Wednesday, June 29, 2005


The latest red herring that the Dems are trying to drag across the consciousness of the American people is fear of China. Take the trade deficit: What it means is that China sends lots of goodies (industrial products) to America and for most of that all they get in return is bits of paper (U.S. dollars). THAT should worry Americans? It seems like a sweet racket that Americans should be rejoicing about to me!

And because the panic is so silly, the Dems have to get really shrill in an attempt to disguise their silliness. As economic journalist Martin Hutchinson comments: "The late unlamented Senator Reed Smoot (R.-UT) was spiritually in full flow at the New America Foundation's Forum on America's Economic Future Wednesday, as Pennsylvania Governor Edward Rendell, ex-Senator Tom Daschle (D.-SD) and Senators Richard Durbin (D.-IL) and Byron Dorgan (D.-ND) competed as to who could say the nastiest things about China. Presumably trade policy is not covered by the "hate speech" laws these gentlemen favor, but any luckless Chinese exporter present must have felt like an African American from the old South who'd wandered into a Ku Klux Klan convention".

And Kristof of the NYT is at it too. He is getting hysterical about America's foreign debt. He is particularly concerned that the Chinese have been buying lots of U.S. bonds as a way of putting their trade surplus into a piggy bank. He says: "The biggest risk we Americans face to our way of life and our place in the world probably doesn't come from Al Qaeda or the Iraq war. Rather, the biggest risk may come from this administration's fiscal recklessness and the way this is putting us in hock to China.... Another issue is that three-fourths of our new debt is now being purchased by foreigners, with China the biggest buyer of all. That gives China leverage over us, and it undermines our national security"

It undermines American national security that China has lots of pretty bits of paper issued by the U.S. government? I'd like to know how! It's the other way around if anything. If real problems with China did develop, the U.S. government could cancel all those bits of paper and thus give China nothing in return for them. So the fact that China is putting its savings into U.S. paper SHOWS that China has no intention of permitting any serious future conflict between itself and the USA! It's the best peace treaty with China that the USA could have.

The above explanation is of course a bit simplified but it gives the essence of the story.

(I have also put this post up on Blogger News)


No comments: