Archive for the 'china' Category

America Has No Trade Deficit

Everybody says that America has a massive trade deficit, and I will agree that it looks that way.  On closer examination, I realized that America was sending just has much value abroad as we are receiving here.  If this wasn’t the case, why would people send us the goods?  The big question is, what are we sending abroad?

 We are exporting faith in the government.  As we send more and more dollars abroad, our government is exporting the faith that its citizens have in her.  The dollar has fallen rapidly.  China is being forced to keep exert efforts to keep the value of its yuan low.  All of the dollars that China has accumulated have turned faith in the US government into faith in the government of the People’s Republic of China.  The US is still the head on international finance, but her pre-eminence is slowly being sold away for televisions and video games.  They will not sell back cheaply what they have paid so dearly for. 

Why do I even care about faith in the government?  Well respected governments attract the best businesses and the cheapest capital.  The US attracts the best and the brightest from around the world, with their ideas and expertise.   Investors all over the world accept below average returns from the US because of the below average risks.  A secure, stable, and low tax  environment for operations is one the best resources available.  The US has eliminated the work and thrift ethics that first lead to the accumulation of capital here, and now they are selling away the trusted environment that was built up through years of steady work, thrift, and available capital. 

There are  a lot of things that we could leave for our children.  The beautiful environment, education, and happiness are all fantastic, but they will be bought from underneath our children unless we leave them work ethic, thriftiness, and a little capital in the country that we haven’t sold to the chinese.