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Trade what? True wealth is created by manufacturing, not zero net gain service sector jobs.
Its funny that you suggest you understand something, yet don't seem to understand any of the implications. If the US has nothing to trade then there is no issue! The US does not have to compete in this case as nobody in the US will be able to purchase the goods made in other countries.
Someone in the US can only purchase a good made in country X if there is someone in country X willing to trade his local currency for US dollars to in turn produce US goods (they could just put the dollars in their mattress, but in this case the US is getting free goods for paper).
But this claim often made on this forum is not accurate at all. The US produces all sorts of goods and services and has a robust export sector. The US is one of the largest exports of goods and services.
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Originally Posted by jimhcom
This country became wealthy when it became a manufacturing power,
Manufacturing has been transformed by technology, even if some manufacturing came back to the US it would never employ the same level of people it did in the past.
All the silly claims made about manufacturing can be said about farming and industrial production if you go back further.
Someone in the US can only purchase a good made in country X if there is someone in country X willing to trade his local currency for US dollars to in turn produce US goods (they could just put the dollars in their mattress, but in this case the US is getting free goods for paper).
But this claim often made on this forum is not accurate at all. The US produces all sorts of goods and services and has a robust export sector. The US is one of the largest exports of goods and services.
The problem lies in the fact that a large part of the dollars they are receiving are not going into the loop as you are suggesting. They are instead going into purchasing US debt which is becoming our only real growth industry. A portion of those dollars are also being used to buy up US assets, such as ports, controlling interests in formerly US owned companies and US real estate. While the US may have one of the largest export sectors, it at one time was "the largest" and is now shrinking and will continue to shrink until something is done to reverse the ongoing trend.
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Manufacturing has been transformed by technology, even if some manufacturing came back to the US it would never employ the same level of people it did in the past.
All the silly claims made about manufacturing can be said about farming and industrial production if you go back further.
Because we cannot obtain the levels of the past is no excuse not to bring every job we can back to our country. Job creation is expediential. Every job created requires others to be employed supporting that position. You cannot equate farming to manufacturing. With the exception of crops like tobacco, and grains, that could be exported, farming did not produce income from outside sources.
This country is clearly going in the wrong direction; the rhetoric from idiot economists who believe in ever increasing debt is the road to prosperity has been clearly shown to be lies and fantasies for the gullible. It is now time to change course and to do what is best for the US and for its people.
The problem lies in the fact that a large part of the dollars they are receiving are not going into the loop as you are suggesting.
Which means at the end of the day the US is getting a bunch of free goods. Although China's currency manipulate distorts the labor market, it is not reducing our standard of living. Rather the opposite, the Chinese are essentially giving us free goods as a way to stimulate their economy.
If China started to freely float its currency tomorrow the US would likely observe a reduction in standard of living as the flow of free goods would stop.
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Originally Posted by jimhcom
Because we cannot obtain the levels of the past is no excuse not to bring every job we can back to our country.
This is again the "I want my cake and eat it too" thinking. You can't bring jobs back without losing jobs in export industries. I have no idea why you guys think bringing back a bunch of low-skill manufacturing jobs at the cost of higher paid and higher skilled export jobs makes any sense at all.
One of the reasons the US had such a large manufacturing base in the past was that it, like China is doing now, borrowed money to other nations so it could purchase US goods. Such policies are not sustainable for the US, nor are they sustainable for China today.
Which means at the end of the day the US is getting a bunch of free goods. Although China's currency manipulate distorts the labor market, it is not reducing our standard of living. Rather the opposite, the Chinese are essentially giving us free goods as a way to stimulate their economy.
Your joking right? You think we are getting all this stuff for free? Tell that to the 12 million people out of work. Tell that to the millions of people who have lost their homes and everything they worked decades to build. Tell that to the people who now work for a Chinese owned company. Tell that to the taxpayers that will be paying a ever increasing of part of every paycheck in taxes to pay interest to China for a hundred years to come. If you believe there is such a thing as a free lunch you are a true idiot.
What people are you talking about? It is only recently that the unemployment rate has been high and the current recession was not caused by getting free crap from China.
No where am I suggesting that the lunch is free, the point is that the lunch is being paid for by China. They are shipping us goods and in return we are giving them paper. The Chinese have two options after they stop running surpluses:
1.) They can bury their dollars in a ditch
2.) They can use their dollars to purchase US based goods/services.
If 1.) then the US has truly received free goods. If 2.) the US has merely received on advance on its goods and will now have to produce things China wants. But for many Americans that is going to a be problem, the Chinese are going to want actual innovate products and many Americans have become accustom to free cheese and rent seeking.
