The Beginning Of The End

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Historians tell us that by the very end of the Roman Empire, goods were pouring into Rome from all over the known world, but about the only thing being sent out of Rome was human waste and garbage.  America has not yet reached that point, but we are certainly well on our way.  In 2010, the number one U.S. export to China is "scrap and trash".  Yes, you read the correctly.  The number one thing that China buys from us is our garbage.  According to author Clyde Prestowitz, China's number one export to the U.S. is computer equipment (nearly $50 billion) while our number one export to them is waste paper and scrap metal (approximately $8 billion).  When it comes to world trade, China is literally wiping the floor with the United States.  In August, the U.S. trade deficit with China set a new one month record of $28 billion dollars.  Our insane trade policies are making China (along with several of our other "trade partners") incredibly wealthy, and the U.S. government ends up begging China to lend that money back to us to fund the exploding U.S. national debt.  That just isn't stupidity - that is insanity.

The truth is that our "twin deficits" are literally bankrupting this nation.  We are completely and totally destroying the economic future of our children and grandchildren.

But hey, the Vikings beat the Cowboys, Dancing With The Stars is heating up and we all have a bunch of DVDs to get caught up on so why worry ourselves, right?

Unfortunately, the reality is that we can't afford to be "comfortably numb" any longer if we hope to have any kind of a future.

It is time to wake up people.

Sadly, a significant percentage of young Americans these days can't even tell you what a "trade deficit" is. 

If you don't believe this, just try a little experiment some time.  Just go up to a few young Americans on the street and ask them to define "trade deficit" for you.

But fortunately, the vast majority of the readers of this column are quite informed.  Unfortunately, I still don't believe that most of you really understand how incredibly dangerous the trade deficit is.



Between 2000 and 2009, America's trade deficit with China skyrocketed nearly 300 percent.  Wealth, factories and jobs are leaving the United States at an astounding pace.  The danger that this represents to our economy is so vast that it is hard to even describe.

If you ever find yourself in a debate with proponents of "free trade", you can almost always get them to eventually admit that "free trade" will raise the standard of living for workers in countries like China while significantly lowering the standard of living for U.S. workers, but that this must be done for the good of the emerging "global economy".

Of course U.S politicians never really mention this nasty little fact when they give speeches about how wonderful our trade policies are.  They never really get around to mentioning that "free trade" is one of the key foundations of "globalism" and that we are being merged into a one world economy.

Today, American workers do not just compete with other American workers.  Instead, U.S. workers now find themselves in direct competition for jobs with workers in China that makes less than a tenth of what an American worker would make.  In China, a garment worker makes approximately 86 cents an hour.  Apple iPhones are manufactured in China by workers making about 293 dollars a month (and that was after a big raise).

So exactly how long do you think you and your family would be able to survive on 293 dollars a month?

But unfortunately, millions more Americans will lose their jobs and millions more Americans will be forced to take a cut in pay in order to compete in the new global economy.


The sad truth is that it is NOT a good time to be a blue collar worker in America.  If your job does not get offshored or outsourced, then it is likely to be made obsolete by computers and automation. 

The need for manual labor is rapidly declining in today's world.  For example, there is a Japanese firm called Fanuc, Ltd. that actually has industrial robots manufacturing other industrial robots in a “lights out” factory.

How bizarre is that?

But things wouldn't be quite as bad for U.S. workers if China was not cheating so badly.  The truth is that they just do not play the game fairly.

For instance, it is estimated that the Chinese government is keeping China's currency valued about 40 percent lower than it should be.  This is essentially a de facto subsidy to China's exporters.

There has been a little bit of rumbling in the Obama administration about this in recent weeks, but it is quite unlikely that they will push China too far on this issue.  After all, the Obama administration desperately needs China to keep loaning us massive quantities of money so that we can keep funding our runaway debt.

If you sit back and objectively analyze the facts, it quickly becomes undeniable that China is beating the living crap out of us economically.  In fact, one prominent economist is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040 if current trends continue.

This all could have been turned around a decade or two ago, but now China has us by the throat.  At any time, China could decide to start selling off massive quantities of U.S. Treasuries.  At any time, China could decide to cut off our supply of rare earth elements (of which they have a virtual monopoly).   

China is now even the number one supplier of components that are critical to the operation of U.S. defense systems.  How smart were we to allow that to happen?

