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2010 April 24 Saturday
Pat Buchanan: The Chinese Century

Move over Rover, the Chinese are taking over.

“Thank you, Hu Jintao, and thank you, China,” said Hugo Chavez, as he announced a $20 billion loan from Beijing, to be repaid in Venezuelan oil.

The Chinese just threw Chavez a life-preserver. For Venezuela is reeling from 25 percent inflation, government-induced blackouts to cope with energy shortages and an economy that shrank by 3.3 percent in 2009.

Where did China get that $20 billion? From us. From consumers at Wal-Mart. That $20 billion is 1 percent of the $2 trillion in trade surpluses Beijing has run up with the United States over two decades.

Beijing is using its trillions of dollars in reserves, piled up from exports to America, to cut deals to lock up strategic resources for the coming struggle with the United States for hegemony in Asia and the world.

Yes, we are providing the Chinese with the cash and technology they are using to out-compete us for a dwindling supply of oil and minerals. Our living standards will decline as a result.

America was once like today's China.

The Chinese of 2010 call to mind 19th century Americans who shoved aside Mexicans, Indians and Spanish to populate a continent, build a mighty nation, challenge the British Empire — superpower of the day — and swiftly move past her in manufacturing to become first nation on earth. Men were as awed by America then as they are by China today.

America seems a declining superpower. She cannot defend her borders, balance her budgets or win her wars. Her educational system at the primary and secondary level is a shambles. In the first decade of the century, she lost one of every three manufacturing jobs. In this second decade, she is looking at trillion-dollar deficits to 2020. The world is losing confidence in her ability to manage her surging national debt.

America is not going to get a grip on the situation. People want stuff now. The welfare state is too mature. Unfunded entitlements, government worker pension plans, Peak Oil, and demographic decline doom America to a sovereign debt crisis and lower living standards. Debt is going to drive up interest rates. Households with heavy credit card debt will be especially hard hit. Note the heavy indebtedness of renters in that last link. That's probably mostly credit card debt. Credit cards are a major cause of America's decline in my view. Though mortgage debt is much larger.

Share |      By Randall Parker at 2010 April 24 09:10 AM  China


Comments
The Sanity Inspector said at April 24, 2010 12:33 PM:

Glad I'm debt-free, at the moment.

Dubya said at April 24, 2010 3:20 PM:

You bet. Going in debt to the Chinese and outsouricing our manufacturing base to them has got to be one of
the stupidest things that this country has ever done. When you compound this folly with the ongoing tidal wave of immigration
from low human capital regions like Latin America and the Carribean, you have a formula for longterm decline.

Some don't think China is the new America. They think compared to us, the Chinese don't have our level of vision or innovative capability or human capital. They point out China's own serious problems with their skewed gender ratio and urban-rural wealth gap to the point where they don't agree with the comparison with 19/20th century America. I do not, however, see the need for China to be the next America. If the Chinese get to the point where we owe them untold trillions of dollars and they have our manufacturing base, they're going to be our next Soviet Union. You throw in China's massive size and you have a country that, at even a low per capita GDP, is a huge economy in absolute terms. If we continue to bring in all these immigrants, then that's going to depress our ability to maintain a high tech industrial economy and help the Chinese even further.

In the long term, we are really screwed if we don't change course. I do think that if we invest in manufacturing, stop the spending and borrowing, and get immigration under control, we can stay on top. Otherwise, game over.

To me, the Tea Party's ideology (stop immigration, decentralize power away from Washington, cut the debt) represents a chance for our country to turn this around. If the Obama crowd comes out on the top, it's done for us.

no i don't said at April 24, 2010 4:30 PM:

China... yes, but watch out for Russia and perhaps Brazil

Mark said at April 24, 2010 4:56 PM:

Oh, right. Brazil. ::rolls eyes::

no i don't said at April 24, 2010 5:17 PM:

Well, maybe you're right. Maybe not Brazil.
Perhaps... hmmmm.... the U.S. or Greece!

no i don't said at April 24, 2010 5:25 PM:

"In the long term, we are really screwed if we don't change course."

Couldn't agree with you more. Education would also be a good idea among the changes you propose.
Cheers!

Stephen said at April 24, 2010 8:35 PM:

Dubya said: "I do think that if we invest in manufacturing, stop the spending and borrowing,"

That calculus doesn't work. Slowing spending means slowing buying which means that the manufacturers have no customers, which means that they stop investing and shut down, which means that middle class employment collapses, which means that spending slows, which means...[rinse and repeat].

