China's economy is not as fantastic as you think. And it's past time to choose a sustainable economic future for America. Choose wisely.
If you think our economy is fubar -- try China's!
China MUST sustain >7% annual GDP growth just to keep the lid on
-- i.e. to create enough new jobs to satisfy it's horrendous overpopulation.
And China cannot allow its currency, the yuan, to increase substantially against the dollar by allowing it to float at market determined exchange rates because doing so would render its U.S. exports 30-40% more expensive and all the U.S. paper (debt) it's holding would be worth 30-40% less.
So China's central bank MUST buy ever more US bonds as the Republican generated Federal deficit grows larger and the U.S. carries ever more paper to finance it. Unfortunately, China would much rather invest more in long-term/renewable energy and stable, less fungible assets like copper and gold.
In other words, the US and China are locked in a vicious, unsustainable, mercantilistic struggle, but to date few seem willing to jump off the gerbil-wheel (until I guess the whole cage collapses).
Jim Jubak predicts
2009 is the year China implodes econcomically and politically (and probably takes the world economy with it as well, though Europe will probably be least impacted due to better planning, lower dependence on inflationary growth, greater economic containment, and basically more mature, practiced and realized basic human intelligence.)
Strangely, it's all happening:
- Commodity (e.g. gold and oil) and real asset (e.g. housing) inflation
- bubble growth (e.g. dot.com, housing)
- economic collapse?
just like
Daily Reckoning, Richard Russel of
Dow Theory Letters,
Lawrence Kotlikoff and many others have predicted since the late 90s...
I guess it just proves that no one is more stupid than people -- especially Americans. (After all, the Chinese are newer at this capitalism stuff and can perhaps be granted a bit more forgiveness. Also China's staggering problems: overpopulation, pollution, shortage of land, political repression, etc. are far more substantial than those of the US -- which IMO could be just fine -- if we could simply learn to live sustainably and equitably, within the framework of a rational economy valuing biosphere/resource preservation and simple, basic human values rather than greed, exploitation and dissipation.)
At this point (and perhaps it's already too late), the only thing that could stave off impending economic doom is for the US to undergo a bubble-purging recession as well as an immediate and substantial reduction/elimination of debt and reduction of M2 (money supply). The operative terms here are austerity and self-control, folks, as our grandparents once practiced. In other words, intelligent planning and mild/moderate economic pain could have prevented the bubble-world economy of today.
So what to do now?
For one, we should be starving China's wage deflating, planet destroying production/labor frenzy instead of feeding it. This would speedup and somewhat mitigate China's eventual bubble-collapse -- because essentially the U.S. is China's consumer class. China does not really have one of its own yet (only 33% of GDP compared to our 67% GDP from individual consumption).
And one nice thing about an economy based 2/3 on consumption is that much (50% or more?) of it in the aggregate is discretionary -- i.e. you probably really can do without the flat-screen plasma TV and razer-phone you just put on your credit card and actually survive, just like your grandparents did -- perhaps even thrive living sustainably and sharing assets instead of a.) stealing (e.g. CEOs, corporations), b.) consuming (you and me) c.) overpaying (inflation) for all goods and services (e.g. energy, housing, health care, transportation) or d.) all of the above.
So do you want to live well but with (perhaps) less (material excess and incumbent economic/financial stress) or do you want more, more, more: bubbles, collapses, (probably) armageddon-like wars, environmental catastrophes, political/social struggles and ulimately forced (barrel-of-a-gun) draconian austerity?
America, it's time to choose. For once in a long, long time, please, choose wisely!