It is a direct threat to national security for China to have so much leverage over us.  But you rarely hear anyone talking about this.

The truth is that trade with China is not a left/right issue.  As I have written about previously, it is impossible for any self-respecting conservative to justify our trade policies with China and it is impossible for any self-respecting liberal to justify our trade policies with China.

Yet very few current members of the U.S. Congress ever discuss the possibility of sweeping changes to our trade policies.

So we will continue to lose thousands of factories, we will continue to lose millions of jobs and we will continue to see the biggest transfer of wealth in the history of the world accelerate.

So do any of you think that I am wrong about this?  Please feel free to leave a comment with your opinion below....

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  • Logosfera

    I read this blog every day. While I arguments for the economic collapse I don’t agree with some of the solution. Regulating trade is not something that brings something good to the economy in the long run (btw, have you read “Economics in one lesson”?)
    You say that iphone are produced by people that earn 293 a month. What would be the price if would be produced in US by people earning 3000 a month, considering that now iphone is 299. How many people would afford it? At that price I don’t think iphone would exist. I could well live only in US if you prevent Samsung and Nokia to be imported. Since very few people would buy iphone the need for iphone apps would be that less lower. The jobs gained by people who make iphone would be lost by people creating iphone apps.

    Don’t think for a minute that isolating the US economy would prevent the economic collapse. Other countries tried it too, in order to secure jobs. They failed misarably because when you prevent products to cross your border, they will prevent your products to cross their border.

    As for the complaint that the US citizens would not be able to live with 293$/month well… the quantity of money has little to do with it’s purchase power. Do you think that rent in China is 1500$/month (as it is in Miami)?

    10 years ago, in my country, I was a graphic designer payed 150$/month at a company that was delivering projects to US.

  • afsar

    Is there a forum to discuss this issue? People don’t understand the gravity of this problem.

  • Brunolem

    The US won’t react politically or economically against China. It doesn’t really know how to do that. The US is not into subtlety. It is more about beating the bush, as in using its military power.

    Sure, the US is not declaring war on China tomorrow, or even next year.

    But tensions will rise slowly, more and more pressure will be put on, say, North Korea.

    Then, something unacceptable will happen, involving, say, North Korea (the US are very good in “getting” events opening them a way to war).

    And tensions with China will rise to unsustainable levels and so on…

    The actual situation between the US, the champion, and China, its challenger, can end up in many ways, but I favor 2 options: either war, as described above, or decadence, the US following in the steps of the Roman Empire, albeit at a much faster pace.

    Only time will tell…

  • Maria

    Just one thing…


    2040! We aren’t going to MAKE IT to 2040 if circumstances don’t START improving RIGHT NOW! Current trends are unsustainable, and unfortunately, no one can fix this problem.

    My old desktop computer “crashed” a few weeks ago. It had been showing signs of having problems for a while, but I just kept limping along with it…thinking I would fix it later. I waited too long. I had to completely erase the hard drive and reload the old operating software. It works like new now, but I lost everything I had stored in it.

    That is exactly what is happening to the world economy right now…it is crashing. Soon, we will wake up one day…and the system will be completely locked up.

    We are going to have to completely wipe the slate clean and start over.

  • jeff

    anyone who does not see that this state of affairs has arisen by design underestimates the psychopaths who have been misleading us all for generations. the design is to polarize the globe in perpetual war, by stealth and deceit transferring all access to material wealth in the western sphere, such that the new world order as envisioned will appear, as if conjured, in the aftermath, with the rest of us enslaved.

  • Flubadub

    Does anyone remember the halcyon days of granting “most favored nation” trading status to countries like China on an annual basis predicated on a country’s human rights record? U.S. corporations were far less likely to pick up stakes and relocate to a country from which our government could decide to ban imports if something like a Tiananmen Square massacre were to occur. With China now in the WTO the flood gates are open and the race is on to move your company’s equipment to Asia or abandon it entirely for new assets built or purchased there. The link below will take you to the Census bureau’s statistics on our trade deficit with China for each year since 1985 when it was just $6 million for the entire year!

    The next time you hear the likes of Cavuto, Kudlow or Forbes tell you how tax cuts will incentivize business to invest in new plants and equipment you should realize that the plants will likely be on foreign shores and or the equipment will consist of technologies designed to replace American labor.

