Friday, August 09, 2019
The Japanese state-guided market system was efficient and effective, so effective that it is considered an existential threat to the neoliberal model of debt-based money and "free markets" promoted by the International Monetary Fund (IMF). That model has been highly successful in South Korea and the other "Asian Tiger" economies, including giant China. China subsidizes workers and all other business costs. China owns 80% of its banks, which make loans on favorable terms to domestic businesses, especially state-owned businesses. If the businesses cannot repay the loans, neither the banks nor the businesses are forced into bankruptcy, since that would mean losing jobs and factories. The nonperforming loans are just carried on the books or written off. Our defense industry operates the same way.
Western speculators took down the vulnerable countries one by one in the "Asian crisis" of 1997-8. China alone was left as an economic threat to the Western neoliberal model, and it is this existential threat that is the target of the trade and currency wars today. Making American products cheaper abroad will do little for the American economy. A cheaper dollar abroad just makes consumer goods at Walmart and imported raw materials for U.S. businesses more expensive. U.S. policymakers consider China's subsidies to its businesses and workers to be "unfair trade practices." They want China to forgo state subsidization and its other protectionist policies in order to level the playing field. But Beijing contends that the demanded reforms amount to "economic regime change." A currency war has no winners. This was proven in 1930, which only deepened the Great Depression. A currency devaluation mainly devalues the price of a country's labor and working conditions. The orange sloth is clueless.
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