The Trade Deficit and its Financial Effects

Foreign countries, like China and Japan, have run a massive trade deficit with the US for a number of decades. On the face of it, a trade deficit is not a bad thing. Foreign countries drop off real goods in America, and take paper money dollars in return. In the natural course of events, the trade balance has to eventually reverse, usually accompanied by a relative devaluation of the money. That is, either the dollars will come back to America in equal trade, or the value of the dollar will drop because of excess supply. The lower dollar would then equalize the trade balance.

However, what happens when they continue to accumulate those dollars year after year, never allowing the dollar to drop because they are a Communist country and pegged their currency to the dollar at an absolute level? That is exactly what we are seeing now.

For years, China has flooded America with their cheap goods, not allowing their currency to rise against ours, but instead hoarding dollars, investing them in Federal bonds, financing the federal budget deficit. This has enabled our Federal government to spend more than their bring in, based on artificial debt-based imbalanced budgets. More than 25% of our federal debt is owned by foreigners, dwarfed only by the debt held by the Federal Reserve itself at over 52%.

It has also allowed the Chinese to pump up their manufacturing economy, as their labor has been held at artificially low levels. In effect, Chinese workers are exploited to finance our budget deficit. The Chinese Communist government views it as a necessary step to build up their own national power. Labor protest are simply illegal, and brutally suppressed by the Communist government, so they can do it. American multinational companies love it because it allows them to fatten their bottom line by accessing cheap foreign labor. American skilled labor is screwed over as their skilled jobs are outsources.

However, thankfully for the good common people of both countries, the game is just about up. After decades of being gutted by so-called free trade outsourcing and off-shoring, the American economy no longer has the wealth-generating ability to earn its way out of a recession. The government is promising to throw money into the deflationary pit, but they do not have the money to throw! These stimulus and bail-out funds are coming with deficit spending, based on MORE BORROWING!

It is almost insane, as they attempt to borrow their way out of the current crisis, when the cause of the crisis is too much debt. The only solution is to end the debt itself, which has grown too big to ever be paid off. Just paying the interest on the national debt consumes almost 10% of our total federal budget.

This has to end, and we need to face the fact that there is only one way for it to end: default on the debt.

No man can sell his children into slavery! The child born into slavery has no obligation to accept his chains, simply because his father's contract put him there.

The debt chains placed on our necks are not our doing, and we do not have to accept them! Cancel the debt now! Save the economy and our way of life before it is too late.