2/22/09

Retirement

In the table below, import/export numbers in million dollars, volume number (gross estimate of economic activity), and ratio between import and export. The US builds up a trade deficit of about half a trillion dollars a year. China almost saves that amount a year and now holds about two trillion dollars of currency in banks, mostly invested in US debt.





























Country Import Export Volume Ratio
United States 1,968,000 1,477,000 3,445,000 4:3
European Union 1,466,000 1,330,000 2,796,000 10:9
China 904,600 1,465,000 2,369,600 6:10




Ultimately, all money has to flow back to the country which issued it. Ultimately, all money can only be transferred into goods as exported by the country which issued it. Although, of course, the dollar is the currency of the world which means that there is a very large buffer before inflation will set in. Asians are increasingly investing in resource options, so they may be ahead of that problem - i.e., a large number of dollars will be milled around as oil for Asian cars.


Two trillion -if they didn't loose it- at, say 4%, means that the Chinese can now import 80,000 million dollars worth of products without doing anything. The Chinese hardly use that money to invest in their own economy. Why would they: They are the #1 rulers of the world according to their own standards and we should be made to serve them at some point. I wonder how many generation they need to starve before they can live like kings, import all goods by interest alone. Like, one or two?


(Why didn't it happen earlier?)