I'd venture to say that the world's consumption demand has already dropped by 10%, and is going lower. China could wind up in more trouble than we currently think.
It will be very hard for China to stay as it is now, ideal solution would be to follow some kind of federal state system like the US. 2040 or so blacks and latinos will be the majority in the US, even if China f... up multiple times along the way, its game over for the US.
I don't understand what the implications are. The implications are that China can prop up its economy with government stimulus whenever it wants. While the US must always give control to the bankers for everything the government tries to do. Hence the US has small government controlled by corporations and China has a government controlled economy... Anything else?
I'm not American. The nice thing about debt in fiat currencies is that they can be eliminated by, well, fiat.
China does not even have a currency. There is no meaningful economy on the planet more "fiat" than the Chinese economy. Why these things have to constantly be viewed as "us or them" is beyond me: history is quite clear that the most likely path is continuing prosperity for both China AND the US.
You are not a shill. You really don't understand do you ? Even after its so painfully obvious that USA is broke. Even after UK and Greece and Spain are all broke. And Germany's picture isn't pretty either. You don't see a connection between broke US and every dollar printed at interest and lent to US You really don't see a connection between the two.
It is so hard for me not to insult you. A grown man like you should know better. I bet you watch a lot of CNN, FOX, CNBC. USA IS BROKE here let me make it easier to read USA IS BROKE BECAUSE US uses money that is printed at interest. You are calling Chinese Fiat and you live in PONZI of USA People like you are exactly the reason we are in unpayable debt. You arrogant southerner.
The USA has been printing money "at interest" for nearly 100 years. That policy has coincided with an increase in wealth and physical security and median standard of living that China can only dream of bringing to its own citizenry. You are, simply and quite plainly, wrong, even before considering the "small" fact China does not even have a viable currency of its own. It is unfortunate that an individual telling other people to read cannot seem to read for himself. I repeat: I am not American. Nor do I live in the USA. Cheers.
That's true actually... I did sort of incorporate that analysis in my previous post but you hit it on the head. With the US government spending, it's hard to actually generate VALUE and thus pay the interest. So what ends up happening is taxes increases to pay the bankers. Basically the politicians must give part of the country away to bankers with every deficit spending. Of course, if the politician is crazy they bankrupt the whole country and you get Germany 1920s. The same thing happened in the 18th and 19th century actually... Bankers lent money to kings for huge wars. Then the kings taxed the country and gave the money to the bankers. If you were a banker, it was a great "democratic" way of getting money out of every household for yourself. Now the same happens but for government spendings (and deficits). Now that I think about it, attaching interest to a BUSINESS loan makes perfect sense. That's because businesses generate value and can pay the interest. But attaching interest to a GOVERNMENT loan is crazy, because the government will rarely generate value. What happens is just the bankers owning more of the economic activity of the people.