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The poor in the third world would better off for having US as company

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July 16, 2008 – Comments (2)

TDRH responds to DWI's post, asking him if he thinks that "the poor in the third will be better off for having us as company." I think the answer is yes.

Actually yes, I think the third world will be better off. Consider the Chinese, for instance. They sell their cheap goodies to Americans, then use dollars to provide cheap refinancing to their bankrupt government.This chain of transactions works like this: 1. We can produce consumer goods cheaply, but we need a buyer who can afford them. 2. Make a leap of faith and imagine that Americans can afford them. 3. Sell our goods to Americans in exchange for their promices to pay us later. 4. Close our eyes, imagine that we made money, rinse and repeat. Now, it's not hard to see by looking at this sequence of steps that America is merely acting as a placeholder. You can drop that link of the chain and replace it with Africa, Asia, Antarctica, even Mars or Pluto if you wish without any detriment to the whole business arrangement. So why not replace it with China instead? Yes, the idea that Chinese consumers can pay for your goods is every bit as good as the idea that American consumers can pay for them, with the additional advantage that now your people get to own some of the goods they produce. China should just write off the US as a deadbeat debt cheat and move on.

2 Comments – Post Your Own

#1) On July 16, 2008 at 10:00 AM, AnomaLee (28.76) wrote:

This is entirely ridiculous...

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#2) On July 16, 2008 at 3:22 PM, FarelessWorrier (21.98) wrote:

Since you reposted your absurd comments here, I am reposting my reply from DWIs blog:

Your simplification of the economic relationship between the U.S. and China doesn't hold water. After all, it's companies like Walmart that are buying those cheap Chinese goods. Nobody has to pretend that Walmart can pay -- they're currently sitting on over 8 billion dollars of cash, with total current assets of over 50 billion. Now, I grant you, that's not as much in Euros or Yuan as it once was, but Walmart's Chinese suppliers can take it and convert it into whatever currency they want. I think the Chinese will take that money over what Africa, Antartica, Mars and Pluto have to offer. Actually, China does get some resources from Africa. For example, they have an exclusive deal with Sudan, who supplies them with oil, which is why they stopped the U.N. security council from taking action against the genocide. But, this is a financial forum, not a geopolitical one, so I'll leave it at that.

 

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