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georgiaright.com - Jan 7 2010 Rise of the Tiger “The cities in China are filthy. They don’t even manufacture brooms. They sweep the streets with twigs bound together with twine.” Such is the absurd economic analysis that one stock broker gave me for why China is not a thriving economy. On the other hand while the Obama administration is nationalizing our banks, energy sector, and car industry [the last of the manufacturing assembly sector], China is creating a vibrant economy that relies more on the free market then does the United States. “As the United States dithers, East Asia has moved forward on market liberalization with a vengeance, creating the biggest free trade zones seen in years. The train is pulling out of the station, and America isn't on board, says Investor's Business Daily (IBD).” The NY Times recently reported that China’s economy is growing much more rapidly than those in Europe and the United States. China has recently surpassed Germany and is closing in on the United States in the final stretch of the race to world leader in manufacturing. Asia is now taking economic giant steps toward forming a cohesive eastern block market having scrapped 7,000 tariffs, forming a $200 billion open market for 2 billion consumers. Those who still think that China needs American dollars to survive are living in denial or believing the propaganda of stock brokers who are not licensed to trade directly in foreign markets like Australia and New Zealand. The Asian block has just opened a new free trade route with those two countries, which will grow their export market by an estimated $50 billion and create more than 600 million more consumers. That market is twice the number of all potential consumers in the United States. Does anyone really believe that the currency of a deindustrialized nation like the United States can possible compete with the currency of foreign competitors that produce wealth in the form of commodities that they distribute throughout the world. The US Dollar is not used to purchase foreign goods. Its only value is to purchase goods manufactured in the United States. For the past 30 years the economy has survived upon debt creation by the Federal Reserve. This is not a formula for success. Given that the US owes China alone $3.1 Trillion US Dollars, assuming that China will collect those dollars at maturity, where are they going to spend them? The answer should be obvious. The quantity and velocity of the future glut of US Dollars competing for domestic assets will eventually, and I believe sooner than later, cause the dollar to inflate to the point where the US dollar lined up end to end will be worth less than a equal length of toilet paper. |