  • William

    Well, if America could add those who supported the illegal and immoral war of choice in Iraq to the trash exported to China, America would be much better off and on the way to recovery.

  • Obambiman

    I think that this article is far too alarmist. Empires always rise and fall, and people get over their demise pretty quickly. Think of the bright side: millions of Americans will now have enough time on their hands to learn and master Chinese – the global language of the future – and, if you run some practical and down-to-earth articles on topics like making a backyard steel furnace, we can get the American steel industry up and running again in our spare time. And who needs DVDs, cars, iPods, fancy clothing, shoes or appliances anyway? One Mao-style suit and a pair of sandals should be sufficient for everybody. That would slash the trade deficit, right there!

  • Durian

    Please reflect.

    Is the undervalued currency causing the following:
    1. Over lending of mortgage loan
    2. Subsequently simulating house price further
    3. Followed by more ‘creative borrowing’
    4. Leading to the collapse of housing market

    Blaming game seems to play a big part now in USA. Currency under-valuation alone couldn’t be the reason of this economic downturn.

    China is prospering by under-valuing Renminbi & ‘stealing jobs’ from all over the world including mine. The people there is very hungry for success and work damn hard, I mean very damn hard. I have seen it with my own eye and felt ashamed even my average working hour per week is 65! no joke.

    But politically it’s not a stable country. Totalitarian is playing an even bigger role now by growing power from this economic miracle. China has missed the most important part, which is the political reform. Not only it shows no sign of happening, worse suppressing it to happen.

    What USA has is the freedom and democracy system that you should be proud of and keep. This system works and last longer, and of course, China is unwilling to import.

  • happy face

    Before WW II, my father saw his grandfather burying scrap iron in a large hole he had excavated. My father asked him why he was burying it instead of selling it into the scrap metal market.
    “Because the Japanese are buying that scrap metal and we are going to war with them and I don’t want them shooting the metal we sell to them back at us.”

  • zimtran

    You’re completely right about it. In 30 years this country will be worse off than Mexico is today. The north American continent will become the poorest region of the world apart from Africa. Most of the former US states will become merely resource colonies of the Chinese global empire. China will be the sole military and economic super power and the defunct United States will be the laughing stock of future historians. One day, cock of the walk. Next, a feather duster.

  • Gary

    blame the greedy CEO/corporations who have decimated the middle class in America which is now a banana republic. The “winners” from global trade in the USA need to compensate the losers.

  • paul

    Cash for clunkers may have been for steel export to china.

  • Mark Payne

    American politicians are imbeciles, vote out all incumbents for new imbeciles. Eventually we will get it right. A nation gets the leaders it deserves.

  • William

    All facts and opinions aside, the most important question is this; what can an average working class guy with wife and three kids making about $55,000 a year at a (so far) safe trucking job and living rent free in our underwater foreclosed house(no movement in the last 12 months)do right now in anticipation of the coming crash? My vote is food, food, food, followed by firewood and maybe some junk silver. Any ideas?

  • Leigh Kimmel

    happy face: I too was thinking about how, right before WWII, the US was selling huge amounts of scrap metal to Japan. As diplomatic relations became increasingly strained, to the point it was clear war was only a matter of time, there was discussion about blocking the exports, but special interests stubbornly dragged their heels almost to the very end.

    The Great Depression was followed by war with Japan. Will this new Depression be followed by a war with China? The only question then may well be how many nukes China has, and how reliably they work compared to ours.

  • http://theeconomiccollapse Loren

    Does anybody think the I-phone would cost 299 in France, England, Brazil, or Australia? They have some degree of tariffs against these products to protect their trade deficit. You will probably find the price around 400 to 500 in these countries. Only the US brings the cost down to rock bottom while exporting our jobs.

  • whoisbiggles

    Hi Loren,

    The cost of the i-Phone in Australia is only slighter higher than the cost in the US. When you sign up to a mobile carrier you can generally get the phone for free, at least I did.

    In Australia we have very low tariffs – which is why we don’t have much manufacturing. What we do have is highly specialised.

    Apparently our economy is doing so well because we sell iron ore and coal to China. Unfortunately the Salavation Army released a report on Monday disclosing that 1 in 10 people live in poverty.

