Not know much about economy, finance or international trade, I am very stressed out by the falling-out of US-China trade war and all the bickering from both sides. But let me give it a try.
President trump insists that America deserve better terms. Among many others, U.S. has required China to stop governmental supplement its high tech base, putting restriction on sensitive industry investment and provide measurable inspection on those items. U.S. want to enter its capital into agriculture and service arena in China. How outrageous this demands! Are not those terms equivalent of China asking U.S. not to use American dollar as world currency?
Some Americans claim that China took over American’s worker’s job, but it was the American corporations decided to move to China their manufacturing base! The U.S. hasn’t had a great economy since jobs offshoring began in the 1990s. Americans forget their economic situations in the 1970s, a time of hyper inflation when the rate goes as much as 20+%. The Arab oil exporting countries put oil embargos on U.S.A, the gas price resulted in high inflation and economic slowdown. All over the world, developed countries suffer high unemployment rate and inflation. Adding to the stress was the continuous cold war confrontation with Russia. That was the factors that motivated United States to initiate dialogue with China and establish normal diplomatic relationship in 1979, which eventually led to multilateral economic exchanges.
Today, Americas boasted that they have 1.5% inflation rate and 3.2% growth rates. It was the low cost goods imported from China kept Americans afloat. Without China, American had long ago bankrupted, not able to afford the kind of life style we currently had. China provided United States much needed cash flow by buying our government bonds, supporting the status of fiat U.S. dollar as world currency thus far. Some of those cash is used by Wall Street as venture capital to fund silicon valley’s indulgent into endless high-tech experiments to produce patents and so called intellectual properties. Without China buying U.S government bonds, with our national debt skyrocket, Federal reserve in worse shape than the economy as post-crisis expansion reaches a decade, the cost of cash would be very high, taking to the account of Silicon Valley’s low statistical success rate, Silicon Valley’s future development is in jeopardy. We may think that Vietnam and Mexico may be able to replace China in low price importer, but when it comes to high-end technical expertise, no one else can do the job China do at the price offered by China.
It is estimated, Trump’s current tariff will cost more than $800 dollar per household. This many not sound much for the media anchors who get high pay by BS the China unfair practices, but when you consider four in ten Americans can’t cover an unexpected $400 emergency expense, all the propaganda barrage about the great Trump economy is thrown out of the window. Does America Have an Economy or Any Sense of Reality? And if you still think America is just fine, open you mind to the analysis from some of the best experts. One the most successful Hedge Fund manager & founder of Bridgewater Associates, Ray Dalio talked about the next crashes. Renown investor Jim Rogers discuss the coming global financial crisis, what central banks will do to delay the inevitable, the dollar and de-dollarization. The New York Times best selling author of several books on next financial crisis and currency wars, James Rickards talked about preparing for the aftermaths.
The status of U.S. dollar as world currency is being questioned. Without that status, American’s living standard would be much reduced. This traced backed to August 15 1971 when U.S. unilateral dropped Gold standard established on Brentwood Agreement. Since then, U.S dollar is a fiat money backed by nothing but the faith of the world to the U.S as a trustworthy and reliable country to hold the paper greenback to its monetary value. Are USA a trustworthy country to guard their money? Forget about Save and Loan crisis of the 1980s, the Year 2000 Dotcom bust, the financial crisis of 2008 spoke well the degree of destruction to the world economy. It cost American $12.8 trillion according to some reports, and had destroyed $34.4 trillion of wealth globally by March 2009. More than ten years later, many countries had not recovered from that disaster. Even U.S. itself, after Federal reserve’s trillions and trillions of quantitative ease and piling up government debt up to its neck, we still have not resolved our fundamental issues that causing the crisis in the first place. Today, Banks and financial institutions are even bigger than (those too big to fall ones) before 2008. We have see ominous sign of treasuries yields curve reverse. Our chaotic financial systems and lassi faire management practices had put the whole world in danger, which turn back to haunt ourselves.
“You can avoid reality but not the consequences of reality.” – Ayn Rand’s motto is a reminder for Americans to think hard on their own, because the truth is sometimes a poor competitor in the market place of ideas – complicated, unsatisfying, full of dilemmas, always vulnerable to misinterpretation and abuse.