China v the US = Strategy v Tragedy

October 13, 2014

By: Kelly Diamond, Publisher

china v usWhile the United States is fixated on some new tribe of rebels in Iraq and Syria, China just swooped by and surpassed the United States twenty-seven ways to Sunday. As I’ve mentioned in nearly every single article to do with China, they are and have been playing a strategic game of Go, while the United States is playing a tragic game of Connect Four with 42 different colors.

First off, I think this says something about how meaningless labels can be. On the surface, a Communist country surpassed a Capitalist one.   But China’s economic behavior and worth ethic is anything but Communist. And the American economic behavior and ethic is anything but Capitalistic.

When you examine the list of ways in which China has exceeded the United States’ performance, it will be rather clear who is the real capitalist in this game.

According to Business Insider: “the IMF measures both GDP in market-exchange terms and in terms of purchasing power. On the purchasing-power basis, China is overtaking the US right about now and becoming the world’s biggest economy.”

The IMF (International Monetary Fund) is part of the European Union’s Troika. While they may not manage money well, they seem to have a good grip on following it.

China is a larger bilateral trader than the United States. Save Japan, China has been trading up a storm across the globe. In fact, we are seeing record-breaking trade deficits with China at a ratio of about 3 to 11.

Here’s the really sad part: our largest export to China is scrap and trash, while China’s largest export to the United States is computer parts. That’s just the headline. The story is, China’s high tech exports are now more than double that of the United States. This is indicative of the qualitative disparity in what is being produced in each country as well.

While China is the largest manufacturer of goods in the world, they are also overtaking in the production of far more precious things ranging from raw materials such as gold, rare trace earth elements, steel, cotton, alternative energy, and coal, to things such as new cars, beer, artificial Christmas trees, and pig products.

China has a higher corporate debt than the United States, consumes more energy, imports more gold, and even uses more cement than the US. It is surpassing the US in scientific research, doctoral degrees, and patent filings.

China owns $1.317 TRILLION of the U.S. National Debt. It is buying up United States’ businesses and land. It was even found to have infiltrated the supply chain of the U.S. Armed Services! Indeed, an audit conducted by a U.S. Senate Committee found over one million counterfeit Chinese parts in their supply chain.

So while technically, in terms of straight raw GDP, the Chinese economy is straggling by about $6.5 Trillion behind the United States, if that is the only thing the United States has left to hang its hat on, then there is cause of concern if not alarm. The United States’ race to the bottom in every facet of its existence pitted against China’s race to the top at any cost leaves me helplessly agreeing with Nobel economist, Robert W. Fogel, that China’s economy will dwarf the U.S.’ in about 25 years.

I think much of the United States has and still does take for granted the economic greatness we once enjoyed in decades past. But there is a new population of the United States that is waking up to the reality of the debts incurred to maintain the image as long as we have. So while China enjoys 75% rate of confidence in its economic trajectory by its constituents, the United States struggles to get even 25% from its constituents.

“We can’t seem to match the work ethic, inventiveness and determination of China and other Asian nations and it is showing,” says Mike Snyder in his contributory article on Zerohedge.

What’s more is, despite how the addled left laments the conditions under which China is growing with its lack of regulations and litany of workers’ rights, China still manages to experience a staggering boost in its overall quality of life indices.

It’s difficult, I know, for modern society to believe that human history actually started BEFORE George W. Bush, but it did. It’s even more difficult for the cushy millennials to harken back to a time in our history known as the Industrial Revolution. For as much as we can sit here and condemn slave labor and deregulation, the hard cold facts are that we built this country on those very things! And China is building its economy under FAR more ethical conditions than the United States did.

We can continue to blame market manipulations on the part of China as much as we can continue to cling to the market manipulations we are fed by our own politicians to make our economy out to be less bleak than it really is. The bottom line is, in terms of tangible and measurable metrics, China is surpassing the US on multiple fronts. While the right should be shaking in their boots, the left should just watch and learn, because in addition to their soaring alternative energy production (wind and solar), they also have the greatly coveted high(est) speed rail system. But hey! The United States has… eh-hem… Amtrak.

What I find to be totally ironic is that China is trying to maintain a communist front while covertly operating capitalistically, but the United States is trying to maintain a capitalistic front while covertly operating socialistically. And so, China’s biggest problem is going to be the ideological reconciliation of all this prosperity. Boo-frickin-hoo, China. Welcome to the land of First World Problems. Your first one is going to be a doozy.

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Comments

  1. The current practice of short term thinking in the United States of America has essentially bankrupted the country. Back in the 1950s, it was long term thinking and we had an unparalleled era of wealth building. Since short term thinking has entered the process, the United States has lost hegemony in so many areas that it isn’t even funny.

    The last real achievement of the United States was the landing on the Moon. After that, there really hasn’t been any significant activity except for the buildup of the military courtesy of the military/industrial complex.

    Wars and continued deficit spending along with the theft of Social Security funds has made the United States a laughing stock of the world.

  2. Patrick H. says:

    Superb article Kelly. The Chinese think with long-term plans not the short-term plans (both business and government). The Western country governments (especially the US) does whatever to get re-elected every two or four years and the US businesses only think about next quarter’s earnings to get the stock price up. Pretty sad in the end. I am very happy I am expatriating from the US police state soon.

    • Patrick H:
      What country(ies) is/are on your expatriation radar, and why?

      – D

      • Patrick H. says:

        Hello Dean G.,

        To answer your question it of course a combination of personal preferences, business, banking, culture and pleasurable places to live. Currently I am still in the US, (Miami) but not for long. Long ago I saw all of this coming so I collected a second citizenship 16 years ago ( Dominica). I was one of the very early ones. Subsequently I immigrated to Canada 12 years ago so I am in good shape on passports, but for me I am more comfortable with more options as you never know. So to directly answer your question on countries and why:

        1. Bahamas – Residency only (no passport aspirations due to current law) as I have a house there. Pleasant and I am very familiar with the culture. Close to the USA (if necessary to look over investments there). Safe Haven -0- taxes. Very unknown loophole allows operating small business without work permit (expensive and hard to get).
        2. Panama – Ease of residency (for US) with the intent of eventual citizenship. International business holding company set up. Can arrange -0- taxes.
        3. Dominica – Very inexpensive. Am setting up a business there for export with 15 year tax holiday. Beautiful place to be in to relax, but not for nightlife. Already have the citizenship and contacts. Again -0- taxes.
        4. Puerto Rico – This is the stepping stone the next year or two before abandoning US citizenship. With the low tax regime and very pleasant weather and surroundings it will be useful part-time until the abandonment.
        5. Ireland – Beautiful place. I am Irish also. Easy to stay if one has the cash – continual renewals. After 5 years citizenship. Am also formring a holding company there.

        In the end if the S*** hits the fan before the next year or so in the US I will dump the blue passport immediately as I do not need to be there. With 3 current passports and 2 in “the oven” it is a no-brainer. I trust this answers your question satisfactorily.

        • Patrick,

          ” I trust this answers your question satisfactorily.”

          Far more than I expected. Thank you for your time.

          – Dean

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