    I would probably prefer to live in poverty here than in America. But our poverty is self induced.

    We elect a government that will give us a carbon tax, wants to put a super profits tax on mining exports – and tells people that both these taxes will be good for growth.

    So take heart in this part of the world we have also elected morons to lead us into oblivion.

  • Everything

    293???, like we did in the late 70′s, no running water, we watered and fed animals on a farm for rent, burned wood for heat, gardened, canned, made maple syrup one year. 5 loaves of bread for a dollar at the store. We had a cow for awhile, chickens, rabbits. Yes, we had some child labor going on at the time, actually Liked most of the work just fine and I’m glad I learned what earning your keep meant when I was young.
    This blog post might seem alarmist, but when Americans don’t care about buying local, sustainability, and this throw away society, no wonder it costs so much to get by in the first place. China is also a nation of savers, as are others. One day the global economy will roar again and the race to eat up all the worlds resources will again be on. You can talk up democracy all day, it is kind of great, although burdened by laws stacked so thick, and now in some ways an anti-business climate, but still, what a melting pot. The global economy will take off like a rocket again one day, it’s still a race to eat up all the worlds natural resources since they can be sold for money.

  • FreedomFirst

    Keep paying CEOS 90 million a year and then you complain about what factory workers in the U.S. make?

    Wake up. Republicans will kill the middle class for corporate profits.

  • http://TheEconomicCollapse dwk406

    There is a man who was addicted to crack. He lost all his wealth to his dealer. He had nothing left to sell to buy more crack. He asked his dealer to give him a loan, so that he could continue his habit, convincing the dealing that he had the funds, but they were tied up in securities and it would take time to convert them into money. The dealer believed him and gave him a loan. The loans became bigger and bigger. The addict was happy with his steady stream of junk, and the dealer was happy with the I.O.U.’s. Until the day of reckoning came when the dealer realized that the junkie had no more vast wealth. What will the dealer do? In real life the junkie would find himself at the bottom of the queens river. What will the dealer in our analogy do, when he finds out those I.O.U.’s are worthless?

  • Jerry

    Wow, let me share a revelation I had today…

    I was working on one of my preps today: A recently acquired used diesel pickup, as part of our continuing preparations. The purpose being, of course, to diversify our fleet between gasoline and an oldeer diesel that can run on kerosene, bio-diesel, etc. Having a variety of fueling methods will be important during the continuing societal decline/collapse.

    While at a junkyard today, getting some repair parts, in order to bring the truck up to top functionality, I actually recieved good service, as they seemed desperate for any business, to the point where I almost felt sorry for them. Except for the fact that although they were expert in older diesel pickups, their communication between themselves was almost incoherent. Most of what I heard between them sounded like a series of “huh, blu blu, yup yup, bluh bluh bluh, yep yep, etc. One, or all three may heve been on something, to include meth, since one of them was very talkative.

    I wonder if there is a relationship between the “Cash for Clunkers” program, and declining business at wrecking yards? I know that one of the side benefits for the hidden elite was the sale of larger amounts of scrap metal to China.

    Although they wrecking yard crew was very helpful, I’m still glad I posess a certain amount of ammunition (they already looked like mutant zombies. The talkative one was already using gray duct tape as finger bandages).

  • DaShui

    Why can’t we have a Communist Party too?

  • Marion McCoskey

    Are you suggesting that we should be angry at china for selling us goods at too low a price? That makes no sense other than as an excuse for the gangster government to increase taxes and regulations.

    I don’t think we should be blaming china for our problems. Getting rid of the income tax and drastically cutting defense and regulatory agencies would quickly bring us out of our “greater recession” and go a long way toward solving our balance of trade problem.

  • Drain 52

    I’m completely sympathetic to your argument here, but how the heck did you get Lew Rockwell, Mr. Free-Trade-Forever and Don’t-Worry-About-Chinese-Currency-Manipulation to run this article?

  • Dave

    “Free Trade” is not the problem (as the article seems to imply), as the term “free trade” as used in the context of this article only applies to the overseas markets.

    Free trade is EXACTLY what’s needed if we ever hope to get manufacturing back in North America. The problem that we see with this author’s blind assessment of “free trade”, is the denial of the fact that trade unions, minimum wage laws, and draconian regulation of American Industry writ large, has choked the productive life out of our economy.

