The U.S. Trade Advantage with China

December 17, 2003

There are misconceptions about our trade relations with China. Misguided U.S. patriots complain about the cheap Chinese labor taking away domestic jobs and U.S. politicians blame the cheap Chinese currency, and complain about the unfair trade advantage that China has.

Those are one-sided views. Here's the truth: We have the trade advantage with China. We send a little paper dollars that they cannot use, and we get a lot of great stuff that we buy and use continually. We give paper money that is an unjust weight and measure, an abomination. We are cheating them; they are not cheating us.

Our trade advantage with China is so great that we could not do any better than if we sent over troops, conquered their nation, and made them all our slaves. Not only would that be far more costly, but impractical, unthinkable, and unimaginable. Nevertheless, our situation today is better than if we beat them in a war, and made them all our slaves. We could not force them at gunpoint to work for us as cheaply as they do today. We have utterly conquered them economically, and we are reaping rewards greater than the spoils of war.

We don't have to fear them conquering us in a trade war, because we've already won. They work for less than slave labor prices, and we get great stuff, which proves it.

Just like when any conquering nation benefits from slave labor, the local peasants who are unhappy and unemployed feel that they are priced out of work, and so they complain and beg for government handouts. It was not much different back in the Ancient Roman Empire.

Why do the U.S. politicians and the media say that China has the trade advantage, when clearly, the advantage is ours? I don't know, but I can only guess when it comes to motives.

First, I must consider the possibility that Americans, including the Media and Politicians genuinely do not understand the benefits of trade. Few do.

Here are the essential details of trade: Trade boosts efficiency, increases specialization, increases productivity. People and nations trade the thing they are most efficient at producing, specifically, the highest value surplus goods that take the least effort to create. The U.S. creates extra dollars very efficiently; we print them. The Chinese produce goods cheaply, because their people are numerous and relatively poor. And so we trade. Who is most efficient at producing what they produce? I suspect we have a much higher profit margin on the dollars we create out of paper. Therefore, once again, we have the trade advantage.

So, it could be that the media and politicians are stupid and don't understand how trade works, or it could be that they are defending the fraud of the overvalued dollar. I don't know which, but it's one of the two, or both.

Our politicians must do two important things. 1. Keep the trade going (since it is so lucrative for us), and 2. Appease the local peasants in the U.S.A. I believe both of these goals are served at the same time when the politicians "complain" about China's "unfair trade advantage" and China's "undervalued currency". But this is a smokescreen, and it properly deceives two groups of people.

First, our politicians deceive the local peasants into thinking that the politicians actually care about their "lack of jobs".

The other reality that U.S. workers and employers need to face is that there is always an infinite amount of work to do in the real world. I know, because I ran several businesses, and I'm very busy today, because we are in a silver boom market. You can always improve your own property, and spend more time taking care of your business. The best way to manage your property is to learn about the economic forces in the world that create imbalances and opportunities that you can then take advantage of by investing your time or assets in projects that will be most productive and give the greatest return. (Today, I think that means buying silver stocks.) People at home are priced out of work due not to China's low currency, but due to our overvalued currency. It is not China's fault that we have an overvalued currency! People also lose jobs due to bad business regulations that have been continuously created ever since we left using gold and silver as money (which is what really threw people out of work) to begin with!

Second, our politicians deceive China into thinking they have the trade advantage, as we draw attention to our "economic pain" and "loss of jobs" here at home. Since China tends to consider us as the enemy (while envying our lifestyle), I think they tend to want to do the opposite of what we complain about. I actually think we have fooled China into thinking they have the trade advantage, but clearly, they do not.

Not only are we receiving goods from China, we are also receiving real money, silver. So, not only are they sending us goods, but they are paying us, in real money, at the same time! And some say China has the advantage? Clearly, we are taking advantage of them more easily than if we were ransacking their cities; looting and stealing everything in sight. But our trade advantage is better than that, because we steal and destroy nothing; creating a situation where we can steal from China year after year. China may be increasing their exports of silver:

http://biz.yahoo.com/rm/031212/minerals_china_silver_1.html

HONG KONG, Dec 12 (Reuters) - The Chinese government is expected to issue 2004 export permits for silver to selected Chinese firms on December 15, industry sources said on Friday. In early November, the Ministry of Commerce said it would allot export quotas for 3,050 tonnes of silver for 2004, up 39 percent from 2,200 tonnes allotted this year.

