economy 2013 2014

Chinese Economic Stimulus of 2013 and 2014 - What To Build Next?

 By Lance Winslow

 The G 20 is now admitting that the world's central banks are controlling the global economic game. Many economists have stated that we have a race to the bottom with regard to various national currencies. 

We have currency debasing, manipulation, and purposeful printing of money in the name of economic stimulus. 

 Each time that currency is worth less and less which gives an advantage to that nation's manufacturing sector, and a trade surplus benefit, but let's also look at the long-term costs of all this.

Many have accused China of currency manipulation, and in the past that was probably so. Of course now, they are continuing building cities to nowhere, propping up various industries, and putting forth additional stimulus all of which is causing their currency to decline. In fact, in the first part of 2013 China's currency had declined in value at the highest rate in quite a while.

There may be no end in sight, because China can continually do centralized planning projects which might succeed or fail, but regardless it will cause their currency to drop, based on recent historic events.
It would cost $380 Billion to rebuild the Great Wall of China - Reference: "Secrets of the Great Wall" YouTube Video. They could put millions of people to work rebuilding the Great Wall of China, do you see that point? This would debase their currency and cause wage inflation but it would be very good for their economy in many other ways in the short term and due to currency value drop.

There was an interesting piece in Bloomberg recently titled; "Yuan Drops Most in Two Months as PBOC Cuts Fixing on Sliding Yen," by Fion Li published on February 18, 2013. Apparently, the currency wars are in full swing, but we can no longer blame China for debasing its currency due to bad stimulus, heck they are just following the Obama Administration's lead. So should we really blame China for what they are doing?

Well, in my views; yes, probably we should by philosophically there are counter arguments here.

Nevertheless, we also see that Japan is also debasing its currency, along with a number of other countries around the world. We have a race to the bottom, and in the end it will not be good for anyone, especially the United States with a somewhat strong dollar.
Do we dare follow all these other nations' race to the bottom, and should we complain about it since we are indeed one of the nations that started the snowball in the first place? Should we inflate the global economy to protect us since we hold the reserve currency?

These are all questions that global economies must ask themselves, and one which US citizens should understand because it will affect us all on a personal level. Please consider all this and think on it.