    American industries have moved overseas to escape these immoral and unnecessary forces.

    Question: If all the USG’s alphabet agencies are so vitally important as they relate to “safety”, “fairness”, and all the other BS noted in the propaganda, then why is China’s economy growing at such an “alarming” rate in the absence of said wisdom?

    Free markets only work when ALL participants are FREE to ply their wares, suffer consequences for incompetence, and reap rewards for success.

    End the FED, abolish trade unions, abolish “public schools”, and beat the federal government back to it’s constitutionally limited impotence, and let free world trade flourish, as it has for 100′s of years…before the arrogance of politicians screwed it up.

  • Dave


    Isn’t “Communist Party” an Oxymoron?

  • Jackson

    No body wins a trade war. You guys should listen to what jim rogers have to say.

    Even if the RMB is undervalue, it wouldn’t do good for any fast appreciation. It would destroy American businesses if it appreciates for example … 10% a year because it would make every other thing more expensive.

    I think the politicians are playing the blame game too much especially in regards to the under value Yuan. They should put in more policies to make u.s manufacturers more competitive. Tax reduction incentives, less regulations, reducing minimum wage, reducing unions …

    They should think about population control but of course that would be political suicide right? … Even though it might be good for the nation and the planet.

  • Bastiat’s Ghost

    Why is no one talking about monetary policy with regard to trade? Mises said “money is one-half of every economic transaction.” You have the goods and services you want to purchase on one hand, and the money you want to use to do so on the other. The fact that we are FORCED at GUNPOINT to use Federal Reserve Notes makes us vulnerable to the Chinese currency peg. That ALONE is 90+% of the problem causing our trade imbalance.

    No one (except for Austrian economists) wants to tell the truth about this.

    The fact that so few Americans know the solution to most of our economic problems (abolish currency laws and the Federal Reserve) tells me that NO, people STILL have not felt enough pain to care. People STILL are not willing to come to grips with reality and what must be done. The Federal Reserve is still The Third Rail, He Who Cannot Be Named, The Man Behind the Curtain, so on and so forth. We can’t even get a proper audit of the Federal Reserve or the gold in Fort Knox.

    The fact of the matter is this country will be broken apart and shattered into at least a dozen different confederacies by the time all is said and done. And this country NEEDS to be broken up. It’s just Too Damn Big. What the hell does Washington D.C. know about California, for example? Those bureaucratic morons are standing up there saying “We don’t care if California passes Proposition 19 and legalizes Marijuana, we’re STILL going to enforce the drug laws.” Those bastards in D.C. don’t have to deal with our border problems. They don’t have to worry about criminal gangs coming in from Mexico and shooting people here. They don’t have to worry about being productive, and running a business, or having the opportunity to even start one. Who the hell are THEY to tell US in California what we can and cannot put in our bodies willingly? Especially when legalizing Marijuana would solve so many problems for California, INCLUDING our own financial problems!

    This country is doomed. It’s doomed by Big Government That Lives in Magical Fairyland Far, Far Away. We will all be thankful for and better off on our own after The Shattering, with localized government that is nearby (how the hell can I even get to D.C. to protest without taking time off from work and blowing all my money on plane tickets?).

  • Ranallo

    Trading is fine as long as we keep innovating here besides in finance and tech. Get rid of IP monopolization and reduce regulations so the next wave of tangible sectors can thrive.

    Oh ya, end the Fed! Its the bankers and their inflationary policies thru the Fed that enslave us with debt making us work more for less.

  • Frodo

    You are totally wrong about free trade. “free trade” is part of “freedom” like the freedom of consumers to buy stuff they want made somewhere else. Would it be better if we could not buy computers from China/Taiwan etc? If these computers were locked out of US market (like their low priced cars are) and we had only choices of $5,000 overpriced crappy home-made computers (analogy US cars) would we really be better off?


    You have identified a disease, but prescribed the wrong cure.

