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Rufus II said...

No, the Chi-coms loan the money to our government to waste on non-productive, elite-enriching enterprises.

Then, at some point, when our industry is decimated, and we owe them more than we can repay, they "call the note."

And, of course, being unemployed, our people can't pay it, or borrow more.

The economic term for this is "Curtains."

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PeakTrader said...

Rufus II, the economic term for that is Obamanomics.

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PeakTrader said...

The article states: "In the long run imports and exports must equal each other."

A Japanese can exchange a new Toyota for a new Ford today or can wait and earn zero percent interest to buy the 2011 Ford (or something similar) in 20 years.

However, what'll likely happen is the Japanese will effectively earn less than zero percent interest (after inflation and currency exchange rates) and receive a $5,000 U.S. biotech drug in 20 years in exchange for the $20,000 Toyota sold today.

Or the Japanese may sell his or her assets, exchange yen for dollars, and retire in Hawaii, etc.

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Buddy R Pacifico said...

"Exports pay for Imports".

Ok, I buy that. We have had massive trade deficits with China the last decade (duh). As the most advanced economy in the universe, the #1 U.S. export to China is: Oilseed products led by soybeans (2009 U.S. taxpayer subsidy of $1.9 billion).

In 2009, the last available year for compiled reports, steel and iron scrap led export growth to China at a 36% increase. Exports, that pay for Chinese imports into the U.S., are skewing to Third World classification.

High-Tech and creative products are shut out to a great extent becuase of lack of or lax intellectual property (ip) protection. Without IP protection in export markets, the U.S. marches mindlessly to feudalism and sharecropping.

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PeakTrader said...

The U.S. is rich in natural resources.

Also, if reverse engineering works so well, why aren't the Chinese building Toyotas?

Moreover, a worker earning $3,000 a year can't buy the same goods, or the same quantity of goods, as someone earning $45,000 a year (comparing a hard currency at world prices instead of PPP).

Top U.S. Exports to China 2009

Electrical machinery and equipment.
Oil seeds and oleaginous fruits.
Power generation equipment.
Air and spacecraft.
Plastics and articles thereof.
Optics and medical equipment.
Iron and steel.
Pulp and paperboard.
Organic chemicals.
Vehicles, excluding railway.

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Michael said...

Why are we sending steel to China only to import steel from China?

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Ron H. said...

Michael,

"Why are we sending steel to China only to import steel from China?"

The short answer is that it's cheaper than reprocessing it in this country.