For over a year economists have been discussing the fact that China has emerged as the largest global consumer market.
Meanwhile the US has claimed jobs and income growth, which has been demonstrably proven false. It is not possible to have expansion of jobs and income while concurrently having mass layoffs and retail closures. It simply doesn’t work that way.
Some have pointed to the stock market numbers as indications of economic health. I’ve covered many times how the stock market is an inverse indicator of the general economy at worst or completely unrelated at best.
Now new numbers are telling more of an advancing tale of the decline of the US market. Perhaps this will be enough for more people to awaken to the truth.
In the most recent Global Fortune 500 list, the US is headquarters to 121 of the most profitable companies. China is headquarters to 129 of the most profitable companies. 20 years ago, in 1999, China was headquarters to 8.
In the global list of the largest banks, 3 are headquartered in the US. China is headquarters to 4. There are one each in Japan, the UK and France. JP Morgan Chase is the highest on the list of American banks and it comes in at number 6. The Chinese banks occupy spots numbers 1,2,3 and 5. This has remained unchanged for several years, even as US media makes claims that China’s economy is declining and US economy is growing.
In the last few months, cryptocurrency has seen a resurgence with Bitcoin as of this writing valued at $11, 834 and precious metals are increasing in value with gold spot price now $1499 per oz, while bonds have shown an inverted yield curve, with short term bonds having more return value than long term bonds.
At the last meeting of the Federal Reserve board, the interest rate was decreased by 0.25% to between 2% and 2.25%. This is unprecedented, as the only time to interest rate has ever declined has been when the economy was showing signs of recession and the interest rate was decreased to encourage spending to spark growth. If our economy is doing so well, why do we need to decrease the interest rate, which is already extremely low? That leaves virtually no buffer for safety if we enter an officially recognized recession/depression.
Of course, those of us paying attention know the US has remained in a recession since the 2008 crash. Yes, it was a crash. Not a “crisis”, not a small event, a crash.
Yet the China trade war still has major implications.
Last year, China temporarily halted purchases of soy from the US, leading to Trump announcing a bailout of mostly corporate farmers to the tune of $16 billion. As of this week, China responded to increased tariffs on Chinese goods with a complete ban on agricultural purchases from the US.
Trump’s response? Threatening even more tariffs on Chinese goods by as much as an additional 15% on top of the recent 10% tariffs.
Last year, China temporarily stopped buying oil from the US. They began buying oil again in February this year but at much lower amounts, less than 50% of their previous purchases. China is likely to respond to this recent threat with banning all oil purchases from the US for good.
Many alleged economic “experts” say the loss of sales to China is basically no big deal and the US will gain additional revenue by selling to Europe. They do not explain where any “additional” sales are going to magically appear from. I haven’t heard of Europe having a sudden increase in their desire for soybeans.
Many countries are banning the import of many US agricultural products because of concerns regarding GMO’s and glyphosate, declared a likely carcinogen by the World Health Organization. The “experts” too often fail to mention these concerns or the fact that the US State Dept has literally tried to sue other nations to force them to accept sales of our produce in contradiction to the will of their own people, who demanded the bans. Alternative agricultural producing countries have primarily already turned away from GMO’s and glyphosate, meaning they are more likely to buy and sell from each other than from the US at this point. Even a large percentage of Americans have objections to the same things.
As of this past week, Trump announced another bailout of farmers to the tune of $28 billion. Combined with the $16 billion already mentioned, that adds up to $44 billion, which comes to a cost of $130 each for every man, woman and child in this country. Plus he has promised he will bail the farmers out again next year if necessary. Of course, the major recipients of these bailouts are corporate farm owners and investors.
Trade deals, especially with such contentious issues as China is facing with the US at this moment, once China establishes trade agreements with other countries, they will not easily be swayed to change those agreements back to the US. They are in the process of negotiating new trade agreements with other countries right now. Which means future sales may be lost indefinitely.
No matter how we look at it, the US cannot force other countries to buy from us. This is even more true when we try and force our sales onto other nations at the point of a gun, literally or figuratively. We cannot sue other nations into submission. Other nations see the fact that we are threatening all of them. The likely outcome is that they will form alliances in opposition to our government. That risk increases when considering that we have a trade deficit with most of the countries we trade with. It increases more when those countries view our massive national debt which has only increased every year for 18 years now and the suspension of the debt ceiling. All those nations are acutely aware that we do not have the resources to pay off that debt.
The road to where this nation is at this moment began decades before Trump. He did not cause all of it but is definitely making it worse. Of course, Trump was merely a logical progression of what came before him with each successive administration since Reagan, at the very least. The flow of wealth to the top is now about to capsize this country. The Panama Papers. Tax cuts for the rich while our own citizens suffer. Collapsing infrastructure, rising “defense” costs.
In terms of international relations, we have been following the same path for well over 100 years. Trade agreements under threats, regime change, the fiat petrodollar, American “investors” who then try to rule over other countries.
We are now in the precise circumstances where all empires in history have fallen. Only on a larger scale.