“”The United States is going to China and saying: we want you to commit economic suicide, just like Japan did. We want you to follow the same thing: we want you to revalue your currency, we want you to squeeze your companies, we want you to go bankrupt,” says Michael Hudson, Financial Times contributor. “Well, you can imagine what the Chinese are saying. They’re laughing! They’re thinking, are you guys joking?”
And yet Washington stands accused of allowing its own dollar to dwindle, roiling emerging markets whose own currencies are rising strongly and damaging their export competitiveness.
Complaints intensified after the Federal Reserve announced a second print-run of $US 600 billion – the “quantitative easing” designed to get cash flowing. However, other economies worry it will flood their markets. Above paragraphs sourced.
While the average Chinese citizen may not yet borrow money like the average North American citizen, we’d be foolish to not expect that day to come. They are modernizing/catching up to and/or surpassing our lifestyle per capita in leaps and bounds. Remember that they are a developing nation with many more of its citizens aspiring to lifestyles and its attachments like our own.
As that day approaches fast, the developed nations have to hope they have learned from our peaks and troughs and manage their own inevitable inflation of wages and supplies. It will affect us in every way in the form of what we owe them financially and for goods and services we already depend on. While we currently hold to the dependency of the health of the American economy (yikes), that dependency will eventually transfer to China and soon after India.
For the anti-free traders (we know its not really free) expressed on these postings: If you’re in the expectation or belief we don’t need these arrangements, we will be left in a bad corner without them. Granted, the agreements have to suit our needs as best as possible, its best we knit some of those deals now while we still hold some of the cards.
We, everyone in developed nations, experienced several years of phenomenal “growth,” bought and paid for with enormous amounts of debt. We took sales from 2010, 2011, 2012, 2013, 2014…and crammed them into 2006, 2007 and 2008. So everything rallied, especially real estate. As real estate rallied, it created fake wealth. However, it created wealth that could still be borrowed against. So many home owners borrowed against their house and bought, bought, bought.
If we took sales from 2010 to 2014 and put them into 2007 and 2008, what happens when we get to 2010? And this “growth” did not arise from any kind of actual physical production. This “growth” came from the creation of fake wealth inside the real estate market. When this was combined with the ability to borrow money for practically zero interest, everyone went on a spending spree, not just for houses, but for televisions, cars, boats AND equities. So the stock market rallied.
Eventually the fake wealth created from the phenomenal “growth” we experienced from 2005 to 2008 will implode. It doesn’t matter what China, the US, or the Eurozone does, we are all going to end up in the same place when the dust finally settles. It’s a joke that the G20 or G8 actually thinks they can fix this.