Journal roman_mir's Journal: Does China need USA more or does USA need China? 7
I am not able rightly to apprehend the kind of confusion of ideas that could provoke the following question:
-Does USA need China more, or does China need USA more?
I am even more amazed and amused by the answer that is always given to this question by various TV personalities, so called 'economists' and politicians:
- Who else is going to buy their products, obviously China needs USA more!
I don't know if they are just saying this as part of propaganda or are they really this stuck in their thinking or are they just stupid, but consumption is a trivial consequence of production.
Chinese based companies export and make their money based on cheap Chinese labor force, but this labor force wouldn't be so cheap at this point, if Chinese government was not destroying Chinese currency - Yuan.
Chinese labor is very skilled and efficient, but it is not efficient because the Chinese swivel their hands faster or some such nonsense. Chinese labor is efficient because Chinese labor has all kinds of capital invested into it - the factories, the tools, the shipment lines, all of the infrastructure makes Chinese workers extremely efficient and the more productive a worker is, the more purchasing power he should be enjoying and they should be easily consuming all of those goods they are creating.
However Chinese government is destroying the Chinese purchasing power because they are printing Yuan to buy back all of those dollars, that exporting companies deposit into Chinese banks. Of-course USD is supposed to be reserve currency, so the more reserve one has, the more of his own currency one can print in principle, however in reality the US dollar is not backed by any production of its own and it's not backed by any gold reserves that can be used to get anything back for that dollar, so Chinese government debasing Yuan is the wrong thing to do, the reserve is not really a reserve.
Of-course currency debasement is inflation, and in China, which buys a lot of raw materials and energy for production the prices for all of those raw materials immediately goes up (which in should in principle increase the production capacity of this materials, but this takes time). So Chinese government decided to combat the problem of inflation, the problem that it itself creates with every new printed Yuan by raising interest rates - price of debt, which means that Chinese government will have to pay more for sovereign debt papers of its own.
But just how STUPID should one be, to do these two things simultaneously: to produce all of these consumer goods and to give them away for currencies that are not backed by any production, and thus are worthless paper, that is printed in huge quantities to sustain failing non-producing economies of the West, and at the same time to raise interest rates for Chinese government sovereign paper and money, which means this:
1. China is providing everybody outside of the country with free products.
2. China is giving an opportunity for any currency counterfeiting foreign central government and banks to place their counterfeit, un-productive currencies into Chinese debt and collect rent from the coupons for free from Chinese tax paying producing population?
This is height of insanity!
THIS IS MADNESS!
I cannot fully comprehend the Chinese government, maybe it is trying to put the entire world on heroin of free Chinese goods, which is causing the rest of the world to lose their manufacturing bases, and then stop supplying these goods to the world and not provide them with anything any longer, but what could possibly the reason for this? To have the entire world so mad at China that the world would start a war against it?
Just how blind are the Americans and British and French etc. to believe that they are necessary to Chinese for anything at this point? (China has trade deficit with Germany, so out of all others, Germans at least are able to supply their own products that Chinese want.)
China is giving away its products for FREE and it is lending money, to vendor finance this consumption and it is allowing anybody to get high interest, so this is preventing the Chinese from buying the products that they produced and they deserve to buy, and this will cause Chinese to owe all this debt to all these foreigners that they will have to pay for with higher taxes!
Obviously China has over 3 Trillion US dollars in reserves. They can just return that paper to all that debt, but what is the point of this insane game? Useless, worthless expenditure of human resources and production and the growing unhappiness among the Chinese population with its own government, not to forget the huge gender imbalance, also caused by the government's policy of 1 child per family. This is the only real product that other countries can export to China that China would really want to import - female population.
American women and more generally, women of the West, get ready. Your future husbands are not speaking the same language as you do, start learning Mandarin.
Does USA need China more, or does China need USA m (Score:2)
Very interesting post, but I'm not crystal clear on your answer. Is it that neither really needs the other?
Re: (Score:2)
As I said, consumption is a trivial consequence of production.
Both nations need each other only if both nations can produce enough to have balanced trade. Right now China is supplying USA with many more billions of dollars worth of goods per month than USA is able to supply China with.
USA needs China much more right now to sustain its level of vendor financed consumption than China needs USA to consume the products that it creates and at the same time to provide it with money that Chinese will not be able t
Re: (Score:2)
when you print money and I don't, I lose, since my money is actually valuable, while yours isn't, and I'd really be giving stuff to you for free when we trade (through money)
Probably I don't understand something. But I think you are saying that the trader who ends up with the sound money comes out ahead in the deal.
Which to me means sound money is better than inflatable money.
I think I'd rather have sound money than inflatabucks, and I wouldn't try to make a living trading sound money for inflatable money.
But nobody has sound money, we all have inflatable money.
Poster's point, I think, is that their devaluing yuan is backed by our devaluing dollar, which puts the dollar in the
Re: (Score:2)
China isn't just giving the West stuff for free.
- yes it is. USA is printing some of that money and some of that money Chinese are lending to US, so that's the 'vendor financed consumption' part.
In return of opening up to the West, China has been able to access Western technology and knowledge.
- not in return for the products. This is done in return for cheap labor. China is paying for this with cheap labor and has been paying for it with cheap labor for over two decades now.
Chinese firms are also looking to buy Western firms and technology
- Chinese have trade deficit with Germany - that's a meaningful trade for them, they are getting more from Germany than they are supplying Germany with, but that's because Germa
Re: (Score:3)
when your workers can look at an iPad and your factory has the designs of an iPad... you telling me the Chinese aren't gonna get some ideas?
- yes, sure. Private industrial espionage happens all the time, this is not a 'payment' structure.
workers as consumers are a trivial consequence as long as the jobs are kept in China and not
- except that Chinese workers cannot afford the products that they are building for export. Of-course there are cheaper versions built for domestic consumption, no doubt, but Chinese consumers also want those same products that they build that are exported. Government destroys their purchasing power not only of those goods, but with inflation it causes food prices to go up by 15% a year.
that would mean their foreign money are worth even less than nothing. At least by printing more money, they aren't losing themselves
- the money in Chine