While we hear about tiny little Iranian boats harassing our giant monolithic skyscraper-like battleships as though it signaled Armageddon, and we shuffle along with hundreds of other airline victims in lines that take forever holding our shoes and wrestling with the logic of not getting to bring our own water with us, and allowing ourselves to be taped and eavesdropped upon like prison inmates…etc etc….the list goes on forever – the real problems start to surface….<\/p>\n
Through the quarter-century in which China has been opening to world trade, Chinese leaders have deliberately held down living standards for their own people and propped them up in the United States. This is the real meaning of the vast trade surplus\u2014$1.4 trillion and counting, going up by about $1 billion per day\u2014that the Chinese government has mostly parked in U.S. Treasury notes. In effect, every person in the (rich) United States has over the past 10 years or so borrowed about $4,000 from someone in the (poor) People\u2019s Republic of China. Like so many imbalances in economics, this one can\u2019t go on indefinitely, and therefore won\u2019t. But the way it ends\u2014suddenly versus gradually, for predictable reasons versus during a panic\u2014will make an enormous difference to the U.S. and Chinese economies over the next few years, to say nothing of bystanders in Europe and elsewhere.<\/em><\/p><\/blockquote>\n