by Jeff Nielson, Silver Gold Bull:
There were several interesting aspects to this news item. First, unlike when Western Deadbeats talk about “buying bonds” amongst themselves; when China’s government talks about doing this it doesn’t need to print more money simply to finance the purchases.
I’ve written about the Western dynamic several times. Being forced to print more money each time they take turns “bailing out” each other is precisely the same thing as when a deadbeat writes a new bad cheque to “cover” an old bad cheque. If you must print new paper in order to “cover” the old paper; all you are doing is kiting cheques.
That is the Western financial system – a cheque-kiting financial system. There couldn’t possibly be a more obvious Ponzi-scheme. Note that with all of the Western Deadbeats ultra-leveraged that no one is really in the driver’s seat, since if one goes down they all go down.
Then we have China. When China buys Western bonds (i.e. lends money to these governments), it’s not making itself vulnerable. While China would certainly lose money on some mass debt-default (Debt Jubilee?) in the West; it would not be instantly vaporized like every Western economy.