Despite the firm talk and handshaking that occurred during the G-20 summit the most crucial issue to the success and security of the United States was barely discussed. The biggest issue facing the United States in the long term is our debt to the People&
Despite the firm talk and handshaking that occurred during the G-20 summit the most crucial issue to the success and security of the United States was barely discussed. The biggest issue facing the United States in the long term is our debt to the People’s Republic of China. Economic crises come and go, but debt lasts for forever, and China has made it very clear that they have a long memory.
The United States owes the People’s Republic of China $739 billion dollars, which breaks down to each and every man, woman and child in America owing the Chinese government about $2,500 on top of our other debts. China took the job as America’s biggest lender from Japan last fall when George W. Bush and Congress all voted to increase foreign debt to pay for the massive bank bailout. Unfortunately, this debt creates an economic, political and military crisis in the making that President Obama cannot shy away from.
Debt is a common way of life in the United States. As a nation, Americans have one of the lowest household savings rates over the last 15 years. We only tuck away about two percent of home income a year compared to Chinese citizens who save about 20 percent of their annual income. Of course we have a government that reflects our values of overspending. Recently, the massive U.S. debt had Chinese central bank president Zhou Xiaochuan proposing to replace the dollar with a new ‘international currency’ to limit our nation’s global economic influence. But this is just the first salvo. The Chinese government has shown that they can be pretty aggressive lenders and have no trouble flexing their muscles with nations that are foolish enough to get into too much debt with them. A prime example of this can be seen today in Africa.
Over the last decade, China has almost doubled their trade and loans to most of sub-Saharan Africa, giving nation after nation ‘soft loans’ with generous terms. But it’s not always money that’s asked for in return but political and cultural favors. Recently, South Africa, which has heavy financial debt and investments from China, refused to let the Dali Lama attend a peace conference in Johannesburg. Why? Because the Chinese government resents the Dali Lama’s peace efforts in Tibet and pulled some puppet strings with the heavily indebted South African government. If a nation that is home to Nelson Mandela can be strong armed into rejecting the Dali Lama over a few billion in loans, it’s not hard to see how that scenario might play out in the United States. It will be hard to rustle up the U.S. calvary to repel Chinese aggression against Taiwan if China has our ATM card.
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