RE: RE: lloy13 Sep 2018 19:22
No matter what Trump is personally, or what people think of him... he is trying to do something about America's debt. He recognises that whilst the USA has trade deficits with multiple countries... the debt will continue to grow at a rapid rate. If he can get the deficits down, then it's possible the USA could actually start paying some of their debt off.
It doesn't matter how big a countries economy is, if the Debt is growing at a faster rate than GDP, eventually that country becomes a weaker credit risk. When the Credit reference agencies downgrade the USA, it will have to pay higher interest rates to borrow more....
If that happens the debt increases even faster. The USA has an over $500 Billion (half a trillion) deficit with China... it simply can't go on. He tried negotiating with China, but instead China said they will fight till the bitter end.
So unless China back down the worlds two biggest economies are going to go toe to toe... progressively throwing more and more punches until one hits the deck. My money's on America winning.
But what happens to all the Western debt tied up in China? If things turn really nasty, China's government could stick two fingers up to debtors... It doesn't take much imagination to work out what would happen to world markets if that happens.