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Dr. Josephe Salerno on myths about Gold standard

http://mises.org/MultiMedia/video/Salerno/Salerno10.wmv

Dr. Salerno is a libertarian economist from the Austrian School

The great thing about the Chinese owning about T$ of Treasuries is that the securities are a bond for their good behavior. Launch an attack on Taiwan and we cancel them.

"It wouldn't be logical for China to invest their dollars in a way that diminishes their value."

It would if the Chinese think the dollar is likely to crash and want to reduce their exposure.

They might look at the trade deficit that the USA had had since the 1970's, the 44 sub prime mortgage lenders that have collapsed or been sold for a song in the last six months and consider just how badly the US financial system will be hit when house prices drop, lots of borowers default on morgagues and that goes back up the chain to the institutions that planned on getting a good return on money lent out for mortgages. Hedge funds are going to go down like dominos.

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