"It's almost Armageddon if the Japanese and Chinese don't buy our debt," Julian Robertson said in an interview. "I don't know where we could get the money. I think we've let ourselves get in a terrible situation and I think we ought to try and get out of it." Robertson said inflation is a big risk if foreign countries were to stop buying bonds. "If the Chinese and Japanese stop buying our bonds, we could easily see [inflation] go to 15 to 20 percent," he said. "It's not a question of the economy. It's a question of who will lend us the money if they don't. Imagine us getting ourselves in a situation where we're totally dependent on those two countries. It's crazy." Robertson said while he doesn't think the Chinese will stop buying US bonds, the Japanese may eventually be forced to sell some of their long-term bonds. "That's much worse than not buying," he said. "The other thing is, they're buying almost exclusively short-term debt. And that's what we are offering, because we can't sell the long-term debt. And you know, the history has been that people who borrow short term really get burned."
Dominant Social Theme: The end is nigh?
Free-Market Analysis: The question we really need to ask is why would Japan and China cease to purchase American paper? The answer is that they would devalue what they hold now, and thus the two countries and others will be extremely careful in the short term anyway as to their handling of the US dollar.
In the long-term, we are coming to believe that this economic crisis will end up with more monetary power being vested in the IMF. From our point of view, were this to be the case, nothing basically changes for the monetary elite. Other countries will have a larger say on monetary policies but the reins will still be held by the Anglo American establishment. Ask yourself this question, dear reader: Who controls the UN? The answer, very evidently, is that Western powers predominate. The UN has been structured that way. The IMF currency, if it comes to that, shall be structured that way as well. Here's some more from the article:
The only way to avoid the problem, he said, is to "grow and save our way out of it." "The U.S. has to quit spending, cut back, start saving, and scale backward," Robertson said. "Until that happens, I don't think we're anywhere near out of the woods." Robertson is not very optimistic about the short-term.
Robertson is likely correct in his analysis. Please note, the Obama administration is taking the US in exactly the opposite direction, loading program after program onto an already overburdened budget. The current conundrum then beings to resemble a pincer. On the one hand are alternative currencies being floated by dissatisfied holders of American paper. On the other hand is America, whose leaders are evidently profligate as ever. The results as Robertson points out, cannot ultimately be healthy for Americans or the American dollar.
Conclusion: The monetary crisis is a manufactured one in that Anglo-American leaders are creating both the problem (a destabilized dollar) and the solution (an alternative currency, perhaps controlled by the IMF). While the problem is manufactured, it is still a stretch for many to believe that it is a deliberate promotion. We do not suggest this either. Still, it is amazing how the stars align.
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