The US economy is like a heroin addict - each fix of consumption satisfies for a time, but ultimately increases the desire for another fix. Each fix is less effective than the last and needs to be repeated faster and faster. This is not accidental, the US economy has been deliberately designed to work this way.

Sometime within the next 30 years the addict won't be able to afford the next fix.

Stephen said at April 24, 2010 8:44 PM:

Cutting debt is another heroin addict problem for the US economy - money spent paying down debt is money not spent on consumption, again setting off the destructive cycle.

Jerry Martinosn said at April 24, 2010 10:05 PM:

When Britain entered it's sunset relative to America 80 years ago, who in Britain did well and who did not so well? I wonder this because America is in a similar position now relative to China. However, China's rise will be muted in 30 years after the one child policy ensures that they will be burdened by a huge elderly population compared to the working population.

Stephen said at April 25, 2010 12:35 AM:

Jerry said: "When Britain entered it's sunset relative to America 80 years ago, who in Britain did well and who did not so well?

The poor. In the near-medium term the poor in the UK got the NHS and free education. This allowed a steady migration from lower class to lower-middle class and from lower-middle to middle class. Those who made that migration filled the new white collar jobs as the UK transitioned from a manufacturing economy to a services economy. Of course, those who didn't make the migration had to fight over dwindling jobs in primary production and manufacturing, but the safety net ensured they wouldn't become destitute.

Also in a macro sense the poor in the UK were doubly lucky because they received a lot of their social benefits out of competition between communism and capitalism (ie capitalist countries had to improve the lot of their poor in order to make communism a less attractive alternative). Now that capitalism is the monopoly system of economic organisation, I guess that the US elites won't have that competitive spur to ensure that the lower classes don't lynch them.

A.Prole said at April 25, 2010 1:37 AM:

America and the west have one clear choice - dump the shitty 'neo-liberal' 'free-trade' economics that have wreaked so much harm over the past 30 years, and replace it with a radically different model (shades of 'co-prosperity spheres'), or face economc oblivion.
Of course, the shit-cunts ('neo-liberals') will continue to con the people and win out.

Randall Parker said at April 25, 2010 11:55 AM:

What is impressive is the sheer breadth of wrongness of US policies. Trade, banking, military adventures, immigration, energy, entitlements, public employee pensions - it is all a sight to behold.

We are fast approaching a great reckoning. We are living beyond our means. Our capacity to generate wealth is going to decline just as the bills come due.

I expect many government bankruptcies, especially in California, Illinois, New York, and New Jersey. Connecticut has a very high state debt as well. Peak Oil will replace economic growth with a several year economic contraction. It'll hit after we've already built up so much debt that the house of cards will fall apart.

Think about this from an investment standpoint. Be very careful in your choice of municipal bonds. Avoid defense industry stocks because they're facing much leaner times ahead. Medical spending growth will stop.

Dubya said at April 25, 2010 5:27 PM:

Our manufacturing base should be geared up to compete for consumers all across the world. For example, both India and China will probably have a huge markets for low cost automobiles in the coming decades. I wish we had politicians that had enough vision that would invest in encouraging big American auto companies, entrapranuers, unions, and machinists/engineers to go after the rising third world automobile market. Instead of encouraging industry and exports the way the East Asians do, our country invests in this stimulus, which is more or less a wasted trillion dollars.

Our longterm decline and China's global rise to dominance is not a foregone conclusion.
Cut the spending, balance the budget, reduce the national debt, moratorium on immigration, build a wall on our southern border and enforce our immigration laws, invest in rejuvenating our industrial base, crackdown on Wall Street's excesses, get the government off the back of our entrapranuers and industrialists, no more subprime mortgages in the name of "diversity", no more foreign adventures, etc.

After Obama's election, I wasn't quite sure what was going to happen to America. Finally though, I think we've got a break through with the Tea Parties that have errupted across the country. This is a signal to our "leaders" that we're done accepting this crap that passes as "hope" and "change" and "bipartisanship." Listen to us and stop with these machinations.

