In China We Trust

On Friday, Ian Bremmer, president of Eurasia Group, was interviewed by Alexis Glick for a segment titled "Government Shaping Economic Future?" on Fox’s Money for Breakfast. Bremmer points out several ways that government policies both abroad and in the U.S. will have a direct impact on the U.S. economic reality in the very near future. One of the most troubling topics that Bremmer and Glick discuss is the possibility that China will shift their investment strategy away from buying U.S. Treasuries and toward their own domestic investments.

If China does adopt this strategy, the implication for the U.S. economy will be marked. According to Bremmer, the U.S. will have to "turn on the printing presses." Unfortunately, much of the recent U.S. government spending is predicated on both the Chinese continued purchase of U.S. Treasuries and the U.S. economy recovering in 18-24 months. If either one of these predictions fail to materialize, then high inflation will likely follow. Our reliance on countries like China is increasingly forcing the U.S. into what Bremmer calls a "secondary role" where "the days where the United States had the political and economic leverage to get the rest of the world behind it are behind us." Short of an economic rebound the likes we have never seen before, it would appear we better hope that China buys our debt.