Today I Learn… I make a point of learning something new everyday. This is what I learn each day

1, Aug 17, 2011

Spoiled Children as the Debtors and Workaholic Parents as the Lenders

Filed under: China,Economy — admin @ 12:08 am

The economic mess that the U.S. is enjoying now originated from (1) over consuming, under production, either in housing bubbles and credit card abuse, at individual and national level, like going to war with borrowed money; (2) Negative saving, that is deficit, again on both levels.

China is doing the opposite: (1) Under consumption, over production; (2) Over saving. Hence, China lends the surplus to the US so that US can keep importing from China, which will perpetuate the consumption in the U.S. and the running of factories in China.

Sometimes, I see China as hard-working parents who toil themselves to generate value and save them for their children (the dear Americans), while the US behaves like spoiled children who demand high-level consumption even running on empty purse. We would expect the US, with a mountain of debts, to save more and spend less and China does the opposite. It is not likely to happen this way, though. The children must be spoiled because of their dollar dominance in the world. Something will happen eventually. Let’s wait and see.

No Comments »

No comments yet.

RSS feed for comments on this post. TrackBack URL

Leave a comment

You must be logged in to post a comment.

Powered by WordPress