The U.S. Trade Advantage with China
There are misconceptions about our trade relations
with China. Misguided U.S. patriots complain about the cheap Chinese
labor taking away domestic jobs and U.S. politicians blame the cheap
Chinese currency, and complain about the unfair trade advantage that
Those are one-sided views. Here's the truth: We have
the trade advantage with China. We send a little paper dollars that
they cannot use, and we get a lot of great stuff that we buy and use
continually. We give paper money that is an unjust weight and measure,
an abomination. We are cheating them; they are not cheating us.
Our trade advantage with China is so great that we
could not do any better than if we sent over troops, conquered their
nation, and made them all our slaves. Not only would that be far more
costly, but impractical, unthinkable, and unimaginable. Nevertheless,
our situation today is better than if we beat them in a war, and made
them all our slaves. We could not force them at gunpoint to work for us
as cheaply as they do today. We have utterly conquered them
economically, and we are reaping rewards greater than the spoils of war.
We don't have to fear them conquering us in a trade
war, because we've already won. They work for less than slave labor
prices, and we get great stuff, which proves it.
Just like when any conquering nation benefits from
slave labor, the local peasants who are unhappy and unemployed feel
that they are priced out of work, and so they complain and beg for
government handouts. It was not much different back in the Ancient
Why do the U.S. politicians and the media say that
China has the trade advantage, when clearly, the advantage is ours? I
don't know, but I can only guess when it comes to motives.
First, I must consider the possibility that
Americans, including the Media and Politicians genuinely do not
understand the benefits of trade. Few do.
Here are the essential details of trade: Trade
boosts efficiency, increases specialization, increases productivity.
People and nations trade the thing they are most efficient at
producing, specifically, the highest value surplus goods that take the
least effort to create. The U.S. creates extra dollars very
efficiently; we print them. The Chinese produce goods cheaply, because
their people are numerous and relatively poor. And so we trade. Who is
most efficient at producing what they produce? I suspect we have a much
higher profit margin on the dollars we create out of paper. Therefore,
once again, we have the trade advantage.
So, it could be that the media and politicians are
stupid and don't understand how trade works, or it could be that they
are defending the fraud of the overvalued dollar. I don't know which,
but it's one of the two, or both.
Our politicians must do two important things. 1.
Keep the trade going (since it is so lucrative for us), and 2. Appease
the local peasants in the U.S.A. I believe both of these goals are
served at the same time when the politicians "complain" about China's
"unfair trade advantage" and China's "undervalued currency". But this
is a smokescreen, and it properly deceives two groups of people.
First, our politicians deceive the local peasants
into thinking that the politicians actually care about their "lack of
The other reality that U.S. workers and employers
need to face is that there is always an infinite amount of work to do
in the real world. I know, because I ran several businesses, and I'm
very busy today, because we are in a silver boom market. You can always
improve your own property, and spend more time taking care of your
business. The best way to manage your property is to learn about the
economic forces in the world that create imbalances and opportunities
that you can then take advantage of by investing your time or assets in
projects that will be most productive and give the greatest return.
(Today, I think that means buying silver stocks.) People at home are
priced out of work due not to China's low currency, but due to our
overvalued currency. It is not China's fault that we have an overvalued
currency! People also lose jobs due to bad business regulations that
have been continuously created ever since we left using gold and silver
as money (which is what really threw people out of work) to begin with!
Second, our politicians deceive China into thinking
they have the trade advantage, as we draw attention to our "economic
pain" and "loss of jobs" here at home. Since China tends to consider us
as the enemy (while envying our lifestyle), I think they tend to want
to do the opposite of what we complain about. I actually think we have
fooled China into thinking they have the trade advantage, but clearly,
they do not.
Not only are we receiving goods from China, we are
also receiving real money, silver. So, not only are they sending us
goods, but they are paying us, in real money, at the same time! And
some say China has the advantage? Clearly, we are taking advantage of
them more easily than if we were ransacking their cities; looting and
stealing everything in sight. But our trade advantage is better than
that, because we steal and destroy nothing; creating a situation where
we can steal from China year after year. China may be increasing their
exports of silver:
HONG KONG, Dec 12 (Reuters) - The Chinese government
is expected to issue 2004 export permits for silver to selected Chinese
firms on December 15, industry sources said on Friday. In early
November, the Ministry of Commerce said it would allot export quotas
for 3,050 tonnes of silver for 2004, up 39 percent from 2,200 tonnes
allotted this year.
So, why is China so easily deceived by our paper
money? Could it be the same reason that nearly everyone in our nation
has been deceived by our paper money? I think it is greed. China envies
the Western Lifestyle. That must be the reason. Unfortunately, China
seems to forget that the time period of industrialization and
prosperity for the U.S. took place during a time when we used gold as
money, and that the U.S. was not built on paper money. We are only
prosperous now because we are enjoying the spoils of war through unjust
trade with nations like China.