    The deficit is a problem, but you are looking at wrong, just like the Dems look at the budget deficit the wrong way (ie they think they need to increase government revenue rather than decrease spending). It is that we are buying more than we can afford. Simply that. If Americans consumed within our means, we would purchase less from china and abroad while continuing our same output. That would bring the deficit into line or at least reduce it to manageable size.
    This protectionist speech is ignorant and, frankly, scary. I am dissapointed that purported economic experts here would propose protectionist actions. Tariffs only increase the price of goods and materials. Increased prices always equal decreased output and less buying power for companies and consumers.
    Yes, China and India have many more factory jobs, but they are cheap and low skilled assembly type jobs. Here we design, test, and innovate those widgets they assemble, market them, and sell them. The things that we do produce tend to be highly technical such as airplanes, computer systems, etc.
    Finally, free trade does NOT lower our standard of living, borrowing ourselves into debt does.

    According to your logic, if I run on an icy sidewalk and slip and hit my head, I should stop running and exercising rather than just avoiding icy paths.

  • Someone

    The author of this article has shown no knowledge of economics. This author appears to think that Americans should be some sort of exception, and their 3000 a month (poverty line in CA) salaries should be protected by barriers in trade.

    Free trade is the only way. But, it will not help if one does support the fascist state, because such a state will inevitably lose in the free trade competition. Our loss in competition is the result of having fascist order, not free trade (which, by the way is far from being free).

    Fortunately, wanted or not, the nature have a way of straightening all excesses. This one excess of having an unrestricted malevolent government in supposedly free country, will not be an exception.

    I am curious on how this author’s fascist propaganda made it to the Lew’s site. May-be Lew isn’t who we think he is?

  • Empire Watcher


    Well, if you are cheering on the US Empire, then yes, that was dumb. But if you believe that this empire is bankrupting the country, as well as creating an ever watchful police state, then this might be the only way out.

    The only question is will any of us survive when the USG implodes.

  • pineywoodsfats

    “Waste paper”

    Now we know where the banksters shipped all the mortgage documents.

  • sharonsj

    The middle class has been ****** over for the last 30 years but no one was paying attention until the depression hit us. I watched exposes on “60 Minutes” (when it did investigative reporting) that showed how U.S. companies got tax breaks by pretending to be headquartered in the Bahamas. I watched shows about out of control gov’t spending on $300 hammers and $1000 toilet seats. I watched as municipalities and school systems went broke investing in derivatives (junk the stock market still sells to unsuspecting suckers).

    Nothing was ever done about any of this–certainly not by Congress, which was too busy taking bribes and campaign contributions for helping corporations get richer.

    So now most people can’t find a job or pay for their homes, and they live on soda and hot dogs because it’s all they can afford. The cost of staying warm, driving a car, and eating is set to keep going up–maybe that’s what it will take for the sheeple in this country to finally get off their asses and take to the streets.

    My advice in the meantime is to stock up on guns, ammo, food, water, and jewelry = protection, survival, barter.

  • John Spiers

    As an importer for 35 years, it is easy to spot Prestowitz’s nonsense. Comparing the dollar amount of what China sells to us (computers) versus the volume (in terms of space taken on a vessel) of what we ship to China (scrap), it sure looks alarming. But it id apples and oranges.

    There is no guarantee currency revision will make any changes, when Japan did that in the 60′s and 70s, we ended up buying all the more. Right now USA consumers are benefitting from Chinese policy, and there is no certainty our desires would yield the results intended.


    Overseas the big USA biz can avoid pointless USA regulations and pointless taxation, which at the same time crushes small biz (McDonalds got an exemption to Obamacare). Big biz can launder profits for themselves and pay off USA politicians.

    Don’t blame China for fielding smarter politicians and biz people than the USA Hamiltonian system can field. If we want to revive, we have to eliminate the subsidies and protections of USA big biz, roll back regs and taxes, so small biz can lead america back to #1. But our big biz/big govt would rather rule over ruins than serve in freedom.

    Don’t expect help from the teaparty or elections, those candidates are all ringers, as you will see within 2 years. The problem is you, yourself, not the Chinese. You can reform yourself.

  • DW

    I’m with Spiers. This article mistakes “globalism” for “free trade”. In a true free market, we’d be allowed to compete against major corporate powers on an even playing field. That means no taxation, and no subsidization, as well as no trade restrictions. This is far from the reality, where governments have been bought and paid by a few powerful businesses in an effort to concentrate trade for the few, and has resulted in the lopsided trading policies we have today. Anyone complaining that this is the result of unadulterated free-trade is seriously deluding themselves.

