Senate candidate Peter Schiff discusses The Truth Behind China’s Currency Peg:
While the peg certainly is responsible for much of the world’s problems, its abandonment would cause severe hardship in the United States. In fact, for the U.S., de-pegging would cause the economic equivalent of cardiac arrest. Our economy is currently on life support provided by an endless flow of debt financing from China. These purchases are the means by which China maintains the relative value of its currency against the dollar. As the dollar comes under even more downward pressure, China’s purchases must increase to keep the renminbi from rising. By maintaining the peg, China enables our politicians and citizens to continue spending more than they have and avoiding the hard choices necessary to restore our long-term economic health.
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De-pegging will force the hand of U.S. politicians toward pursuing realistic policies. The Chinese will come to their senses eventually because it is in their interest to do so. Meanwhile, the longer the peg is maintained, the more indebted we become, the more out of balance our economy grows, and the more our industrial base shrivels. In short, the longer they wait, the steeper our fall.
I opined in a comment at InfoWars.com about why China may maintain the US Dollar peg for a bit longer:
Mac:
If Peter Schiff’s assessment is correct, and depegging would cause “cardiac arrestâ€, and the longer the peg continues, the harder we fall, then I suspect the Chinese have a strong motivator to keep the peg going as long as possible.
This is economic warfare folks. This is SERIOUS business.
They will pull the plug and stop funding our debt at a time of their choosing. Seems to be a solid strategy from the perspective of the Reds. They choose the battlefield. They choose when the final attack will come.
The Chinese are not doing this because they want to help us. The exact opposite is true.
I firmly believe we are engaged in a global war. No missiles have been fired yet, but perhaps at some point in the future they will be. Or, it may end similar to the Cold War, where the USA completely destroyed the economy of the Soviet Union through a variety of methods, namely by forcing them to spend billions to keep up with our defense spending. Eventually, the Soviets were bankrupted.
Sound familiar?
Interesting point, Mac.
Funny…doesn’t it sound like some of the stuff straight out of Sun Tzu’s “The Art of War?”
“The Chinese are not doing this because they want to help us. The exact opposite is true.”
Righttt.
Mac, you sound like an old conspiratorial figure now. Posting on Infowars says enough. The same old fear mongering that the Bush policies presented and Jones presents is just absurd. Get real mate.
Not all things in life are a conspiracy. The Chinese government has always funded the American Dream in order to keep the benefits of manufacturing and technology to develop their nation. Of course they lifted on the US and sure, the US loved it…not producing much and paying with IOU’s from the States. Who’s using who exactly?
Logically, with the spending drift of your electorate representatives in Washington it was obvious this state of affairs was going to happen anyway. Suddenly the Chinese are the conspiracy? Get outta here.
The United States just doesn’t have any backbone in order to keep its house (finances) in order. Its like an addict that funds his pusher. And you think its weird that the pusher keeps doing his job after you started on drugs?
The story is similar when you compare Wallstreet (pusher) to Mainstreet (innocent addicts).
Mac, you are getting way out of reality now. Forget Alex Jones…he might have some interesting points, but the connections he makes are just insane. Not even credible in a long shot.
Keep it sane.
I
Rob, thanks for the comment and alternate viewpoint.
Note that this article was posted on infowars.com originally, but it is by Peter Schiff, who has no affiliation with Alex Jones.
QUOTE: The United States just doesn’t have any backbone in order to keep its house (finances) in order. Its like an addict that funds his pusher. And you think its weird that the pusher keeps doing his job after you started on drugs?
You are certainly right about this. The politicians in DC have no back bone and are there not to serve the people, but to enrich themselves. They ARE addicted to spending and debt (much like the American consumer).
This is no ‘conspiracy theory’. It is clear as day for me. While I respect your opinion, I disagree with the notion that the Chinese are funding America just to keep their manufacturing up and US dollars flowing in. Sure, this is what has made China the ‘next great super power’, but I do not believe that their goal is to be another super power in the world.
We are dealing with a staunchly Communist nation. Regardless of what we hear from MSM or even investors like Jim Rogers, I personally do not believe the Chinese are moving more towards ‘capitalism.’ Sure, they use capitalism to generate revenue, but the State is tightly controlled, and run by communists.
This brings me to my ‘conspiratorial’ point, I guess. For a communist to live in peace with other nations, all other nations must be communist. Otherwise, they are at war. You can believe this, or chalk it up as extremist thinking, but this is how the mindset of a red commie works.
That being said, I maintain that the Chinese are simply setting up the chess board, waiting for the right moment to strike. The ultimate goal is the destruction of the American way of life. Deny this at your peril, but in my view, this is fact.
