In less than 2 years China's currency has gone from 0 to 12% of the worlds reserve currency. They will continue to push the RMB into more markets to replace the dollar. They are working with Europe now sending the RMB and receiving Euros back in exchange. This will make trade between Europe and China easier. The IMF has again called for a basket of currencies to replace the dollar. Of course the dollar will be apart of this basket. The dollar unfortunately will have a smaller role.
If you look at history every fiat currency has failed. It will be no different for the dollar as it will continue to lose status as the reserve currency. As I said it could take a decade or longer but don't underestimate China's resolve. They have liberalized their markets to some extent and will slowly open them up. They will begin to increase the size of their bond market to help make the RMB more fluid.
As for your idea for infrastructure, it's a good idea. However I don't believe it will bring in enough revenue in taxes to stop the bleeding. Politicians are intent on printing and borrowing even more money to satisfy their constituents with even more pork projects. They also have to take care of all of their contributors to their campaigns. Obama's new ADA will be needing much more money than originally stated. People are lying about their income and affairs to receive health care subsidies. Besides the ADA was set up to fail so that it could be replaced with an even more sinister plan. The single payer system. This will cost tax payers trillions more than was expected. Washington doesn't know the meaning of the word restraint when it comes to spending. The only way to fund all of this nonsense is to borrow and print more money. Printing more money will only help to debase the currency even more. Every time Washington starts a new program they find ways to do stealth taxes. Look at all of the tax increases in the ADA. 20 new stealth taxes people don't even realize they are paying. Yet just as with social security, congress will raid the funds to pay for some other government program. The president and congress can not be trusted with tax payer money.
Talking about waste now in government programs. Look at all of the tax payer loses with Obama's green programs. Solyndra for one. His friends the biggest bundlers of money for his campaign did not lose one penny when it went down. Yet the taxpayers were on the hook and lost their money. This has happened in many of Obama's green energy projects. His buddies come out scot free while the taxpayers take a bath. This is a prime example of crony capitalism and corruption. The way politicians waste money is ludicrous. Still think that an infrastructure program will make up the difference in Washington's wasteful spending?
Thank You for such an interesting conversation. It's nice to talk with someone that has many good ideas and good points. I'm sure I haven't convinced you of my ideas and points. However it was a good debate. I look forward to another time when we can debate our differences. It is also nice to debate a grown up. You were very interesting and very civil. It's hard to find someone on the chat blogs that remains calm and civil and doesn't resort to name calling just because they disagree with each other. Again Thank you!

Now get this. China has fiat currency, just like us. The reason they are gaining on us is that they do a LOT more deficit spending than we do - twice as much. Their debt figures are twice ours.

Neither they nor we need taxes for spending. Taxes are used ONLY to prevent inflation. New spending comes out of thin air, limited ONLY by inflation, which is nowhere in sight here or China. We are paralyzed by fear of inflation. They watch it for danger signs and go full speed ahead. That's why we have to fear the RMB

They are running with full employment. We have 20 million people drawing benefits and looking for full-time work. They are building infrastructure with fiat currency. Our infrastructure is rotting because you and Congress are worried about too much private sector savings.

Why is China smart and why is the US dumb?

Why is it so hard to understand something so simple?

Fine, you have your opinions I have mine. Now you hear this, no one knows what the future holds. No one knows everything like you believe. You have a lot of what you think are facts, I have mine. We'll have to wait and see what the future brings. I thought you were more civil. Your now hear this statement proves to me your not. As I said no one knows everything, even you. You want to know what makes China so smart and us so dumb? China has a massive cash reserve of over $3.2 trillion. Our cash reserve is about $100 billion and sinking fast. They can spend the way they are because it will help their economy to boom, and they can afford to. Soon our reserves will be gone. We don't have the luxury to spend the way we are. Why is it so hard to understand we have no cash reserve and spend too much? Is that hard for you to understand? You are just like all the other know it all people. You want to try and insult my intelligence with your know it all statements. I really thought you were different. You're not. Again China has $3.2 TRILLION that's with a T in reserve, we have $100 BILLION that's with a B. Is that so hard to understand why we can't afford to spend like a drunken sailor? We absolutely could have a currency crisis in the future if we don't change our spending habits. Is that so hard to comprehend? Sure China has a fiat currency in it's infancy. If they become the worlds currency, they too will have to face the fact that at some point in the future their currency will fail, just as every other fiat currency has failed over the centuries. We have to reign in our spending soon. Of course you don't believe that. You go on ahead and believe as you wish, I am preparing myself for the possibility of a currency crisis. I will not answer any more of your comments. I like to debate people that do not try to belittle others. As for my statement about being naïve, that had a general meaning and I did not mean you personally. People are naïve to think that economic laws stop at our boarders. That is meant for people in general. So Long!

