Sending Money to China
Just wanted to clarify what is happening…
1. There are X amount of dollars circulating in the US (called M2).
2. We pay 30% of our money to the gov’t.
3. The gov’t “spends” our taxes on the U.S. and the money ends up back into the system plus the deficit (borrowed money in the form of Treasury Securities).
4. Since we have so much debt, a lot of the money created goes to paying off interest to other gov’ts and never ends up back in our economy so the amount of money in the US stays pretty much the same, but each year the gov’t gives more and more money to other countries as Treasuries.
5. The “Rich” think that they deserve the money they have extracted from the system but, it is because of them “gaming the system” that we have to produce more money each year.
I found this when I was trying to figure out how much of our money China has.
http://news.bbc.co.uk/1/hi/business/6106280.stm
Basically, if China put it’s surplus into the system it would cause significant inflation as suddenly there is a lot more money circulating. It’s like we sold them money that they can’t use and only holds it’s value if they don’t get rid of it.
Look at that chart on the bottom. So, you better learn Chinese.
Categories: Finance
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