As a caveat, I must mention that we, the United States, are fully engaged in this war. Though the average American may not realize this, the upper echelons of leadership in the US are fully aware of what is going on.
I do believe that, just as the Chinese are playing chess, we are too. The debasement of the US currency is just one facet of this battle. For now, the Chinese are countering with a currency peg, it seems. While I believe Mr. Schiff is right about a de-peg causing economic cardiac arrest in the US, I also believe there will be extremely negative ramifications in China if this were to happen. Kind of a scorched earth effect where everyone gets hammered.
I believe that eventually all this will play out, and pretty much the entire global economy will be ‘reset’. The economic cold war may very well go hot at some point in the future.
We are certainly addicts and China is the pusher. Eventually, the crack kills the addict and the pusher (in this case) runs out of people to sell the dope to.
In an insane world, the sane man must appear insane  🙂
Again, Rob, thank you for sharing your views.
Take care,
Mac
p.s. — Rick, I was totally thinking Sun Tzu when i wrote the original comment over at InfoWars.
Sorry, I’m just not buying the “Evil Chinese commies want to destroy us” argument. In many respects, US government is MORE socialist than China (e.g. bigger portion of economy owned by government, more military spending, more imprisoned per capita). Why worry about your neighbor’s cancer, when you are dying from AIDS?
I do believe that unpegging the currency will be very disruptive – for both countries. But ultimately, it’s the best policy. Meanwhile, I’m enjoying the products that Chinese laborers are making for me in exchange for green pieces of paper.
Dr. Acula: US government is MORE socialist than China (e.g. bigger portion of economy owned by government, more military spending, more imprisoned per capita)
You make a very strong point here Doc. We are certainly not living in a republican form of government in the US.
One thing I must stress is that I do not necessarily believe that the Chinese are “evil.” But, they do have their own interests in mind, just as we do. My personal observations suggest that the US and China are at war, economically for now. This may or may not lead to something else.
I suppose I am a little biased towards the USA winning the ‘war’, of course, because I despise commies and I live here in the US and would prefer to maintain my standard of living and quality of life. But, there is no doubt, the USA is a socialist nation now.
Though, I do believe that we are in the final throes of socialist and marxist leanings. All of this will be a failed experiment, and the system will eventually be reset. Perhaps one day we can actually go back to considering individual liberty and personal responsibility as our foundation, as was originally put forth in the Constitution.
So you gents really think the politicians & corporate giants of the world actually function without a common organization or agenda? One of the definitions of conspire:  “To work together toward a single end.” Take a look at the 2009 Bilderberg attendees list of corporate & governmental members & tell me why they won’t allow reporters inside their meetings.  http://www.consciousape.com/news/whos-who-at-bilderberg-2009/
The chi-coms have a lot to admire. A nation that executes its prisoners to sell their organs & incarcerates its political dissidents in slave labor camps sounds like a wonderful place to live.  Perhaps that’s what inspired the US govt to create the civilian inmate labor program- http://www.army.mil/usapa/epubs/pdf/r210_35.pdf Â
The US govt has adopted the vast majority of socialist policies since WWII & will culminate with the implementation of its socialist health plan. Here’s a brief history of those who’ve contributed to foreign policy development in the US. http://www.prolognet.qc.ca/clyde/cfr.html
The demise of the dollar as a world reserve currency fits a globalist one world bank & currency agenda perfectly.  What part of world government don’t you understand my dear Pollyannas?  Perhaps Mr Jones views aren’t as ridiculous as you’ve been led to believe.           Â
Zed, great links. Thanks for posting those.
QUOTE: So you gents really think the politicians & corporate giants of the world actually function without a common organization or agenda?
In my opinion there is definitely a coordinated, multi-national effort under way. However, I also believe that there are a variety of ‘factions’ at work here. Sure, they work together to achieve certain agendas, but I also think that there is a power struggle within the globalization effort.
In the US/Europe some suggest the Illuminati are running the show. I do believe there is truth to this, whoever these Illuminati are.
But we also have ‘Illuminati” type structures in Russia and China. I honestly do not know many details about the upper echelons of power in China, but my gut tells me that with thousands of years of history, there is going to be some type of ‘Chinese Illuminati” as well.
I am, admittedly, a fan of Alex Jones and the work he does. I don’t subscribe to everything Prison Planet / Infowars puts forth, but I do consider everything they put out there. Their documentaries have alerted millions of people to the dangers of putting too much power into the hands of others, as well as the effects of these power structures, which are evident, as you suggested, in things like socializing healthcare, taking over private industry, and pretty much stripping individual liberties (around the globe) and using our very lives as collateral for all of their credit funded pet projects.