Click to enlarge.
It shows the amount of oil China could buy if they were to use their entire trade surplus with us to do so. That's assuming the price of oil would not be driven even higher in response to increased purchases of course, which is no doubt a bad assumption.
The next chart plots the natural log so that constant exponential growth can be seen as a straight line.
Click to enlarge.
China "sent" us ever increasing amounts of stuff that we want, yet we do not seem to be returning the favor by sending them ever increasing amounts of the stuff that they want (barrels of oil). Note that I used "sent" instead of "sends." The next chart explains why. It shows the annual growth rate of imports from China.
Click to enlarge.
As seen in the chart, the nominal growth rate is just about dead now. The growth rate in the middle of the channel is roughly 0%, which oddly enough is what the Fed feels short-term interest rates should be over an "extended period."
ZIRP-a-Dee-Doo-Dah
For what it is worth, I am not even remotely bullish on China (nor have I been since starting this blog in 2007). I also don't believe that I will ever feel the need to bribe a border guard to let me on the last plane to China. You know, as a desperate attempt to protect my future standard of living and freedoms (Patriot Act notwithstanding). Sigh.
This is not investment advice.
Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2
St. Louis Fed: Custom Chart #3
"Because the government can issue its own currency at will, MMT maintains that the level of taxation relative to government spending (the government's deficit spending or budget surplus) is in reality a policy tool that regulates inflation and unemployment, and not a means of funding the government's activities per se."
ReplyDeletehttp://research.stlouisfed.org/fred2/graph/?g=saR
Our baby boom is aged 50 to 68 this year. Expenditures on them are going to skyrocket this decade and next. Taxes on Gen Y are not.
Devaluation i.e. printing is baked into the cake.
http://research.stlouisfed.org/fred2/series/EXCHUS
shows the end of the weak-yuan regime has come already, and it will probably go to 4 soon enough.
This doesn't make their existing hoard of dollars more valuable, but it does make their currency more competitive as an alternative to holding USD for their trade partners.
Troy,
ReplyDeleteI don't know anything, but I'm 'bullish' on China.
I am clearly not but differences of opinions are what makes markets.
What does China's population do for work when all factories are fully automated? More than a billion people in an area roughly the size of the United States? That's got pain written all over it if/when the @#$% hits the fan in earnest.
Their stock market is performing horribly. Something's amiss in the bullish camp.
December 13, 2013
Why it's time to get short: Jim Chanos
Elsewhere in the market, the prominent short-seller said China is in a lot of trouble.
Although I have never shorted stocks (nor would I), I am in the Chanos camp. I would not invest in China.
Just opinions of course.