Economic MAD – Mutually Assured Destruction

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p> I’ve been thinking about the interdependence of China on the US and the US on China for some time now, but I’ve been unable to find the worlds for the model that’s been forming in my head to describe the situation. Until today. This doesn’t totally summarize my thoughts on the situation, but it definitely articulates a lot of my considerations.

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The U.S.-centric global speculative financial system continues to operate as a kind of perpetual motion machine, propped up by the “moral hazard” of central bank policies and the willingness of foreign lenders to support U.S. consumption on credit, in order to fund their own economic expansion at home via export income and domestic savings.

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p> The name for this system of interdependence? Economic MAD. The name comes from the Nuclear MAD system that the Americans and the Soviets worked on for much of the 20th century. Catchy name, don’t you think? Go read the original story at iTulip (The Contrary Market View). If course, we know how MAD ends if one player figures out how to cheat…

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p> Note that I believe the iTulip article does cross the line characterizing the CCP as a despot which I totally disagree with. Just because we’re playing MAD, doesn’t mean that one of us is good and one of us is evil, as much as talk like this would irritate our soon to be replaced white house…

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