Fine, you have your opinions I have mine. Now you hear this, no one knows what the future holds. No one knows everything like you believe. You have a lot of what you think are facts, I have mine. We'll have to wait and see what the future brings. I thought you were more civil. Your now hear this statement proves to me your not. As I said no one knows everything, even you. You want to know what makes China so smart and us so dumb? China has a massive cash reserve of over $3.2 trillion. Our cash reserve is about $100 billion and sinking fast. They can spend the way they are because it will help their economy to boom, and they can afford to. Soon our reserves will be gone. We don't have the luxury to spend the way we are. Why is it so hard to understand we have no cash reserve and spend too much? Is that hard for you to understand? You are just like all the other know it all people. You want to try and insult my intelligence with your know it all statements. I really thought you were different. You're not. Again China has $3.2 TRILLION that's with a T in reserve, we have $100 BILLION that's with a B. Is that so hard to understand why we can't afford to spend like a drunken sailor? We absolutely could have a currency crisis in the future if we don't change our spending habits. Is that so hard to comprehend? Sure China has a fiat currency in it's infancy. If they become the worlds currency, they too will have to face the fact that at some point in the future their currency will fail, just as every other fiat currency has failed over the centuries. We have to reign in our spending soon. Of course you don't believe that. You go on ahead and believe as you wish, I am preparing myself for the possibility of a currency crisis. I will not answer any more of your comments. I like to debate people that do not try to belittle others. As for my statement about being naïve, that had a general meaning and I did not mean you personally. People are naïve to think that economic laws stop at our boarders. That is meant for people in general. If you would REMEMBER, I stated infrastructure spending would be FINE. However due to massive government spending, the taxes collected will not be enough to help significantly. That is what I said. Check out I said before putting word's in my mouth. So Long!

For deficit spending, the Treasury auctions bonds and buys goods and services (infrastructure) with the proceeds. The bonds represent savings by the private sector. The total debt is the value of all outstanding treasuries and is also equal to the total saving of the private sector (including foreign bond-holders). The savings are a necessary part of the economy and must continue to grow with population and with increasing wealth.

The balance is complete. The government has infrastructure and the private sector has savings in the form of treasuries, risk-free, interest-bearing instruments necessary for trade collateral, pensions, insurance, bank reserves, etc. As the much-needed bonds mature, they are redeemed by anxious auction- bidders, not by the taxpayer.

Bond-holders would stop buying bonds only because another nation’s instruments are safer because its economy is better than ours. Excluding war or other catastrophe, the dangers to our economy are inflation, unemployment, and foreign exchange rate disadvantage. With fiat currency, the amount of outstanding federal debt is immaterial and the interest on the debt is covered by the deficit spending, paid for by bond-buyers.

During a recession, Inflation due to a shortage of goods is mostly due to energy needs, now en route to surplus. During prosperity, bank lending is the primary cause of inflation, not deficit spending. (Republicans are absolutely opposed to regulation of Wall Street.) The Fed can always stop inflation on a dime with high interest rates.

Unemployment and foreign exchange problems are tied to infrastructure. With enough deficit spending on infrastructure, unemployment would end completely and the world’s best infrastructure would guarantee the world’s best trade advantage. The solution is at hand if we are not too blind to see it.

The European nations do not have fiat currency. China lacks t***sparency and will lack it for many years to come. England is suffering from austerity. Japan is entering its third decade of liquidity trap. The basket of currency is going to be hard to fill.

Fine, you have your opinions I have mine. Now you hear this, no one knows what the future holds. No one knows everything like you believe. You have a lot of what you think are facts, I have mine. We'll have to wait and see what the future brings. I thought you were more civil. Your now hear this statement proves to me your not. As I said no one knows everything, even you. You want to know what makes China so smart and us so dumb? China has a massive cash reserve of over $3.2 trillion. Our cash reserve is about $100 billion and sinking fast. They can spend the way they are because it will help their economy to boom, and they can afford to. Soon our reserves will be gone. We don't have the luxury to spend the way we are. Why is it so hard to understand we have no cash reserve and spend too much? Is that hard for you to understand? You are just like all the other know it all people. You want to try and insult my intelligence with your know it all statements. I really thought you were different. You're not. Again China has $3.2 TRILLION that's with a T in reserve, we have $100 BILLION that's with a B. Is that so hard to understand why we can't afford to spend like a drunken sailor? We absolutely could have a currency crisis in the future if we don't change our spending habits. Is that so hard to comprehend? Sure China has a fiat currency in it's infancy. If they become the worlds currency, they too will have to face the fact that at some point in the future their currency will fail, just as every other fiat currency has failed over the centuries. We have to reign in our spending soon. Of course you don't believe that. You go on ahead and believe as you wish, I am preparing myself for the possibility of a currency crisis. I will not answer any more of your comments. I like to debate people that do not try to belittle others. As for my statement about being naïve, that had a general meaning and I did not mean you personally. People are naïve to think that economic laws stop at our boarders. That is meant for people in general. If you would REMEMBER, I stated infrastructure spending would be FINE. However due to massive government spending, the taxes collected will not be enough to help significantly. That is what I said. Check out I said before putting word's in my mouth. So Long!

I forgot to make one correction to the above. You said China has a multi-trillion US dollar reserve. That is due to their US bond holdings. You also said that the US has only $100B cash reserve. That is incorrect. The Treasury has no cash reserve. Zero. Zilch. Nada. It has an account at the Fed which contains sums of money appropriated by Congress for specific expenditures, but no other funds.

Nor is it legal for the Treasury to have other funds. The Constitution clearly prohibits spending other than Congressional appropriations. Of course, this is never a problem because Congress can appropriate any amount of money it wishes without limit: trillions, quadrillions, quintillions, sextillions, septillions, octillions, etc.

The IRS collect taxes and reserves a relatively small amount to send over-payments back to taxpayers.

Stop worrying. In an emergency when lots of money are needed without bothering Congress, the Fed can just buy Treasury bonds directly as it did in WW II "in any quantity and at any price". That's how we won WW II without cash reserves and without Congressional appropriations.

That may be easier to understand.