(04-07-2009 02:49 AM)RobertN Wrote: (04-06-2009 07:01 PM)Paul M Wrote: (04-06-2009 03:04 PM)DrTorch Wrote: Ok, so what do you think the banks do w/ it? Just keep it in some chamber guarded by goblins?
Wouldn't surprise me if he responded "yes".
I was going to say invest in China so you basically correct.
Umm.. Rob, you don't understand much about how things work, do you?
The net flow of investment capital is FROM China TO us, not vice versa. We send them money to pay for our imports, and that money pretty much completes the cycle when China invests in the US--and buys our debt. It simply is not physically--or fiscally--possible for things to work the way you imply. True, the banks loan lots of money in the form of credit cards, which people use to go to Wal-Mart and buy electronics that were made in China, so that money ends up in China, but not in the form of investment.
There are two ways out of this situation.
1. We revitalize American industry, in particular our value-added components, and ramp up our exports--either to China or elsewhere--sufficiently to balance our trade, pay off our debts, and we become increasingly prosperous.
2. We discourage the money we spend on imports from coming back as investment by adopting tax and regulatory policies that are less favorable to investors, the cash flow becomes a net drain as the world bleeds us of our wealth, and we go ever further in debt that we cannot repay, until we become Zimbabwe.
Which path do you think Obama has us on, and why?
For the record, I'd say it's the same path Shrub had us on.