The time to stand up for the American worker came and went while Ray Dalio was busy getting absurdly rich from the financialization of the economy.
China’s 40 year economic boom has all the trappings of miraculous growth. Real wealth has been created. Living standards have improved. And mega cities have sprouted up from the barren earth like garden weeds following a spring rain.
- Several decades of perpetual credit creation courtesy of the Fed’s artificially low interest rates have had countless unintended consequences for the global economy. In short, the economy’s reconfigured itself in ways it otherwise wouldn’t have. One example is the offshoring of U.S. jobs to China and the massive trade imbalance between the two countries.
- Where did American consumers get the endless supply of credit to consume all the made in China goods? Where did the money that showed up in the paychecks of Chinese workers come from? If you follow the money back up the supply chain the culpability for its origination is the Fed.
- The real dirty dead, which allowed the giant fiasco in the first place, occurred on August 15, 1971. That’s when Nixon defaulted on the Bretton Woods system and terminated the agreement that allowed other nations to redeem their paper dollars, acquired through trade, for gold. Since then, debts and deficits have gone completely haywire.
- As China reaped more and more of the Fed’s fake money, Beijing had to debase the Chinese yuan at greater and greater rates to keep their cheap labor advantage over U.S. workers. Year after year, decade after decade, the U.S. heartland was hollowed out and deindustrialized, and its prior vitality was reconstructed in China.
- All the while, the excess credit was used to financialize American businesses, where, rather than borrowing money for capital expenditures, corporations borrowed money to boost share prices. Wall Street was rewarded for their part in the money shuffling, as the cheap credit that pumped up financial assets was the same cheap credit that pumped up China’s economy. Main Street, on the other hand, was rewarded with stagnant wages and exploding debts.
- When it comes down to it the gripes of the American worker and the Chinese worker – and all workers of the world – should be united not against capitalism, as promoted by Marx. But against the curse of fake money and the governments that perpetuate it.