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PeakTrader:

It should be noted, there’s huge foreign demand for U.S. dollars and most of those dollars flow back to the U.S., one way or another.

Income Flows from U.S. Foreign Assets and Liabilities
Federal Reserve Bank of New York
November 14, 2012

Foreign investors placed roughly $1.0 trillion in U.S. assets in 2011, pushing the total value of their claims on the United States to $20.6 trillion. Over the same period, U.S. investors placed $0.5 trillion abroad, bringing total U.S. holdings of foreign assets to $16.4 trillion. One might expect that the large gap of -$4.2 trillion between U.S. assets and liabilities would come with a substantial servicing burden. Yet U.S. income receipts easily exceed payments abroad. As we explain in this post, a key reason is that foreign investments in the United States are weighted toward interest-bearing assets currently paying a low rate of return while U.S. investments abroad are weighted toward multinationals’ foreign operations and other corporate claims earning a much higher rate of return.

U.S. investors earned a much higher rate of return on multinationals’ foreign operations and similar corporate holdings than did foreign investors here, 10.7 percent versus 5.8 percent, respectively. The superior U.S. rate of return on FDI, as well as the greater tilt in U.S. foreign investments toward FDI, accounts for the $322 billion income surplus recorded in this category in 2011…The United States has earned a substantial premium on FDI investments at least since the 1960s.

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Foreign investors pour $102 billion into U.S. assets
July 17, 2012

Foreign purchases of U.S. assets surged to $101.7 billion in May, compared with net sales of $8.2 billion in April, according to the Treasury International Capital (TIC) report. Private investors bought a total of $60.3 billion, while public institutions purchased $41.4 billion of U.S.assets.

Foreign investors bought a total of $45.9 billion of U.S. Treasury bonds and notes in May, compared with net purchases of $38.7 billion in April.

Demand for U.S. Treasury securities has been robust, with public and private investors outside the United States buying a net $464 billion over the last 12 months.

The yield on the 10-year U.S. Treasury note slid to a record low of 1.44% Monday, as ongoing signs of weak global growth kept the flight to safety alive and well. Investors tend to snap up Treasuries during times of uncertainty because they’re backed by the U.S. government.

“Despite the downgrade of U.S.sovereign debt last August and little subsequent progress on deficit reduction, foreigners remain enamored with U.S. Treasury debt,” analysts at Wells Fargo wrote in a note to clients. “Apparently, America’s fiscal problems do not look so bad when compared to the situation in Europe, which has festered for more than two years.”

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Appetite for Bonds High
September 18, 2012

The deficit also narrowed because the surplus on income—the difference between money Americans make on foreign assets and money earned by foreigners on U.S. assets—increased last quarter to $55.5 billion from $47.4 billion. Unilateral current transfers, such as foreign aid and money sent to families living abroad, rose slightly, adding to the deficit.

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Much of the U.S. trade deficit with China, which hit a record high recently, is importing our own goods.

The hidden downside of Santa’s little helpers
The Irish Times
December 21, 2002

“An investigation into the price of a Mattel Barbie doll, half of which is made in China, found that of the $10 retail price, $8 goes to transportation, marketing, retailing, wholesale and profit for Mattel.

Of the remaining $2, $1 is shared by the management and transportation in Hong Kong, and 65 cents is shared by the raw materials from Taiwan, Japan, the US and Saudi Arabia. The remaining 35 cents is earned by producers in China for providing factory sites, labour and electricity.

Toy factories hire the least-skilled workers…Sixty per cent are young women between 17 and 23 years old who live cramped in company dormitories, 15 to a room, earning just 30 cents an hour and often inhaling spray paints, glue fumes and toxic dust.”

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And the U.S. sells that Boeing 747 at a world price, while China sells those “10M small appliances at $20 each” too cheaply, to induce U.S. demand, and sells them even more cheaply over time, to maintain employment, because of diminishing U.S. marginal utility.

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The U.S. is still the largest manufacturer in the world, because U.S. multinationals produce goods all over the world. Much of those goods come back to the U.S., at lower prices and higher profits.

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http://www.aei-ideas.org/2012/12/charts-of-the-day-world-manufacturing-output-2011/#comments

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PeakTrader:

Like firms in the Agricultural and Industrial Revolutions, firms in the Information and Biotech Revolutions will produce more output with fewer inputs.

Information-Age firms already make much greater profits, compared to the 1990s, and quality has been rising faster than prices.

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Of course, maximizing volume, while reducing value somewhat, may not be optimal, e.g. many foods. However, higher incomes and lower prices of many goods allow Americans to buy more non-processed and organic foods.

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http://www.aei-ideas.org/2012/12/the-decline-of-manufacturing-is-a-global-phenomenon-and-thats-something-to-celebrate-not-compalin-about/#comments

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China’s working-age population drops in 2012
January 19, 2013

“The number of working-age people in China decreased by 3.45 million to 937.27 million in 2012 (ages 15 to 59).

China’s population stood at 1.354 billion at the end of last year, increasing 6.69 million in 2012.”

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Here’s some data from China’s National Bureau of Statistics

China’s working age population falls
Jan 18, 2013

“Almost 118 boys were born for every 100 girls.

China’s urban population rose to 712 million, up 21 million on the previous year and adding to the strains on public services, while the rural population fell 14 million to 642 million.

Average per capita income was 26,959 yuan ($4,296) in the cities, compared to 7,917 yuan in the countryside.”

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http://www.aei-ideas.org/2013/01/us-oil-production-grew-more-in-2012-than-in-any-year-in-the-history-of-the-domestic-oil-industry-back-to-1859/#comments

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