    China is not the real threat to our economy. Our corrupt banking system and the politicians that suck on its tit are. It’s the reason why our dollars don’t gar far here, yet go farther in China and Mexico (hence the eagerness of foreign workers).

  • Puzzled

    I’d recommend a class on basic economics.

  • SurfMan

    If we can protect America militarily why can’t we protect it commercially? Invading Armies do less damage than what the U.S. government has allowed China to do to us. Look at Detroit. It looks worse than London after WWII.

  • David Everitt-Carlson

    The largest US export is, despite you thinking computer software, and all this seeming ribbish around here, is cultural product. Music and movies. This is what keeps California and the Governator in power and made Ronald Reagan. He was head of the Screen Actors Guild before becoming President. America’s top export? Propaganda, about America!

  • WilliamCobbett

    What a mercantilist/Keynesian rant! average Chinese working stiffs don’t get $55,000 per year. They work like dogs to send cheap consumer goods to the US (and to the UK, where I live)…and increasingly worthless US dollars are all their government – not they themselves – get in return….

  • bink

    This article impies that China “owns” us through its ownership of approximately 6% of depreciating US Treasuries (American taxpayers own about 75% – aren’t we lucky!)

    When did the Chinese get ownership of the PRIVATE Federal Reserve? Are they the ones cranking out US dollars at will? So it is the Chinese we have to pay whenever a Federal Reserve note is produced for welfare AND warfare deficit-spending? As the US dollar is the world’s reserve currency, are they also history’s biggest currency manipulator?

    Having been a regular at the Lew Rockwell site for close to two years either my reading comprehension is sub-par or this article is. Anyone as confused as I am?

  • MyFirstNameIsPaul

    Yet another alarmist blog without any suggestion on how to get out of the mess, or significant contributing factors to the mess.

    What would China’s currency look like if they weren’t able to buy T-bills, i.e., if the U.S. Government didn’t run a deficit? Probably something higher, no?

    Why is it so much more expensive to live in the U.S. than elsewhere? Perhaps the crony capitalism?

    Why can’t we just move the Chinese factory workers to the U.S. and have them work here for the same wages? They would like it and we could keep a better eye on the factory’s operations.

    If we halt all imports from China, will those jobs come to the U.S. or some other developing country? The correct answer is some other developing country. China is not to blame for the trade deficit.

  • Dick Buttkiss

    “[I]t is estimated that the Chinese government is keeping China’s currency valued about 40 percent lower than it should be.”

    Who says? Not the market, since the world’s money is controlled by central banks, and central banks are BY DEFINITION currency manipulators. I mean, what is the Fed’s (failed) inflation targeting if not currency manipulation?

    Translation: Trade won’t be free until money and banking is. Period.

  • Bruce

    Regarding your statement: ” . . . if your job does not get offshored or outsourced, then it is likely to be made obsolete by computers and automation.”


    Should we outlaw tractors and force farmers to go back to using horses?

    Or ban 18-wheelers and ship all goods on trucks half that size?

    Or ban backhoes, excavators, and earth movers and make everyone go back to a pick and shovel?

    These “solutions” would end unemployment immediately!

    LOL, these are the fundamentals of understanding how economics works, and how technology makes everyone more productive. In the aggregate, automation does NOT put people out of work. Quite the opposite, it raises their standard of living.

  • Premjit lal

    I think you should check your premises again and read the “Theory of comparative advantage” by David Riccardo before condemning trade as the reason for todays problems in the United states

  • ThatDamnGood

    I like this quote.–_and_why_america_is_going_down_the_drain/

    McNally: You point out that as globalization grew, the US chose to compete on the basis of cheap labor by outsourcing. We kept the marketing and executives here and moved the manufacturing elsewhere. We’ve been playing that game for 20-30 years now. Germany chose to play the opposite game.

    Geoghegan: 30 years later the Germans are making money off of China, and China is making big time money off of us. One thing I really try to get across in the book: Many Americans think that we’ve got a trade deficit because we can’t compete with China. We’ve got a trade deficit because we can’t compete with Germany in selling things to China. Until people wake up and look at the kinds of things that the Germans are doing to keep their manufacturing base, we’re going to continue to run deficits which leave us in the clutches of foreign creditors and compromise our autonomy as a country.

    Seems like after WW2, its the Germany that finally won big, Russia and China are doing ok but Japan is on its way to become US-2.