So, why is China so easily deceived by our paper money? Could it be the same reason that nearly everyone in our nation has been deceived by our paper money? I think it is greed. China envies the Western Lifestyle. That must be the reason. Unfortunately, China seems to forget that the time period of industrialization and prosperity for the U.S. took place during a time when we used gold as money, and that the U.S. was not built on paper money. We are only prosperous now because we are enjoying the spoils of war through unjust trade with nations like China.

If China really wants to help their own economic boom take place, they must allow economic freedom and competition, and they need to put an end to fraud and corruption. To that end, they should pursue using gold and silver as money, and they should reject the U.S. paper dollars that they receive in trade with us, and demand gold and silver as payment, instead. They should reject the frauds of fractional reserve banking and should reject paper money. If they do this, they will stop being economically exploited in trade relations with the U.S., and they will prosper.

It's really quite ironic. Communism was supposed to prevent the exploitation of the worker. But China is more exploited now than ever. The last of the Communists just don't get it. The only way to end exploitation is freedom. At least they are slowly headed in the right direction by allowing the trade of gold and silver. Unfortunately, they may also allow futures markets, which is an open invitation to another paper nightmare of fraud.

If they want what we have, they ought to stop giving us what we have, and instead, they ought to make it and keep it for themselves, or trade value for value; not trade value for nothing as they are doing.

If only the people of our nation had the courage and wisdom to reject the frauds of paper money and fractional reserve banking.

Look at the amount of dollars out there that could buy gold.
$20,200,000,000,000: U.S. bond market, yr. end, '02:
http://tinyurl.com/vr7g
$8,835,000,000,000: M3 (money in the banks) Oct. '03
http://tinyurl.com/vra0

$20 trillion in bonds, $9 trillion M3 = $29 Trillion. A mere 1% of those dollars is $290 Billion, which, at $400/oz. is a massive demand of 725 million ounces, or 22,549 tonnes. $290 Billion at $1000/oz. gold is a massive demand of 290 million ounces, or 9020 tonnes. The physical gold market has an annual supply of 2500 tonnes, and an annual demand of 4000 tonnes, so do you understand what that means? 22,249 tonnes and/or 9020 tonnes is still much, much more than either 2500 or 4000 tonnes! That means that far, far less than 1% of dollars, in either bonds or M3 can buy gold, because there simply is not nearly that much gold available.

Long before 1% of U.S. paper money tries to buy gold, gold will be leaping well past $1000/oz.

The other interesting fact is that China's foreign exchange reserves stand at $383.9 billion in September 2003. See: www.rieti.go.jp/en/china/03103101.html

China's $384 Billion is much more than the 1% of dollars, or $290 Billion, that, if it were exchanged for gold, would cause gold to leap well past $1000/oz.

Other interesting articles on China's trade situation with the US:
www.atimes.com/atimes/Asian_Economy/EG15Dk01.html
www1.chinadaily.com.cn/en/doc/2003-08/07/content_252808.htm

Thus, China alone could cause gold prices to hit $1000/oz. or higher by selling dollars for gold, either covertly or overtly, because outright war with China would do the same thing.

In the meantime, by the time 1% of U.S. dollar owners decide to protect their fraudulent paper wealth with gold and silver, the price of silver will be headed well past $50/oz, (at a 20:1, silver to gold ratio) and the silver stock boom will be just beginning.

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To the Chinese people and contacts to whom I am copying this report. Please send this report on to whomever you feel needs to receive this report, whether Chinese people in government, news, business, economics departments, family, friends, or whomever. If you want economic freedom and prosperity, you have to act to make it happen.

Gold weighs 19.3 times as much as an equal volume of water.