Anyhow, the problem with Chinese policies is not that they produce unemployment in the US but rather that they tend to distort the labor market in the US. Some industries have grown much too big (e.g., finance) while others have gotten too small and once the flow of goods from China is turned off labor will have to be reallocated. But for most generations of Americans this is going to sting, the only generation that is actually accustom to hard honest work is largely dead!
The Boomers, Gen-X and Gen-Y are collectively loafers, though in different ways.
No it is not. Our creditors are holding the notes on it, and they intend to collect.
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the US has merely received on advance on its goods and will now have to produce things China wants.
This is partly true. The US has received an advance on the goods, but the note holders do not want payment in what we produce, they want payment in real tangible assets such as businesses and real estate. The dollars are being used to purchase debt private and public. What most people do not understand is that according to Income Tax laws the people of the US are directly responsible for the debts of the government. In the event of government default on its debts, such as happened in 1933, the people’s assets can have liens placed against them to satisfy that debt. The people of Iceland are now facing that scenario. Most of the trade deficit was purchased with borrowed money using home mortgages. The government has now assumed most of that debt by the take over of Freddie Mac and Fanny Mae, therefore the majority of the debt is now public and subject to liens on all of our assets instead of the people who actually incurred them.
No it is not. Our creditors are holding the notes on it, and they intend to collect.
You'll notice that I said we are getting free products, not free money. The principle on the loans is money they borrowed us, the interest on the loans does not even come close to the number of free products we've gotten as a result of Chinese trade policy. Does this deal sound good?
You borrow me $100 for 10 years and I pay a few percentage interest, but for doing this you also give me $80 in free products.
Sounds pretty good to me.
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Originally Posted by jimhcom
but the note holders do not want payment in what we produce, they want payment in real tangible assets such as businesses and real estate.
Hate to break it to you but a business is not a tangible entity, it is an abstract structure. And why would they want US real estate?
But the Chinese certainly will (and have) purchased US businesses and brands. Don't think for a second they are not going to get royally ripped off when doing so though.
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Originally Posted by jimhcom
The dollars are being used to purchase debt private and public.
If China stops running a trade surplus with the US there will be no more dollars for them to purchase US debt with. This is what they are doing now to manipulate their currency.
Quote:
Originally Posted by jimhcom
the people’s assets can have liens placed against them to satisfy that debt.
Give me a break this is nonsense.
The US is borrowing in its own currency as a result it would never default, it could always inflate to avoid defaulting.
You'll notice that I said we are getting free products, not free money. The principle on the loans is money they borrowed us, the interest on the loans does not even come close to the number of free products we've gotten as a result of Chinese trade policy. Does this deal sound good?
You borrow me $100 for 10 years and I pay a few percentage interest, but for doing this you also give me $80 in free products.
Sounds pretty good to me.
As "try some, buy some" sounds good to a crack addict.
On the more consumer side, 0% interest credit cards sounded like a good thing, too.
Neither the crack addict nor the credit card addict come out well served by your "business plan."
After we have disabled ourselves and can no longer produce even enough to take care of ourselves, and floated our debt around the world, the bill comes due.
When it comes due your $80 worth of "products," will be in the junk yard, and China, et al, have the production capacity, the money, and the capacity to buy and own the underlying resources.
Great Plan you have there -- Want $80 worth of cheap junk? I have a bargain for you.
In 1970 manufacturing was almost 23% of our GDP.
After almost 40 years of globalism, offshoring, NAFTA type laws...
In 2008 manufacturing is 11% of our GDP
Our GDP is based on consuming not producing.
You cannot consume infinitely without producing in return.
The current state of US economics points that out. When your consumers are tapped out what do you do ?
In 1970 manufacturing was almost 23% of our GDP.
After almost 40 years of globalism, offshoring, NAFTA type laws...
In 2008 manufacturing is 11% of our GDP
Our GDP is based on consuming not producing.
You cannot consume infinitely without producing in return.
The current state of US economics points that out. When your consumers are tapped out what do you do ?
Very interesting article. There's a lot of truth in it.
Judging by what I continue to read on this forum, many people have fallen deeply for the idea of something for nothing. That is the root cause of all of this. My mother used to tell me that when people got flim-flammed in one way or another, the underlying reason for their vulnerability was greed. It was so true. We have been flim-flammed and it's our own fault, because we thought we were entitled to get something for nothing. We have to stop depending on banks and credit card companies in an inappropriate way, and we'll be much better off. That dependency, the result of living beyond our means, is what has allowed them to do what they have done.
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