Is Trump Trying to Crash China’s Economy?

Is Trump Trying to Crash China’s Economy?
Is Trump Trying to Crash China’s Economy?

Is he crazy, or crazy like a fox?

When Trump announced a new trade war with China everyone in the media rejoiced that there was a new chink in the armor (no pun intended!) of the administration. Everyone can see that the media, even the ‘right-wing media’ (i.e. – Fox) loves to attack Trump – that is an open secret – just open any newspaper.

So, when an announcement THIS big was made, there comedians and CNN reporters all rubbed their hands gleefully for having new content to monetize. What if, just like the Korean success, Trump has a long play in mind? What if…there is an actual long-term strategy at play? When I saw the headline that claimed that China’s central bank reduced reserve requirements, I had the spark of a thought that what was going on was a bit of brinkmanship aimed at hurting China economically from the inside.

Yes, I realize how much money goes to China from the US as interest on their bailouts. Yes, I know the Chinese leadership thinks in 100 year intervals, not 4 year election cycles like the US, but there is precedent for this. In the bad old days of the USSR, how did the US prevail? Economics – push their internal spending beyond what they could sustain, outspend them, make their economy crash until simple social services would be unfunded in order to throw money at space and the military. It worked with the USSR. What is going on with China now?

The US dollar is being devalued, that much is also apparent, and China holds an enormous amount of US debt, in US dollars. Now a trade war is announced through tariffs, and China is forced to add $100 Billion US to its economy to support its fledgling 1st world system. They are balanced precariously between the past and future, between Mao’s teachings andXi Jinping’s pragmatism in a capitalist world. They have a quickly growing middle class that yearns for cars and dishwashers and disposable incomes. They have a problem.

In a trade war, countries place tariffs on imports in order to boost domestic manufacturing. This is a stupid endeavor, as tariffs are easy to put in place but almost impossible to lift, since you make your domestic industries lazy and inefficient, which gets worse and worse as more time goes by. The opponent has to get smarter and more efficient while your own industry is allowed to stagnate – not a good move. Never was. Competition makes your own industry better. Maybe, however, Trump has another goal in mind, especially when the US has already conceded most light manufacturing to China due to price inequalities in manufacturing between the two nations.

What if Trump is creating a trade war to make China blink and start to act less rationally with its internal economics? What if Trump wants China to reach a bank collapse? Why not? You lower reserve requirements, bank lend out more money, another crunch happens and fewer of those loans get repaid, and presto – you have banks failing at a higher rate.  Look at the mess this has made in the US. Look at the economic mess facing both the US and the EU – there’s no future prediction out there that doesn’t include a major crash. Its just a question of – will the crash be absorbed by the system or will it be a doomsday scenario.  That’s the reason Britain has decided to pull out of the EU structure, btw, not some story about racist Brits who are just being xenophobic. That’s what some will have you believe in order to influence your opinion of the developing new world order. The reason anyone wants to influence you rarely has your benefit at its core, once you go beyond your parents and close friends.

So it remains to be seen how this will play out and what the motivations truly were. I remember ‘crazy cowboy’ Reagan who managed to spook the USSR enough to allow Soviet Jews to emigrate and speed up their defense spending and demise, and I recall more recently the progress made with North Korea by acting more irrational than they are. Since 1950 there has been zero publicly visible progress on North Korea until this year.

I am no Trump apologist, in case you are getting to flame in response. ))  Didn’t vote for him in the last election, but time has shown that in hindsight it wasn’t such a bad move. The chicken littles will always scream that the sky is falling, but cooler analysis shows otherwise. Politics are getting more interesting, at least.  Oh, and the previous advice about ignoring the news  and media stands – as Edgar Allan Poe once wrote, ‘Believe nothing you hear, and only one half that you see.

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