VelocityShares Daily 2x VIX ST ETN (TVIX)

[Miracleman 1]

Good post and points. China, the biggest foreign creditor of the United States, owns a truckload of our government bonds. Over the past several weeks, it’s been selling some of those bonds to prop up their currency, the yuan. There has been an alert issued by the IMF for US Bondholders to be aware of the higher risks associated with China selling off massive amounts of US Bonds in an attempt to pump more funds into China's market.

This is supposed to signal the end of the dollar. As the Chinese put our bonds out for the bid, interest rates are going to shoot higher, driving down the value of the greenback and making imports unaffordable. At least, that’s what dollar haters have expected for years.

As for the ace in the hole, the same group that’s failingly tinkered with the economy can always step in. If the Fed felt that the Chinese were going to sell a block of bonds that would destabilize the markets, the Fed could always buy the bonds directly, adding them to their already-swollen inventory of U.S. Treasuries.

So, unless we devalue our currency to make US products more competitively priced abroad, our market will tank for sure. It's impossible for China to prevent a busted bubble in their economy when it has already busted. The problems in China's economy will last many months and possibly years. Also, the US market is certainly going to experience much more volatility. We've already seen a huge increase in the VIX as investors don't trust the upswing.