The US is stoking worldwide inflation in order to lower its outstanding debt by repaying creditors with depreciated dollars This is done through a process called quantitative easing, lowering the value of the dollar. Washington is flooding financial markets with $600 billion, hoping that this monopoly money will bring America out of recession.
At a G20 economic summit in South Korea, China’s state credit agency publicly downgraded Americas credit rating and scolded Washington for “deteriorating debt repayment capability” and predicted that quantitative easing would lead to “fundamentally lowering the national solvency”.
At this summit, Obama’s attempts to stimulate the US economy with steroids of more deficit spending were criticized by many other G20 members. In the past, the US has criticized China for manipulating its currency to keep the value low, and now the criticism is on the US. This depreciated dollar does boost US exports, but it also hurts nations exporting to the US, this was a destructive trade practice that played a key role in the 1930’s depression. In the past 2 months, the US dollar has dropped 6% against other major currencies. US debt has now hit $14 trillion. Running down the value of the US dollar marks the beginning of the end of the American era.
Title: China to the US: Stop With the Monopoly Money
Author: Eric Margolis
Publication: Information Clearing House, December 7, 2010
URL: http://www.informationclearinghouse.info/article26831.htm
Student Researcher: Chelsea Silva, Sonoma State University
Faculty Evaluator: Sheila Katz, Sonoma state University