printCHINA AND THE US: Two countries whose respective central banks are pursuing distinctly different policies.
Federal Reserve Chairman Ben Bernanke’s reason for living is to lower interest rates and inject liquidity into an overinflated economy. When Ben announced, a few days back, that he remains “open to using the blunt tool of higher interest rates to avert or pop future asset bubbles … particularly if other approaches aren’t working”—people were floored. (Yes, Ben considers raising interest rates a “blunt tool,” but keeping them artificially low quite okay.) For now, Our Ben is keeping rates near zero.
The People’s Bank of China, on the other hand, has moved to restrain lending by raising “the proportion of deposits that banks must set aside as reserves by 50 basis points starting Jan. 18.” This, anticipates Bloomberg.com, “may foreshadow higher interest rates.”
China is cooling its economy; Ben is heating ours’ up, as he tries to pump stale air into deflating balloons.
Regarding the economists: Do they not know, not care, or are they really this evil?
America, which invented the nuclear reactor, hasn’t built them since Carter killed off the industry in response to non-fatal Three Mile Island. China is going to complete 20 nuclear plants in the next 10 years while we go off liberating Sudan, Yemen, Algeria, Somalia, Afghanistan, Fungustan, Bacteria … Even lefties like the New York Times’ Tom Friedman observe that China has its act together more than America. Now, if America were a limited government republic (not a Global Leviathan Empire), our private sector might be able to grow the country – but instead we have the corrupt whores of the Demoplican/Republican duopoly pumping up inflated home prices, free college for every moron, and health care for all.
We are witnessing how a “great nation” can self-destruct – NOT from Umar Underpantsabomber or Pedro the Lawnmower Alien – it is truly ourselves doing it to ourselves. Umar and Pedro are merely supporting actors in our national suicide.
And what does America have that China doesn’t: (1) the National Football League (playoffs this weekend!) – and (2) a “DEMOCRACY” that allows Americans to choose between a McCain and an Obama to be the Clown in Chief every 4 years – whoop-de-doo.
I freely admit that economics is beyond my comprehension. A country that imports most of its manufactured goods and more than 60% of the petroleum it uses pays for it all with a fiat currency. Why do that country’s foreign suppliers tolerate the arrangement? What’s in it for them? I’m not really complaining; I hope it goes on forever. I’m afraid, however, that we’ll experience both an economic and a political collapse just about the time I’d hoped to settle into a comfortable retirement.
East, Confucian logic, meets West, Keynesian fantasy. We’d have an appropriately sage maxim or two on the actions of Mr. Bernanke, and his ilk, but Confucius obviously could not imagine so inscrutable a thing as fractional reserve gambling.
Just found some new reading on whether China is a BUBBLE – e.g. a Las Vegas / Dubai with Moo Goo Gai Pan –
“Is China the New Enron?”
http://www.nytimes.com/2010/01/13/opinion/13friedman.html
and from Forbes magazine:
http://www.forbes.com/…/china-bubble-chanos-leadership-managing-rein.html
We send nitwits like Bernanke, Hillary Clinton and even our Nitwit in Chief, Obama to schmooze the Chinese to no avail. The Chinese are smarter and three steps ahead of our “A” team. Do we have any economic and political minds to equal the Chinese? Of course we do, but they aren’t in politics. In our country only the scum rises to the top.
Gringo, why we export the most important commodity of all – reasoned and enlightened thought! One need only read the recent NYT lead editorial by our very own Ms. Mercer or the #1 best-seller “The Return Of The Great Depression” by Vox Day. And with Ron Paul leading in every 2012 Presidential poll, surely we’ll be on top for some time to come. Heck, I saw a kid with a dog-eared biography of Mises on the bus just this morning.
Greenhell, I’m sure that all that reasoned and enlightened thought is worth its weight in gold. IMHO, expecting to maintain a reasonable balance of payments without exporting something that actually has weight is not particularly enlightened.