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07/28/2007 - 7:21am
China Will Soon Own The United States
Imagine that you take home $3,000/month from your job, and that's your only income. Let's also imagine that you have a credit card with a $5,000 limit, and that you spend $3,500/month. That is, you spend all your cash, and you borrow $500 each month on your credit card. You can see that this is not sustainable for a long period of time, roughly 10 months because your card will be maxed out.
But what do most people do when their card is maxed out? As long as they've been "good debtors" and paid all of their payments on time, they can get additional credit either by an increased limit or by acquiring debt from other credit card companies, perhaps even upwards of $20,000. At some point, creditors are going to believe that you are no longer a good credit risk. Not only will they stop lending money, but they are going to want their money back. Not only that, but if your conduct doesn't match their terms exactly (timely payments, nothing is "lost in the mail"), they can call all of it due now.
So now you make $3,000/month, you have a lifestyle where you spend $3,500/month, and need to make debt payments on $20,000 (about $400/month), which means you need to cut your $3,500/month lifestyle to $2,600/month for approximately the next 30 years so you can afford to live on what you make. On a side note, if you had not tried to live beyond your means, you'd be able to continue to live a $3,000/month lifestyle for the next 30 years.
This works the same way whether it's an individual or a nation of 300 million. As a country, we live beyond our means. This doesn't mean we individually live beyond our means (though many Americans do), but that our social programs have caused a drain on us and we can't afford them. So where do we get the money to continue to afford this? In addition to printing some of it, we borrow most of it, about $3 billion each day. And as you can tell from above, when you borrow money, there are limits to it. Creditors will only give you so much rope, and eventually will want their money back. And, in fact, they'll want it back more quickly if they don't like our conduct.
Here's an example of our creditor not liking our conduct:
China warns U.S. against "smear attacks" on imports
We import tons of food from China, and there have been a few recent issues that have made news, like tainted dog food. The Chinese embassy in Washington has released a statement condemning our comments about their tainted food, saying that we are blowing the situation out of proportion, and that 99.2% of the food we import from them passes health standards.
But that means that 0.8% doesn't. And when we import millions of tons of food, 0.8% is a lot of food. It means that roughly 1 out of 120 people, or 2.5 million people in the country, will eat tainted imported food from China each year (most of the food is not inspected). That sounds like a big deal.
Just look at the title of that article, "China warns U.S. against 'smear attacks' on imports." They certainly are getting brave, and understandably so. Because we owe so much money to China, they virtually own our dollar and our economy is in their hands. Someday, we'll need to pay them back, and the more we delay the inevitable, the harder we're going to suffer when it happens.
Posted by: Walter Burien
The US Government, local and federal promote through the media only one-side-of-the-coin. The trade deficit with China and the holdings of US Dollars by China is what US government promotes to maintain an illusion created by design of a one sided picture.
The other side of the coin they intentionally omit is: US Governments investment ownership within China.
Do you remember about seven months ago the stock market plunged over 600 pts in one day? Well, what happened on that day was China and India said "No more" to US Government investments in their stock market and debt instruments. They capped further investment by the US Government investment funds due to the fact those US Government investment funds were taking over their economy and thus their country.
In China, US Government investment funds sank in about two trillion dollars between 1995 and 2000. US Government now was setting up to pick the big cherry, cheap labor in China. US Government now owns most of the fortune 500 companies by investment. As an example of just one (1) government investment account out of tens of thousands, here is a listing from the NY State RF CAFR: http://cafr1.com/NYSR.html
Government since the 90's promoted (insisted) outsourcing to US Corporations that they owned by stock ownership and debt instruments given, that they take advantage of the cheap labor so that the investments held by government would then, in so many words, "Go through the roof." Well, they did.
US Government's investment of two trillion dollars blossomed to six to seven trillion dollars come 2007. Additionally, US government made an extra two trillion or so by investment from stock rises in those US Corporations they got to outsource to Mexico, India, and then China.
Back in 1978, the Feds recommended that all local government pensions participate with an off-shoot of CALPERS under a different acronym other than CALPPERS.
CALPERS INTERNATIONAL was created to participate with the off-shoot, but is not the parent corporation, but participates by investments of about one trillion with the parent International management group, set up outside of the US. Here the local governments, by investment could avail themselves in the benefit of derivative trading, cheap labor, and covert take-over of international holdings. Well, the effect was creating the biggest pool of funds unequaled in the history of this planet. The funds annual rates of return were from 18% to 34%. Compound those apples over two decades. They now have over twelve trillion dollars under management as of 2007, of which CALPERS International through a matrix of buffer international investment funds to mask the parent has about a 12% holding of.
To us, not a peep from the media, any political party, or government sponsored educational group. As they say, Silence is Golden! http://cafr1.com/SilenceisGolden.html
US Government stands a better chance of "breaking the bank" in China then China does of doing the same to US. That is why China cut off any further investment in China by US Government investments seven months ago. They are not as dumb as people here may think..
Posted by: Nick Coons
Very nice contribution, thank you!
<They now have over twelve trillion dollars under management as of 2007, of which CALPERS International through a matrix of buffer international investment funds to mask the parent has about a 12% holding of.>
Does this mean that our government has the ability to pay off our national debt entirely with several trillion left over?
Posted by: Walter Burien
A complete audit of federal AND local government's investments would probably reveal assets that could cancel most if not all of government's debt. In fact, many local governments fund their own debt with the use of their own investment funds. Cute don't you think?
On one hand, they promote the debt, and on the other they use their own investment funds to fund that debt locking the public into repayment. Wouldn't Bugsie Segal or Al Capone be so proud?
Posted by: Dave Henning
Walter, I have heard you speak and I have gone to your web site. I feel like I am only partially understanding your information, yet I have a hunch you are really onto something important. I would like to think that I am at least of average intellegence, so I am thinking others might also be missing the heart of your message.
Would it be possible to prepare a new document that is basically a primer to this whole concept of government investments. It would be helpful if you could put together a 3-4 page document that in simple terms explains what the government is doing with regards to these private investments. Perhaps, giving one example of how these investments are initiated and maintained and how the money flows from us to the them. Then, describe a simplified CAFR statement, excluding any non-relevant details.
I think for many of us, this is new territory and we need more of helping hand.
Posted by: Walter Burien
You must have just glanced at my site. The questions you ask and the recomendations you make are there.
Try http://CAFR1.com/TNT.html as a start.
The KEY point you want to grasp is that the CAFR is "The Annual Financial Report" a report the taxpay should have been going over with a fine tooth comb for the last 65 years and why both political parties, the press, and controled education never mentions a peep. (Their hands are to deep in the pockets to mention it) So, try reading: http://cafr1.com/SilenceisGolden.html
Do a Google search on CAFR and you will get two or three million hits. Then try to get your local politician to make simple mention of the CAFR in public forum, put a recomendation for the taxpayer to review it. They WON'T. They knjow the toes they would be steping on. So now read:
Pay special attention to the first paragraph.
Hope this helps you,
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