The US economy is the finest in the world. The US has quality goods at high prices. They have everything money can buy. The demand for US dollars overseas is high. Unlike the economies of other countries, the US is the only country that can just print more dollars out of thin air without any negative consequence related to exchange rate just because there is a high demand for US dollars overseas.
But the party is soon coming to an end. Unless the US gets back to the drawing board, they may not have any more cards under the table.
The US will have to export more than they are importing. They can not force China to import US goods and neither is China forcing US to import their goods. The US - China import export trade will have to work on free flow of the market forces.
The goods from US are of good quality but the prices are not workable. In many markets, especially in the developing countries, workable prices are more important than quality. If the average labour cost per hour in US is $17, then do not expect to produce competitive goods in US for many world markets. At $17, you can have a Chinese working for you for a whole 100 hours with no insurance and medical care to pay for.
If a product is not economical, why should you buy it? If a product is low priced and economical, why should you not buy it?
When US industries move all production to china, it’s the US that benefit most by getting inside a 1.5 billion people market. If US industries were not benefiting, they would not have moved production in China in the first place.
China has a complete catalogue of US goods but can not order much from US because prices in US are not workable. Perhaps the Chinese can order a few items in specialized industries like aviation just as a gesture of saying “we are trading partners” and “we have to reciprocate by buying these items even though these items are very expensive to us”.
The one million dollar question is: are the American laborers ready to accept less than a dollar per hour? Never, Never!
Inflation: A Significant Economic Indicator
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