China's Economic Train Wreck?

[Copernicus]

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first of all, china doesnt subsidize our budget deficit but rather our trade deficit. What happens if they stop? THe US dollar loses value relative to the yuan.

Then imagine what happens, if their goods become twice exspensive to us and our goods become half as exspensive to them. So, we start exporting more they export less. How that affects the economy is somewhat a matter of debate but many people believe that it will improve for us. We will be able to buy less in the short term, but our production will go up.

Hopes this helps.

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As I said, I'm a layman but it seems to me that they buy a fortune's worth of our Treasury bills and that finances our deficit. If their economy slacks off then they don't have the same amount of money to buy our T-bills and the U.S. taxpayers have to take up the slack of either funding the deficit or doing w/o a lot of gumint spending that the citizen would have to cover out of his pocket therefore leaving less money to buy Chinese products, etc.

So that was what I was wondering.

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If whoever is in office at the time responds to the Chinese downturn by raising taxes the effects could be compounded. Republicans w/ Greenspan wouldnt make that mistake. Democrats with Bernanke, who knows.