By the way, Rasmussen says Ron Paul could run even with Obama in a presidential election and it looks like his son Rand Paul will win Kentucky's Republican nomination. http://www.charlestoncitypaper.com/SouthernAvenger/archives/2010/04/14/rasmussen-2012-poll-obama-42-ron-paul-41

In Arizona, pro-moratorium Hayworth is within 5 points of McCain and McCain is now singing the praises of border security. http://www.rasmussenreports.com/public_content/politics/elections2/election_2010/election_2010_senate_elections/arizona/election_2010_arizona_republican_primary_for_senate

In Arizona, there's also been a big push to finally solve the illegal immigration problem with tough new laws. http://www.kansascity.com/2010/04/25/1902096/kc-protesters-oppose-arizona-immigration.html

Don't lose hope folks. We can win this.

NotProgressive said at April 30, 2010 11:27 PM:

China uses Sovereign banking principles (or Chartalist money). That means they print their Yuans straight out of the treasury debt free. Lincoln did the same thing with Greenbacks during the Civil War. Benjamin Franklin did the same thing with the Philadelphia colony. Wherever Sovereign debt free money is used, it is successful. Our U.S. banking system is based on debt. Virtually all new money in the U.S. that pops into existence is debt money. If you take a loan from a bank, then new debt money is created. If the Fed issues new Fed funds, then it uses a bond (bondage) to back it up. Pretty soon, we will not be able to service the interest payment on our debt, never mind the principle. If most money in circulation is debt money, then the users are in debt bondage. What you earn is siphoned away just for the privledge of using money.

A government can print new money out of thin air, and there is no penalty if unemployment reduces. In other words, you get no inflation by issuing money straight into the economy. Did you ever wonder how Germany went from being flat broke after the Weimar Republic, to being the richest nation in Europe by 1938? They used Chartalist banking principles. The people need money to transact business, and money should be viewed as infrastructure provided by government, not private banks. Private banks and their captive corporations can influence government, as is evident today in America. State banks, like that of North Dakota, are overseen by the people and have a check on their abuses. Ever wonder why North Dakota denizens are so satisfied with their lot in life, and why ND is the state in the best financial position? It is the only state with a public "state owned" bank.

The banking system is China's secret weapon. They also keep a lot of dollars in reserve in their banks. That means there can never be a bear raid on the Yuan. The Chinese can use surplus dollars to back up their currency if it is ever attacked.

The way the game is played now, is that the East Coast of China exports across the Pacific to the U.S. The American military insures trading routes are secure by using the U.S. taxpayer money to fund the Navy. China has no natural tributaries or transportation routes into their interior. They are busy building that infrastructure with rail and highways, and soon the wealth production in the East will move into the interior.

In the meantime, China knows that their population will invert due to the one child rule. They have one generation to move up the economic food chain, and become the head instead of the body. That means locking in resources around the world. It would be reasonable to expect China to build factories in other Countries once their population ages. As long as they can print money from nothing, and people around the world accept it, then there is no worries as long as actual wealth production increases.

Instead of using taxpayer money to bail out private banks, we should have nationalized the U.S. banks. Better yet, each state should have its own bank, like North Dakota. Screw the Federal Reserve, they are private bankers who make money from nothing, and make debt slaves of the U.S. citizens. Reasserting states rights would be a bulwark to the creeping Statism in the U.S.

The industrial revolution was put into hyperdrive with the information high tech revolution. The world is producing wealth now at an astounding rate, and yet we are getting poorer? That is because our money system does not serve us, but instead serves the money masters. A crushing debt burden means most wealth is siphoned off. China's money system better serves its people, and is the key reason for their economic success.
China makes low cost loans to their businesses. Zero or nearly zero interest rate loans to businesses, allow said businesses to expand and take markets. A Chinese balance sheet will show debt and profits rising simulataneously. But, the business does not have to pay back the debt, just keep it on the books. In this way, the money on the books does not enter into circulation, and it is non inflationary.

Chinese businesses holding Dollars are asked to trade them for Yuans. Those Dollars are then taken by the Chinese Govt and recycled back to the U.S. to buy treasuries. The treasuries are debt bonds to the Chinese. The Chinese have taken today's dollars, and taken them out of circulation by locking them up as bonds. In so doing, they make the dollar stronger (supply and demand). The strong dollar means that China can continue to suck technology out of the U.S.

