Dec. 30, 2021

Just How Much Of Our Income Goes To China?

Honestly, I saw the number flash across my screen: 97.8 billion dollars. An all-time, historic trade deficit. For this country or any country.

And frankly, it hit like a ton of bricks.

Now you and I have been talking about this since last summer. Back then we speculated whether this year's trade deficit would hit a trillion dollars. November made that a lead-pipe cinch.

Without a doubt, the year 2021 will go down as the year that America sent a trillion dollars overseas to our (quote-unquote)trading partners, China et al.

5% of our national income, now goes to enrich other countries. Making them wealthier and us poorer.

Today we'll look at some of the histories behind this pernicious event. Tomorrow, just how we got here.

So, there are no two ways to put this. Our spending is out of control. We are rapidly approaching the month when our monthly trade deficit will reach an unbelievable $100 billion.

Just yesterday the deficit reached just under 98 billion dollars. So it's no great predictive power that I use to predict another 2% rise.

Before this year we'd never had a 90 billion dollar monthly trade deficit. Before last year never as much as had an 80 billion dollar deficit.

But that's not to say there is no historic precedence for this behavior. History is replete with the graveyard of countries that choose to act that way. These countries were called colonies.

And they found themselves in this pitiful position, not because they choose to be there. But because other, much more powerful countries placed them in that position.

The times were a few hundred years ago. And the exploiting countries were called Imperial Mercantile ists. Powerful, primarily European Countries used their military might to subdue these colonies.

After the trade was established between the Mercantile Powers and the colonies. The colonies would trade raw materials and foodstuffs to the Mercantileists who would turn around and trade advanced finished products. Products which had inevitably a very high-profit margin.

The poor colony inevitably grew poorer, lacking any pricing capacity. While the vast empires grew wealthier by the year.

It was unfair, and history has condemned this program of exploitation.

But in the wildest dream of the most avaricious of the Imperial Mercantile ists. They could never imagine the transfer of wealth that is now occurring hundreds of years later in the 21st century.

This year, it looks almost certain that the United States of America will trade away fully 5 cents of every dollar we earn, to a foreign power. A country far away. As they become richer, and we poorer.

And look to our largest trading partner, China. With them, we provide primarily raw materials, agriculture products. The goods and products of an underdeveloped third world colony.

While China trades with us, the highest of high technology. The iPhone, laptop and other computers, and high markup consumer goods, like Nike Sneakers.

And before we point our fingers at China. Stop and realize that this is all part of a business model developed here in the US designed to exploit the US.

I give you Apple Computer and Nike Sporting Goods as the two companies which first developed the modern version of Mercantilism.

That is the combination of cheap foreign labor to produce less expensive finished goods. Hooked up with America's seemingly limitless consumer market. Sell to the American's, they have lots of money when their mantra.

The problem is, that those Americans are running out of money. And so much the more with this year's trillion-dollar trade deficit.

You see in a perfect economy, what economists call a virtuous cycle is created. A cycle in which workers produce the goods and services that their countrymen want to buy.

Those purchases give those workers, in turn, the money to buy the other guy's goods and services. And so collectively the nation grows wealthy.

It's a model that worked for nearly 200 years in this country and made America the economic wonder of the world.

But we've blown out the virtuous cycle. It's gone. Now a trillion dollars that should have gone to American Industry and American Workers are sent overseas. Paying those workers, making their industry wealthy.

Next time you look at your paycheck, just imagine what you could do with a 5% raise. Because that's how much more income this country would have if we could only close that deficit.

Just imagine if the factories and industry in America had a 5% bump in income. Imagine the technological advances, the production efficiencies, and the environmental advances we could make with that extra income.

Unfortunately, it's not going to happen this year. This year, it's a near certainty that $1 trillion of hard-earned American Dollars will have been sent overseas, to advance those economies.