ‘growth miracle’ or will China be the next bubble to burst?”

So far, it’s been widely assumed that the strength of the Chinese economy is a plus for the global economy as a whole. But fears of over-heating are growing and, after China’s failure to raise interest rates over the weekend, there’s inevitable concern that it might wait too long before tightening the screws.

What’s more, the rhetoric from China seems increasingly confrontational. Premier Wen Jiabao warned other countries not to pressure China over its exchange-rate policy during his news conference at the end of the country’s annual legislative session Sunday."
Wall Street Journal

"In China's zeal to keep their economy going, the government injected about 4 trillion yuan since 2008 (14 percent of GDP) as fiscal stimulus. It expects to have deficit spending equal to 1.5 trillion yuan this year. Since they believe in Keynesian stimulus, and since they still have a quasi-centrally planned economy (the ultimate Keynesian technocrats), they will keep doing this until the crisis passes. You see, there is one thing the Central Politburo fears: their own people. If the economy collapsed, you would see massive unrest, and I believe they fear for their lives."
Zerohedge