What is the current state of the world economy?Is America Really in Decline?Why didn't China take tougher measures against the United States, but continued to take advantage of its own resources to the West?These questions may confuse you, but don't worry, this article will solve them for you.
The American way of life is built on debt. They consume more than they earn, leading to a problem known in economics as a deficit. The problem has reached its worst level in history – up to minus $1 trillion a year. This means that Americans import $1 trillion more goods and services from the rest of the world than they export. This is a staggering number, and it reflects the special position of Americans in the global economy. Without this status, Americans cannot sustain their economic and foreign policy. Just look at their military spending, which is up to $858 billion a year, to see how dependent they are on this "extra" $1 trillion. Without this money, the Americans would have to close their military bases around the world and drastically reduce the size of their troops.
The United States spends an extra trillion every year, and where does this money come from?The answer is simple, print money. The United States, using its monetary hegemony, can issue dollars at will without fear of inflation. In this way, the United States can spend more than it earns, and at no cost. In contrast, other countries can only borrow to keep their economies afloat. The U.S. has printed a staggering amount of money, with nearly $6 trillion printed in the last two years alone. The European Union also followed suit and printed 25 trillion euros. Without these money prints and subsidies, the American economy would have collapsed long ago. We also remember the financial crisis of 2008, when the United States relied on massive quantitative easing to save the market.
Behind the high level of consumption in the United States is a huge fiscal deficit. So, what about the fact that the United States borrowed this money from **?Some say that the United States is fed by the whole world. This is patently false. The world is not all creditors of the United States, and many countries are like the United States, mired in debt. Debtors cannot support each other. The real support for the United States is the countries that have the habit of saving. These countries are earning more than they spend, and they save the excess money or buy American bonds. In other words, the United States is supporting itself by borrowing money from wealthy and frugal countries.
The American way of life is sustained by borrowing. They attract global capital inflows through the issuance of U.S. Treasury bonds. They also continue to print dollars and use the dollar's status as a reserve currency in the international arena to allow other countries to keep their foreign exchange reserves in dollar accounts at U.S. banks. In this way, they can issue additional dollars at will, thereby devaluing the reserves of other countries. This is the secret of how Americans rely on the wealth of other countries around the globe to feed themselves.
Americans enjoy spending more than their income, and behind this is the support of some frugal countries. These countries lend or store excess funds in dollars to the United States, thus helping the United States maintain its fiscal deficit and currency over-issuance. But the trade-off for this is that their savings are eroded by the depreciation of the dollar, while the United States can exchange cheap banknotes for physical goods. So, which countries are paying for the United States?Why should they put up with the bottomless pit of the dollar instead of choosing other, more valuable currencies?
Some countries have very good economies, and their revenues far exceed their expenditures, creating a ** surplus. Surplus is one of the important indicators to measure the economic strength of a country. By this standard, the five most honest and hardworking countries in the world are:
The U.S. debt problem has been the focus of global attention, and the U.S. borrowing is mainly supported by some major countries, the most important of which are China and Russia. The two countries do not have friendly relations with the United States, but they hold large dollar reserves, which is surprising. So, which countries are still holding dollar reserves?How do they help the U.S. issue unrepayable dollars and take on the risk of U.S. inflation?Let's take a look at the following data:
We can see that China has long occupied the first place in the list of US bondholders, while the United States regards China as an enemy, and without China's support, the United States may not even be able to afford to eat expired burgers.
Americans' standard of living is largely maintained by borrowing money from countries such as China. China is the largest creditor of the United States and has a huge influence on the American economy. Suppose our country suddenly terminates its contacts with the United States, no longer buys U.S. Treasury bonds, or even sells off its dollar assets and turns to U.S. as the main reserve currency, then the U.S. will face the double blow of depletion of funds and inflation, and the economy will fall into a deep crisis. In that case, why don't we yet take the opportunity to deal with the hostile behavior of the United States against us?
The U.S. market is huge, and a crisis, civil war, or other turmoil would hit the global economy hard. Demand for oil and other commodities will fall sharply, and we will also face difficulties. Therefore, we need to prioritize other markets and improve our own risk resistance. As can be seen from the Russia-Ukraine conflict, this process is already accelerating. China has significantly increased its contacts with Russia, India, Turkey, Brazil and many other countries, while reducing its ties with the United States and the West. In addition, in the past year, more and more countries have chosen to settle in their own currencies, including China, Russia, India, Saudi Arabia, Brazil and dozens of others.
The rapid collapse of the American economy is not beneficial to anyone, but the trend of declining living standards of the American people is already inevitable. Recently, Yellen, the United States, openly threatened China in her speech, claiming that if China does not abandon its development strategy, the United States will impose sanctions on China. It's a stupid and dangerous approach, and it means that Americans are dragging down our economy at the expense of their own well-being.
The US deficit has reached a record high, but they do not dare to take drastic measures against China, because it will exacerbate domestic contradictions. They can only choose to gradually reduce their imports from China to ease their economic pressure. This is not a "** war", but a "currency war". In order to stimulate the economy, the United States printed money aggressively, which led to the depreciation of the dollar and the rise in inflation. Their inflation target is 2%, but in fact it has exceeded 4%. They can no longer continue to release water, otherwise it will cause an even greater crisis. They will no longer be able to borrow money from China, because China has seen through their tricks and has begun to massively ** US bonds and reduce their dependence on the dollar. Americans are already feeling the decline in their standard of living, the money in their hands is becoming less and less valuable, and they are buying less and less goods.
The United States can no longer respond to the crisis by printing money, as this will only exacerbate inflation and weaken the purchasing power of the dollar. The United States has also lost credibility in international lending, as countries around the world have lost confidence in it and have sought more stable relations with other countries. The United States also cannot rely on force to plunder the resources or markets of other countries, because the existence of nuclear ** makes it dare not act rashly.
The United States can only auster spending and rely on its own productivity and innovation to sustain the economy. However, it is not easy. As China gradually emerges from the influence of the U.S. economy, Americans' living standards will face a long-term decline. This process does not happen overnight, but slowly and persistently.
The U.S. economy may be in turmoil, but we prefer it to transition smoothly to reduce the impact on us. We will not sacrifice our own interests in order to fight the United States, which is not in line with our rationality and morality. Europe is a prime example, they have recently been intimidated and sanctioned by the United States, but we will not compromise the well-being of the Chinese people in order to counter the United States. So we are still exporting our resources or products to the West, but this is only a temporary strategy, and when we establish new markets in other regions, China can get rid of the dependence of the Western economy and enjoy its own development and happiness.