Free Markets, Free People
Nice – lectures on fiscal responsibility from … China
Who would have ever thought to see the day the US was lectured on its economic policy by the Red Chinese? Even worse, who would have believed the Chinese would be right?
Sovereign debt troubles in Europe underscore how important it is for the United States to control its own borrowing as its indebtedness reaches concerning levels, a senior Chinese official said on Thursday.
With China facing criticism for holding its currency in a de facto dollar peg, assistant finance minister Zhu Guangyao shifted attention to Beijing’s own worries about U.S. policies, especially its soaring deficit, ahead of high-level bilateral meetings next week.
China will look to coordinate its economic policies with the United States as a buffer against the turbulence and would also like the G20 group of nations to play a role in strengthening the global response, Zhu said.
But the United States needs to take a hard look at its own fiscal situation in the light of what has happened in Europe, he said.
We continue to hear from those like Paul Krugman that debt is fine in conditions like this, that in fact, we haven’t spent enough. Obviously that’s not worked out too well, has it? And, as we’re seeing in Europe, especially Greece, when debt reaches a certain proportion of GDP, it becomes unsustainable. Guess what China, a country holding almost a trillion dollars of our debt, is worried about?
“We hope that the U.S. deficit will fall as a proportion of GDP as the economy recovers and reach a sustainable level,” Zhu said.
Well, Mr. Zhu, if you look at the projected 10 years of budgeting the Obama administration has forecast, you’re not going to get a very warm and fuzzy feeling about that.
But here’s a promise – you will get all the lip service to that end that you can stomach. And, as most Americans are learning, this administration considers talking about something akin to doing something about it. In the meantime watch closely as they continue to spend us into oblivion and eventually erode the value of the treasury holdings you hold.
All the while they’ll continue to say to anyone who will listen – “we’ve got to address this debt, it is unsustainable” all as trillions in borrowed money continue to go flying out the door.