money_pit_yj said:
How does revolution start? Who is the first one to walk up and put a bullet in the head of a liberal? Or is it just politicians? Say revolution does over throw the government...what are you going to do when China comes for their $1.2 trillion dollars we owe them? Or what do we do when our depleted military has to fight off a Russia or Iran? Do we have it so bad with current leaders we are willing to turn our country into Liberia or Zimbabwe? I am in no way shape or form a Clinton supporter but I think we are stretching a little comparing our current state to what the founding fathers were living.
So here's the interesting pickle we are in. Unknowingly thrust into a circle of a debtor economy.
So that magic "$1.2 trillion" is the amount of treasury bonds that China owns in the U.S. All based on the huge value of the U.S. dollar. In review, the value of the dollar comes directly from selling oil from Saudi sand namely, all in the U.S. dollar. So it's a pretend amount written on paper so the federal reserve can print more money.
So anyway, the treasury bonds are in laymen terms American citizen debts for the most part. So that's anything that we finance through a bank. We take out a loan with interest then the bank sells our loan on the bonds market to other countries. So China has bought a trillion or so in those bonds. So yeah theoretically, if we default then a chinamen knocks on our door right?
Well I personally have a hunch that not only have they bought tons of our loan debt but they have also bought tons and tons of derivatives. This is an entirely different market.
Basically the derivatives market is a stack of paper bets just like a horse race. You buy a contract that says you think that a bond or a commodity WILL default. If and when it does you stand to make 10 times what you would have if those debtors paid their contracts in full.
So I really think what's going on right now is exactly what happened in 2008. There are a select few HUGE central banks and their buddies about to short the hell out of this market. I think T rump is involved also.
I don't think China wants to come physically take from us like an Italian with a baseball bat. I think they are playing the market just like others and betting on the fall rather than pulling 2% interest on a treasury bond