Gary North and China Strategy

Dr. North is one of my favorite commentators on economics, and today he has another article over at lewrockwell.com, which I hope you peruse daily.

One point North and many others make is the foolishness of the Chinese to make things for USA and take IOU's in return. It is foolishness to think the Chinese, with some 2500 years of continuous cultural development, would fall collectively for something very stupid. Such an error would be more likely among a people with say, hmm, a 200 year history.

The Chinese in fact were under foreign control for some 500 of the last 1000 years, and I count most of the Maoist era as foreign control, since the guiding philosophy was not Chinese, but an import from central europe. When Deng Xiaoping reinstituted Chinese culture circa 1979, the Chinese began to re-assume it's proper place in the world. China still has a a ways to go.

When the Chinese saw the fruits of their labors went into the pockets of Foreignors, they quit working. The first time was under the mongols, the Yuan Dynasty circa 1300, and then again under foreign domination, circa 1650, when the manchu's took over, under the Ching. How come the Chinese, so inventive in the first milennia AD, were almost backwards in the second. Why invent and create if the fruits of your labors simply went to enrich foreignors?

Just as for 250 years under the Ching people worldwide believed chinese were only fit for labor, the world found out different after the communists took over. After some terrible mistakes, the Communists have embraced freedom and autonomy and thus their economy is greatly expanding.

If Africa can throw off foreign domination as China has, it too will assume its place in the world.

But back to Dr. North and China. USA owes China 2 trillion dollars. We all know USA will never pay a penny of that back. Dr, North believes the Chinese were foolish to get caught in such a ruse.

What all of the analysts miss is over the last 25 years, while running up that balance, China was accepting technology transfer of machinery, equipment and know how, to become a prime resource for the rest of the world. The Chinese are perhaps 80% the way towards being number one in every category of industry and science. In many categories they are number one. And this only cost them two trillion dollars. To get to 100% may cost another 2 trillion, but even at four trillion, what a bargain! USA is slipping behind in all categories, with a deficit of twelve trillion on the books, 80 trillion off the books. China has no off the books deficit because the communists told the pensioners, "you are on your own now, although you are free to work." So China grows, as the president extends the Patriot Act and expands the war in Afghanistan.

In USA politicians and their minions in "private/public partnerships (fascism)" rip off taxpayers with such scams a biofuels, and are a net deficit to our economy. In China, when someone builds a another bridge, it is needed. In USA the bridge goes to nowhere.

USA could easily compete with China and leapfrog over them if we were to take the path of freedom. But Obama is continuing the path of George Bush with torture, expanding the war in Afghanistan, extending the Patriot Act, bailouts, and all of the other policies that hamstring American ingenuity.

We need the kind of free trade autonomous regions in USA that China and India have instituted.

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