There is so much noise and propaganda in the press today that most people are simply overwhelmed and thus they don’t know what to believe. They don’t have the helpful filters of history and Austrian economics to help them squelch the noise. Take the situation where Bernanke and Geithner have been trying to vilify the Chinese people for several years now. Basically, our financial leaders are upset that Chinese rank and file are unwilling to go into deep debt in order to consume American made goods Instead, the Chinese choose to save for a rainy day. Geithner and Bernanke have called this “the paradox of thrift”. They know that without increased debt based spending the global debt Ponzi will collapse. Thus, anyone that doesn’t engage in reckless spending activity is an enemy of the scam. The other attack on China is that they have been keeping their exchange rate too low. While that may be true, the implication has been that if the Chinese let the Yuan appreciate a bit against the dollar, American products will become more affordable for the Chinese people who would then be spending stronger dollars.
By saying these things Geithner and Bernanke prove that the best con men mix a little truth with a lot of BS. They imply that a 20% or even 30% appreciation of the Yuan will have some big positive effect on American jobs and on the global economy. But the Chinese leaders are correctly pushing back on these math-less statements by our leaders because they know 20 or 30% won’t make any difference. Even 200% or 300% won’t do the trick. Chinese factory workers make $300/month. Even if they made 10x more (the equivalent of 3k per month or 36k per year) it would hardly be enough to buy American made goods. So now the Chinese leaders are calling these currency manipulation assertions by US leadership “red herrings”. In other words, our leaders are being accused of trying to distract the people from the truth of the matter.
Call me crazy but I’m going to have to agree with China on this one.