  • Everything

    So many smart guys/gals have commented and trashed the author. Sometimes you have to read between the lines a little. For one, the industrial age is not to far along, i.e. everything still runs on steam or little explosions in metal cylinders. I mean guys like Bruce and so many others think everyone should be sitting around in an office like work environment or something someday? And, all educated up about economics, which by the way is just simply the wars we fight between real actual wars, you know, wanton destruction kinds of wars. That’s the way so many Americans think as they ride on a high standard of living unbeknownst to most people who live a life. China and India, etc. will take our garbage no problems, cheaper than extracting them out of the earth. It could just be that the author of this piece loves his country a bit more than so many other Americans do, and sees how simplicity and hard work benefits a nation. Something we lost.

  • lostinmissouri

    Why not just tell China, that all those US Treasuries they hold, can be used as scrap paper.

    It will save them the importing costs, and they can wipe their ass’s with them, since that is all they are going to be worth.

    Suck up China, this isn’t the first time you have been screwed, by western bankers.

    Don’t feel bad; We all have been screwed.

  • Bruce

    Everything wrote: “I mean guys like Bruce and so many others think everyone should be sitting around in an office like work environment or something someday?”

    Heh, not quite. I’ve been a toolmaker for 42 years, and self-employed for nearly 26. I learned toolmaking the old way, long before computers. About a dozen years ago I bought computerized machinery and was amazed at how much more productive I was. Depending on the job, I can easily do the same work I did before in 2/3 the time, and the quality is better. If I had not kept up with technology, I would have gone out of business because I wouldn’t have been competitive.

    This is what technology does — it makes people more productive. And you think this is a bad thing? If you really do, then we should abandon all technology and live like cave men? Or like people did 2,000 years ago? Or 200 years ago? What point would you go back to?

    How would NOT having indoor plumbing, cars, modern medicine, central heat, air conditioning, etc. improve our lives? Should women be forced to spend all day and half the evening in the kitchen, cooking meals with a wood stove? Do you know how hot a kitchen is when it’s 90 outside, and the only way to cook is with a woodstove? And I won’t even get into how much fun it is trying to wash dishes without running water.

    This is all pretty silly.

  • jimmy

    America SHOULD be one of the best places in the world to live, beautiful scenery, great wildlife and natural resources. It seems as if the desire to build an empire has overridden the idea of freedom and independence. I hope the USA recovers soon and builds its wealth again, from domestic resources.

    What is puzzling about the USA is that the population is armed, and when it wants to be, very assertive about liberty, the federal government has to listen to people because you cannot argue with thousands or millions of angry people who have guns.

    I will pray for america and that things improve from now on.

  • Russ

    Until America ‘mans up’ and gets China to quit undervaluing their currency, this madness will continue.

    I am a rock ribbed conservative/libertarian, but I must agree with the uberliberals on this one; we need to get assertive with China and get them to float their currency, so that it can reach it’s fair market value.
    If China refuses to float their currency (ie; allow it to trade freely on the open market), then our government should slap sanctions on Chinese imports to make up the difference.

    At the same time, America MUST own up to our financial mess and make some hard choices about taxes and spending; we MUST get our house in order !

  • Dave H

    It’s fun to blame China for currency manipulation. But who is the master manipulator? The Fed, that’s who.

    Whether through trade or war, we pump dollars into the world. Foreign central banks must do something with them. They buy our debt, and are not too happy about it with the interest rates so low.

    Why hasn’t the newly-created money gotten to those it’s supposedly intended to help — small business, consumers, etc.? Because instead it’s used to fund currency speculation. Speculators buy foreign bonds with US dollars, exacerbating the inflation export.

    If the Chinese central bank, and others, are not to lose out by buying our Fed-created inflation, their currency manipulation must keep pace with ours.

    Much as I’d like there to be a simplistic solution, blaming China for what our own Fed does won’t fix the problem. Instead, international commerce will be disrupted and the dollar’s world reserve currency status shall be destroyed. When that happens, it will no longer be even possible to export our inflation.

  • godofwar

    think we should just say ****** you china make our factories produce get people taking jobs at low rates many would still be glad to work . and get our steel mills back in line . produce our own **** **** china . stop giving aid to all theese bit th ehand that feeds them countries support gods country isreal and prosper

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