If China really wants to help their own economic
boom take place, they must allow economic freedom and competition, and
they need to put an end to fraud and corruption. To that end, they
should pursue using gold and silver as money, and they should reject
the U.S. paper dollars that they receive in trade with us, and demand
gold and silver as payment, instead. They should reject the frauds of
fractional reserve banking and should reject paper money. If they do
this, they will stop being economically exploited in trade relations
with the U.S., and they will prosper.
It's really quite ironic. Communism was supposed to
prevent the exploitation of the worker. But China is more exploited now
than ever. The last of the Communists just don't get it. The only way
to end exploitation is freedom. At least they are slowly headed in the
right direction by allowing the trade of gold and silver.
Unfortunately, they may also allow futures markets, which is an open
invitation to another paper nightmare of fraud.
If they want what we have, they ought to stop giving
us what we have, and instead, they ought to make it and keep it for
themselves, or trade value for value; not trade value for nothing as
they are doing.
If only the people of our nation had the courage and
wisdom to reject the frauds of paper money and fractional reserve
Look at the amount of dollars out there that could buy gold.
$20,200,000,000,000: U.S. bond market, yr. end, '02:
$8,835,000,000,000: M3 (money in the banks) Oct. '03
$20 trillion in bonds, $9 trillion M3 = $29
Trillion. A mere 1% of those dollars is $290 Billion, which, at
$400/oz. is a massive demand of 725 million ounces, or 22,549 tonnes.
$290 Billion at $1000/oz. gold is a massive demand of 290 million
ounces, or 9020 tonnes. The physical gold market has an annual supply
of 2500 tonnes, and an annual demand of 4000 tonnes, so do you
understand what that means? 22,249 tonnes and/or 9020 tonnes is still
much, much more than either 2500 or 4000 tonnes! That means that far,
far less than 1% of dollars, in either bonds or M3 can buy gold,
because there simply is not nearly that much gold available.
Long before 1% of U.S. paper money tries to buy gold, gold will be leaping well past $1000/oz.
The other interesting fact is that China's foreign
exchange reserves stand at $383.9 billion in September 2003. See:
China's $384 Billion is much more than the 1% of
dollars, or $290 Billion, that, if it were exchanged for gold, would
cause gold to leap well past $1000/oz.
Other interesting articles on China's trade situation with the US:
Thus, China alone could cause gold prices to hit
$1000/oz. or higher by selling dollars for gold, either covertly or
overtly, because outright war with China would do the same thing.
In the meantime, by the time 1% of U.S. dollar
owners decide to protect their fraudulent paper wealth with gold and
silver, the price of silver will be headed well past $50/oz, (at a
20:1, silver to gold ratio) and the silver stock boom will be just
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To the Chinese people and contacts to whom I am
copying this report. Please send this report on to whomever you feel
needs to receive this report, whether Chinese people in government,
news, business, economics departments, family, friends, or whomever. If
you want economic freedom and prosperity, you have to act to make it
December 17, 2003
Other essays by Jason Hommel:
25 Reasons To Support The Sound Money Bill - 08 July 2004
I'm Insanely Bullish On Silver - 19 June 2004
Silver Stock Evaluations - 22 May 2004
The Silver Bull Is Back - 04 May 2004
Late April Silver Update - 22 April 2004
Silver Juniors With Cash Flow - 04 March 2004
Major Frauds of the U.S. Monetary System - 26 February 2004
Market Perspective & Cabo Mining - 12 February 2004
Usury Enslaves - 19 January 2004
Sterling Mining - 29 December 2003
The U.S. Trade Advantage With China - 17 December 2003
Rising Gold Prices Will Help The Economy - 02 December 2003
Miners to Use Silver as Cash - 27 November 2003
Private Placements in Silver Companies - 20 November 2003
Is the Silver Market Too Small to Buy? - 13 November 2003
Inflation & Deflation During Hyperinflation - 06 November 2003
Silver Price Expectations of Silver Stock Investors - 30 October 2003
Buying & Tracking Canadian Silver Stocks - 29 October 2003
Canadian Zinc--Silver Potential - 23 October 2003
Silver Stocks--Comparative Valuations - 4 - 13 October 2003
Silver Stocks--Comparative Valuations - 3 - 06 October 2003
Silver Stocks--Comparative Valuations - 2 - 29 September 2003
Silver Stocks--Comparative Valuations - 1 - 22 September 2003
Silver and Cardero Resource - 08 February 2003
The Moral Failures of the Paper Longs - 22 January 2003
CFTC Response to Silver Problem - 14 January 2003
People Talking About $32,567/oz - 10 January 2003
Letter To Authorities of Silver Markets - 06 January 2003
Why no talk of $32,567/oz ? - 02 January 2003
Refuting Myths about Gold - 28 October 2002
Controlling Gold with Paper - 10 June 2002
Impending Gold Futures Default - 29 May 2002
Certain gold stocks are still cheap - 07 May 2002
A Few Supply and Demand Fundamentals of the Dollar and Gold - 06 May 2002
New DROOY Institutional Holdings - 21 February 2002
Hommels View of Gold - 23 March 2001
Gold Price Under Differing Scenarios - 24 June 2000