The U.S. Trade Advantage with China
Jason Hommel
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.
If you would like to receive a free email notice of my free weekly silver stock report, now listing 90 silver stocks, please sign up at www.goldismoney.com
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.
Jason Hommel
Goldismoney.com
December 17, 2003
Cc
www.china-embassy.org/eng/
chinaembassy_us@fmprc.gov.cn
www.chinacommercial.org/
info@chinacommercial.org
www.bank-of-china.com/english/index.html
www.china.org.cn/english/
webmaster@china.org.cn
www1.cei.gov.cn/govinfo/english/default1e.shtml
editor2@mx.cei.gov.cn
www.chinatoday.com/org/cpc/
service@chinatoday.com
info@chinatoday.com
www.marxist.com/china.asp
contact@marxist.com
Chinaintel@aol.com
cxu@chinaonline.com
Email this Article to a Friend 
Printer Friendly Version