The usual tirade against trade with China


The symptoms that beset the US economy today are apparent. “

Part II

The American economy was then supported by its enormous industrial and productive production. It was the dynamo, producing and manufacturing as many goods as China is today. The United States holds nearly 70% of world production and is invariably the world’s largest importer of raw materials. This prompted the US dollar to engage in unilateral monetary policies, not caring that it might turn against it to promote deindustrialization and de-globalization instead. Of course, this policy was based on the idea that the United States could control and dominate the world economy. Nonetheless, the symptom of bad things to come came sooner than expected. The symptoms that beset the American economy today are obvious: First, the belief that by allowing the dollar to revalue, the United States could import so many goods at cheaper prices. The decoupling of the US dollar from the gold standard has in fact completely abrogated the Bretton-Woods Agreement of 1946. Its financial advisers have every reason to rely on the strength of its industrial production, the only industrial power spared by the devastation of World War II. Second, barely after the implementation of the Marshall Plan, the US dollar could already feel the shakes in its economy. In Europe, Germany and Italy competed with its allies like the UK and France. In Asia, Japan led the pack among the so-called economic tigers. The threat to her economy and financial situation became evident when she sought a counterweight to maintain her existential dominance. Third, barely after the United States left the gold standard in 1971, world currencies suffered a sharp fall. The Philippines, which just suffered an economic shock in 1961 after Macapagal devalued the peso as a “floating rate”, had to abandon its anti-usury law to keep the remaining value of the peso viable in the currency market. Fourth, the decoupling of the US dollar increased our exports, which many could barely understand. The system released the value of the dollar from $ 35 an ounce only to skyrocket on the basis of US GDP forcing countries to devalue their currencies. In the meantime, local exporters have welcomed the devaluation so well that it has “increased” their exports in volume, but not in value. Gradually, this translated into a huge trade deficit, with countries importing raw materials in exchange for their sparse manufacturing industry. It was this system of currency valuation that enabled the United States to assert its short-lived dominance. China, on the other hand, has perfected the policy of import substitution to initially allow it to manufacture goods at a lower price. It was during this period that Chinese products labeled as “imitators” flooded the market. But soon after China improved the quality of its products and perfected its production and manufacturing technology, it slowly raised its price just enough to allow foreign investors to continue the practice of outsourcing. This explains why the United States reluctantly allowed China to join the World Trade Organization and consequently allowed it to achieve an 8% annual growth rate of its GDP. Fifth, the decision to ditch the gold standard forced the Philippines to ditch its anti-usury law simply to keep the remaining value of its currency. The policy resulted in the removal of the restriction, namely the interest rate on loans. The policy was initially well received by exporters, regardless of the fact that the floating rate mechanism would cause the country’s trade deficit to widen. The country has suffered from a permanent trade imbalance, so development projects have fallen behind. It was during this period that the country really got into debt. More devastating, the devaluation of the peso forced the country to raise the minimum wage as the depreciation in the value of the peso affected the country’s cost of living and commodity prices. So from P2: 1 USD, it jumped to P6: 1 USD until it stabilized at P8: 1 USD. Sixth, the lending countries have also tightened their grip on the debtor states due to the lack of foreign exchange to settle their loan obligations. Many have had to call for a moratorium or enact laws to allow foreign ownership and / or partnership to formerly nationalized companies. Seventh, the decoupling of the US dollar from gold has made it the de facto reserve currency of the world. This has led financial institutions to ask borrowing countries to agree on an Exchange Rate Adjustment System (CERA) to pay off the loan based on the current dollar value. This is in addition to the interest rate built into the flexible exchange rate system. As a result, many debtor countries defaulted on payment. The effect was catastrophic for their economies because, while they fought to avoid high interest rates, they also fought to prevent the erosion of the value of their currency. Eighth, many countries have been forced to export their production abroad to reduce their production costs. The United States has been trapped in this anomaly of exaggerating the value of its own currency in an attempt to maintain its status as the world’s largest economy. China’s production consignment system for a short time turned out to be lucrative and profitable. The result was an artificial surplus, with exporting countries competing to reduce their own cost of production and maintain their concession. Despite the windfall, the US dollar continued to suffer from inflation. The price of goods and services often continues to rise relative to the cost of production. Inflation and the trade deficit continue to hamper the US economy. Monetarists have not been able to explain why despite the withering of production, the cost of wages and services continues to weigh on the US economy. Monetarists have suggested printing more dollars called “quantitative easing” to control interest rates. In fact, the United States has not seen a real wage increase since 1971. The effect has been very devastating as prices continue to rise while the economy has not seen an increase in the wage. production. Others call it “stagflation,” or that characterized by stagnation and inflation. Many could not understand because while profits and sales increased, production remained stagnant. Ninth, outsourcing became the shortest route to deindustrialization because, alongside unemployment, industries and factories were only dismantled to be erected in countries with lower production costs. Eventually, cities were reduced to depressed areas populated by homeless people, drug addicts and violent people who could not afford their rent and depended only on social assistance. To keep the US economy moving, the monetarist suggested the idea of ​​pumping more money into the market. It was a prosaic economy created by the United States. The allegedly richest country in the world turned into a consumer society that imported almost everything it needed. It was destined to become poor because it abandoned the immutable Marxist economic formula that it is in production that wealth is produced. Unprecedented numbers of homeless people have proliferated in America’s urban centers, its health care system has become the most expensive in the world, an education system obtained only through usurious student loans, a standing army serving only as a palliative employer to graduate from thugs and carry guns. criminals in their own society, and most disturbingly, a decaying infrastructure that reminds people of their past military adventurism.

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