Bill Clinton allowed China MFN trade status at about the same time as Nafta came into force. China short ciruited NAFTA, and that is a very big reason why unemployed Mexicans flood north to the U.S. American wall street bankers took your 401K money and Pension fund money, and invested it in China after MFN (most favored nation) status. The investment bankers crowed about the great returns you were getting in your 401K's, but at the same time you were funding your own disposession. How is it being unemployed and buying cheap Chinese imports at Wall Mart?

Pat Buchanan is a great Historical thinker, but he doesn't think about money. Follow the money and history (and current reality) becomes much more clear.

NotProgressive said at April 30, 2010 11:48 PM:

Speaking of Mexico. After Nixon went off of the Gold Standard, he dispatched Kissinger to see the Saudis. The agreement was struck, whereby the Saudis put their petrodollars in Western banks, while Saudi Arabia will be protected by U.S. Military might. Additionally, the Saudi's will get advanced military gear (AWACs and F-16's, etc.) The U.S. dollar is backed up by OIL. The world needs dollars to buy OIL, and other commodities priced in dollars. If the world ever decides to not buy oil with dollars, then those dollars will come flooding back to their source, and the U.S. economy will collapse. \

Pat should remember this arrangement because he was in the Nixon administration.

The Western Banks, now flush with Petrodollars, decided they needed a country to make dollar loans to. Mexico got relabeled as a "emerging country" and the loans commenced. The Mexican leadership got hooked on the drug of cheap dollar loans.

But, the bankers (including our favorite friends Goldman Sachs) decided to do a bear raid on Mexico, forcing the Peso down. Eventually, Mexico's dollar reserves were depeleted trying to defend the currency. Then the bankers insisted on accelerated loan paybacks and to pay in dollars. The U.S. then intervened with U.S. taxpayer money, bailing out Mexico. Most of those dollars went straight back to Western (U.S. and British mostly) banks. The U.S. taxpayer got taken for a ride, and Mexico was broken. Those holding dollars picked over Mexico's real assetts at bargain prices.

When Nafta came into force, guess what, there was a provision for allowing Mexican banks to be privately owned. So, Nafta insured the international bankers access to Mexico, and China MFN short circuited NAFTA simultaneously. We busted out Mexico, and that is the prime reason why it is a failed state, with about 1/5 of their population living in the U.S.

When you buy something made in China, it should have been made in Mexico. The unemployed Mexican is due to macro economic full spectrum warfare from the West. China's rise is also a function of malfeasance from our banking class as they fund China with your 401K and Pension funds.

dorian said at May 1, 2010 10:54 PM:

Pat Buchanan is a Muslim apologist and a pro union hack.

eber hart said at May 12, 2010 1:38 AM:

While we might agree with some of Buchanan's 'stated' opinions
we're afraid, examining the record, we find 'Populist' Pat very
much riding cover for the 4 decades long sellout of the Far East
to history's --MOST-- awesomely genocidal regime.

When not tut-tutting the looming, indeed, gargantuan implications
of it all, he's tut-tutting the status quo nightmare, scandalously
downsizing the death tolls, and generally playing the apologist
for the biz-nihilist Red China lobby ---which HE helped found.

"The Americans came just like whores --all dressed up and knocking
at our back door."
-Chou En Lai
speaking about the NIXON-MAO Summit

Catch Buchanan -how he's forever tut-tutting the looming implications
-or, even worse, scandalously downsizing death tolls (BTW it's 70 million
exterminated in 'peacetime') and waves a pass card against ANY revelation
whatsoever concerning revealed historic truth.

As millions continue to suffer and die in silence
and as, just last month, a South Korean ship was torpedoed and sunk
killing 46 ---Buchanan, Washington, Hollywood and our entire US media
---are looking the other way. Buchanan even chuckles about the
reality of the threat from the Red Chinese client state of North Korea.

From PC franchise slum Hollywood and Ted Turner to FOX News --and Pat Buchanan
one and all are reading from the same page. You can't help but see.

ESP. galling on this, the once again 'mysterioously overlooked'
60th Anniversary of the astoundingly relevant ---STILL unfolding
--KOREAN WAR...

AGAIN ---BUCHANAN CAN'T BE TRUSTED TO INTERPRET FAR EAST REALITY
OR POLICY! -he's tainted! ---pass it on!

Randall Parker said at May 12, 2010 11:35 PM:

eber hart,

If the South Koreans are unwilling to hold the North Koreans accountable why should we? The South Koreans have a much bigger and more capable military than the very poor North Koreans do. I am sure the South Koreans can handle the North Koreans.


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