Will China be great……
Does this ever come to your mind that you can just print money? Actually, once you have controlled the money printer, your hands are tied. The more money you printed, the less value the notes hold and what’s worse, if the notes holders found out that the note bills is going to depreciate more, they will try to get rid of all the notes the hold, finally there won’t be anyone is taking in the unwanted money and then the note bills is just paper and your money printer will be just printer.
So, USD became international currency because the US was rich and powerful. USD then hold both international and domestic roles. As the international settlement currency, USD could be printed by US government to purchase directly from the international market, and US literally could trade many things from other countries by paper note, consider that most country keep USD as international currency reserve. It’s quite lucrative to keep USD’s dominant role as international settlement currency.
It works like the same way. When the global economy rises, more and more currency is in need to satisfy the trade, US government has to pour more USD to the international market or the USD will appreciate and the US export will be affected. Then US government has to pour money to the international pool by cheap loan to the business bank or other organizations, anyway, it ends up to that there is affluent money in the America market. So In some period, American people can have all those cheap credit and they purchase and spend much rather to take their part in this party, they just can, it’s called America Dream, because in this period, you can make money by doing almost everything, just because there is plenty money.
They have already did it, literally poured money into the market. With the world economy rising, USD’s international role will surpass its domestic one if the international trade volume is bigger than the US domestic one. There is a river over American’s head. If ever those USD around the world come back to US domain in a relatively high rate, the USD will depreciate and then everything just vaporizes. So, there is supposed to be a buffer, which will sponge all that money flow back US domain. If you are government, you can just do it easily take all those money in by signing some paper which is national debt. So in some period, US government is absurdly ample with money they just don’t know what to do with those money as you cannot just spend it domestically because there is already affluent money in the country. Back to the first place, what is that qualified USD as the international settlement currency? Rich and powerful. Then came all those military bases and the wars about oil, port and all those who want to become a superpower. Democracy you may want, you have to buy it with USD.
Back to our course, a sponge is not a blackhole which means it has its limit. Debt expired, you cannot pay the debt by printing more money and keep the USD value steady in the same time. All those financial derivative could slow but not stop the payday coming. So one of the most important responsibilities for the president of US is to rat on its debt or steal or rob some money, like I have said your hands are tied, you just cannot print the green back while keeping the USD value steady. Remember 97 southeast Asia economic crisis. What did happen at last was some small countries’ foreign currency reserve dissolved. The so-called crisis is just because the Americans consumed much but they produce little and when this situation accumulates, it surly ends up in crisis. If it didn’t rob some other country, it will be doomed. The circle works like print money, issue ND, rat on debt or rob. It worked well until . Well, do you remember the 2007 financial crisis and after that China has come to your sight more and more frequently. It’s accident or just because China had hold more and more USD reserve and US just cannot rat on the debt or rob China? Which won’t surprise us if it has to be China to write off some US national debt to salvage the American economy or the world’s economy. If you are the biggest player of a game, you cannot win if the game break itself.
I’m not saying that American people are lazy or what. It’s just that after all those years cozy and ample credit way of life, is there any entrepreneurship left among the whole country, is diligence still counts in the society, which promise rich and progress in the long run.
Credit is just like taking drugs, can you survive without it when your life is already in a mess. If the US is in a trade deficit, it’s not because other countries cheated, it’s because US have already decided to poured all that money out but they didn’t produce that much in exchange. It’s quite absurd if you take it clearly into your mind that someone borrowed from you to live a fancy life beyond their reach and then when the debt expired it just curse you rob him of his job because you work hard while he lives cozy and easy.
If you have followed so far, it will jump to your mind if one certain currency wants to act as an international settlement, its country has to export much, or it will end up in a rather fraud like shelling note bill. Talking about this, the second opium war between China and those western countries come to my mind directly. After the first opium war China had been forced to trade with those countries but after a while the western countries found themselves in trade deficit then came the second opium war. It’s karma. So, today, will there be a war between China and Uncle Sam? It’s about trade deficit. And it’s about the next dominant international settlement currency.
Can US afford a wrestle with China? Like I have said, USD is based on the Uncle Sam Idol, if ever there is a sign that the war will touch the US domain, USD cannot buy on the world market and then the country will soon be doomed. It’s quite simple can Americans survive without made in China, they can’t, they can’t in peace time, and they can’t in war time. The intact and mighty image of Uncle Sam cannot be sabotaged by surviving purpose, then you can understand why extremists launch all those terrorism in the US, because if they can sabotage the image, they can make Uncle Sam old and weak whether it was or not before they succeed.
Though Trump said he would bring job back from China. It’s kind of funny. When the president of the US is relatively a one-time job, since 1999 when China change its blue fourth version 100-yuan bill into red fifth version one, which define itself from the USD notes. Maybe it’s just an accident, maybe from that time, China’s government had set up a plan to overtake US’s position.