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Its okay that China is buying T-Bills. The problem we have with China right now is Comparative Advantage, they have it in nearly everything we produce because of their productivity and working standards. So, right now China is taking from our economy because of those factors. However, as a country grows, so does social welfare and concern for the worker. Given China's economic freedoms, it is inevitable that they will adopt working standards similar to the United States. As a country becomes richer it becomes more concerned with externalities like health and environment. Developing countries, however, do not have that luxury. Cheap labor is what brings them into the first world eventually.
So, YES, we are living in a time of turbulence. China is saving and we are borrowing. China is selling and we are buying. However, economics dictates that we will revert to a steady state. Both countries will be better off because of trade than without. However, because we had it so good for a long time here. We have to realize that our economic 'pie' has to decrease as countries grow up to us. Bringing everything to somewhat of an equal state.
Oh, and the weak dollar has helped us export. When your currency is cheap people want to import from you.
So, everyone calm down. Its not the end of the world, just an era of turbulence.
So, YES, we are living in a time of turbulence. China is saving and we are borrowing. China is selling and we are buying. However, economics dictates that we will revert to a steady state. Both countries will be better off because of trade than without. However, because we had it so good for a long time here. We have to realize that our economic 'pie' has to decrease as countries grow up to us. Bringing everything to somewhat of an equal state.
Oh, and the weak dollar has helped us export. When your currency is cheap people want to import from you.
So, everyone calm down. Its not the end of the world, just an era of turbulence.
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