Having China as a trading partner is just like having a tapeworm.

You look good. You feel good. And you sure as hell have a good appetite. But you're losing weight.

The Chinese have deliberately undervalued their currency in relationship to the dollar. Let's say the Yuan exchanges at 10:1. That means when you buy a $100 microwave, you won't pay Y1000. You'll pay Y1100. So what, you say. Well, that means we are paying a hidden tariff on every purchase. So what do they do with that extra Y100 ?

The Chinese have evolved into a giant manufacturer of goods (mostly cheap junk that we buy at discount stores) so they spend a much higher percentage of their export dollars for raw resources. Oil,metals, components. Commodities sold on the open market. Here they get $110 (Y1100) worth of chromium for......$200. Neat, huh?

So how do we fix this? Can we just raise the price on American products sold to the Chinese? Nope. Because the commodity we sell to them most are US Treasury notes which are sold on the open market just like all other commodities. Get the picture? They are buying our debt at a discount. They,and we, are undermining our economy. You can't say "We will sell the bond market US notes that pay 3% interest but we must add a 10% surcharge to make up our losses". How many buyers would we get? NONE! Can we impose a 10% tariff on imported Chinese goods? We can and that is the usual remedy.

But the Chinese just made it clear: ANY efforts on our part to address the balance of trade problem will (by inference) see them stop buying our treasury notes. The euros are broke and can't buy them. We would be unable to operate on credit as we are now and our economiy would run outta gas and stall. Immediately.

What is the solution? I have no idea. But this problem affects our ability to float bonds (treasuries) and finance any more "stimulus" programs. Every dollar we borrow feeds our tapeworm and brings our starvation closer. We cannot afford more stimulus spending, period! It is NOT a matter of being generous or stingy. It is a matter of economic survival.

thanks for that post.. i knew some of it, but not all of it, i buy tools at harbor freight, and some are pretty good and just about all are from china, but i dont use them alot, i do use my dial and digital calipers at work , the price when harbor freight has some things on special the price is to good not to buy, their calipers are fine for where i work, if i worked in a fancy machine shop i would only do like i use to use starrett or brown and sharpe, i also have a set of zero to 12 inch micrometers, but they dont have them now, they are fine, in a wood box, ane each has a standard to check it, and carbide faces, and they are better than some guys that had polish made micrometers, but when i went to work where i do, a guy i had worked with before told me to leave my good tools at home, lol, where i work has tons of grinding dust, and not close tolerances work, its not like a real job shop, just cut rails, but i have starett micrometers not that many but i dont take them there to work, i use the ones i got from china, but like i said i cant find anything wrong with them, and i like my zero to 8 inch digital calipers, and zero to 12 inch digital, they cant get off they have a zero button to set them to zero, when they are clean and closed, and u have button to change them to metric, but we dont use metric there, well im rambing, take care,

We can buy American/,we just have to search!
God bless
Our President