Industrious nations like China grow wealthy and secure by making enough products to support their needs on their farms, factories and mines, plus earn additional currency by creating additional wealth by exporting products that they manufactured. The health of every other business depends upon these productive industries.

Do US farms, factories, and mines manufacture, grow or mine enough products to maintain us? NO!!! Could They? YES! Do we need to import additional products and increase the current trade deficit if we do not want to work to make whatever we want to consume? YES!!!

Borrowing money from China and other wealth generating nations to pay US citizens for raking leaves, environmental cleanup, mortgage bailout, union retirements, TARP, business failures, and etc. to stimulate the economy just makes the existing money have less value and less buying power, but does nothing in the long run solution to the foreign trade deficit problem.

Many of my (college educated) friends tell me that this modern economy needs the consumers who do not produce anything but sit idle and consume the things that the workers produce. This is like saying that a slave needs an owner to sit idle and consume the things that the slave works hard and produces for the slave owner's consumption. The slave does not need an owner.

Why can't we just print more paper dollars, T-Bills, bonds and other paper securities and sell them to people in other countries that work to manufacture the things that we consume? We can remain idle and refrain from working while our children work hard later to pay off these bonds and other debts at some later date when they become due. Our children should be happy to work and pay for our priviledge of not working.

Our Political Leaders must lobby loudly and become persistent in their quest for implementing at least an extremely high import tariff on all imported goods, and repeal of the NAFTA, WTO, IMF, and maybe complete withdrawal from the United Nations.

If we want to rebuild our industries, we will need the funding to do it. Do you really think that China and Japan (our leading creditors) or any one else will really give us loans to re-build our manufacturing capability? Will Chinese entities become loan sharks after we sell all of our assets to the foreigners in return for our trade imports of the products that we consume? I just hope it is not too late already.

"We will explore the Moon certainly," he said from his office in Beijing, "but with unmanned spacecraft." "

From BBC news.

Not that it matters to the subject but just to let it straight.

"One baleful consequence of the global financial crisis has been a swarm of ill-informed commentary about the decline of the US and the dollar, and the rise of China and the renminbi. Such hyperbolic claims about a tectonic shift in global power relations are bunkum.

Since last November, the People's Bank of China has initiated more than $100bn in renminbi swap lines with various other central banks, mainly in the developing world. There also has been lots of noise about increasing the use of renminbi in regional trade transactions.

These developments have led many to speculate that China aims to make the renminbi a major global currency, and that it is just a matter of time before the currency of the world's largest creditor supplants that of the world's biggest debtor as the major global reserve asset.

On the potential for the renminbi itself as a reserve currency, commentators frequently confuse three distinct concepts: currency internationalisation, reserve currency, and dominant global reserve currency.

The renminbi will clearly internationalise significantly over the next five to 10 years. Over a longer period (10-20 years) it may emerge as a secondary reserve currency like the Japanese yen, although this is not certain.

But for it to replace the dollar as the main global reserve currency, many decades and a combination of improbable events would be needed.

Plenty of currencies internationalise without becoming substantial vehicles for reserve holdings (Swiss franc, Singapore dollar, etc). The renminbi will certainly become far more widely used in many countries because of China's large role in global trade and the vast numbers of Chinese business and leisure travellers who will trot the globe.

Swaps and trade facilities may help this internationalisation, though it is worth noting that the talk of denominating trade transactions in renminbi remains mostly talk (the practicalities are inconvenient), and the total swap lines initiated by the PBoC since last September are about one-fifth of the international swap lines opened by the US Federal Reserve during the same period.

Internationalisation – ie the increased use of a currency in current-account transactions – is a necessary but insufficient condition for a reserve currency, which emerges only when people want to hold and invest large balances of that currency.

For the renminbi to become a vehicle for reserve holdings, foreigners must be able to invest freely in onshore renminbi financial assets (stocks, bonds and bank deposits), and freely repatriate both their earnings and their capital. For foreign investors to want to hold renminbi assets on a large scale, they must be convinced that China's financial markets are trustworthy and not rigged.

For the renminbi to become even a secondary reserve currency, it must therefore fully liberalise its capital account and set up reliable financial markets that are reasonably free of government interference. Technical difficulties aside, this will require a significant retreat from the current state-dominated model of credit allocation – and this cannot happen quickly.

The US dollar's position as the dominant global reserve currency is secure. It boils down to this: in a fiat currency world (unlike the gold and quasi-gold standards that prevailed until 1971), the dominant reserve currency nation must be a net debtor, not a net creditor.

This is because the principal reserve asset is the debt securities of the reserve nation. Other countries must have current-account surpluses that they can invest in those debt securities, so the reserve nation itself must run a current-account deficit. (The problem of recent years was not that the US ran a current-account deficit, but that the deficit grew too large – nearly 7 per cent of gross domestic product rather than the sustainable 1 per cent of GDP or so.)

So if China wants the renminbi to become the world's main reserve currency, one condition is clear: it must abandon mercantilism and start running a current account deficit. Until it is willing to satisfy that condition, all talk about the future dominance of the renminbi is the purest hot air." (Financial Times, 5/27/2009)

The USA has created a situation that US gold; US currency; and title to US property and other assets are leaving the USA in amounts of value greater than they would be if US citizens were manufacturing the things that US citizens consumed. We must change this situation or we could become a post WWI Germany economically, and this could happen overnight.

A Trade Deficit is created when the USA importing, transportation, distributing and retail sales companies such as WalMart, Home Depot, NTB and etc. pay companies and individuals in foreign countries with US dollars to manufacture the things that these US businesses import, distribute, and then sell to the US consumers. Manufacturers such as GM, Ford, GE, Chrysler, GE, Westinghouse and etc. manufacture vehicles, appliances, and equipment made with imported parts that they paid the companies in the foreign countries with US currency to manufacture these parts for assembly of the finished product in the USA that is then sold to US consumers. What is the dollar value percentage of USA assembled products that are made with imported foreign manufactured parts and/or sub-assemblies?

The only thing that will create/save US jobs, preserve/restore the buying power of the US Dollar is reversing the trade deficit, reducing government borrowing, reducing government spending, and then re-building our gold reserves. Only a positive balance of trade will restore the value of the dollar, and we must accomplish this by any means possible, or accept third world poverty on a large-scale basis. The only way to do this is to produce and export more (dollar value of) things than we import. The only way that we can accomplish exporting US made products is to re-industrialize and make these products with US materials & Labor. The only way that our products will be sold abroad is if these products are either technologically superior, or cheaper.

Chinese leaders are pressured to make their country prosperous and they see that there is risk and great opportunity in their future.

USA has one way to restore this confidence…. let them fail…let them be bought up by efficient entrepreneurs…
NO PAIN NO GAIN…
Capitalist system is a whole…if you play with it, you get a semi-socialist system which is destined to fail in time….