China and America Exchange National Debts to Revive Markets.
The International Institute of NonViolence
By: Rev. Jermano
China: A Majestic Dragon, or Hornets Nest? Many wonder whether China will use its Foreign Reserves to rescue the world economy.
I think this theory is very intriguing, and I think is a wonderful idea. In my opinion it is a whole new thought process to World Economics never discussed or contemplated before.
This has more intelligence and merit than any of the stuff we have seen by our elected officials.
The topic is not about buying Debt like China has been doing by buying US Treasury Bills. It has to do with exchanging our National Debts.
China's national debt balance reached 2.96 trillion yuan (US$370 billion), in comparison, the US national debt stood at $8.4 trillion as of April 13, 2006, or 65% of forecast GDP. Now think of how small that really is for China, who has a billion more people than in the US. It is pretty amazing to see how China can manage so well with so many people, while the US is up against the ropes with a billion less people. If anyone deserves awards for national leadership it goes to China...who has the largest population in the world.
About $4.9 trillion of the US national debt is held by the public and $3.5 trillion is held intra-governmentally. US national debt is about 20 times China's on a nominal basis, five times on a purchasing-power-parity basis, almost four times on a debt-to-GDP basis, and 100 times on a per capita basis. US per capita income is about 35 times that of China in 2005, which means each US citizen is carrying almost three times the national debt-to-income ratio as his or her Chinese counterpart. On average, US wages are about 50 times those of China because of higher income disparity in China.
China needs to help the US, because if the US fails, it also means bad news for China.
Instead of China buying T-bills from the US....Why doesn't Hillary or President Obama suggest this plan to China? The plan would be to Exchange our National Debts. This could legally be done, by having the leaders agree to it in a G- 20 or G-Wiz summit.
What would happen.. is China would accept Americans National Debt at about $8.4 trillion, and America would take China's National Debt. of $370 billion US.
This would mean America is no longer tied down with a huge National Debt....and it would change the dynamics on the economic picture in the world. The markets would change immediately.
Of course there would be reasons and agreements to such an arrangement. That being China now having the big debt load would get the support to create jobs and things moving in uplifting China. This means people returning and working in the factories again. This means exports from China would continue into the USA for the American people. It would be a major push for Green Environmental Jobs.
The products would be low priced allowing many Americans to take advantage of in making their businesses by selling chinese products, while America would have influence in having American trademarks and ideas to those products they create..
Having China take Americas Debt would cause no inflation, because China prices are already low, and the increased Debt would not increase prices due to an abundance of goods on the market. But inflation will take hold if we do not see this transfer exchange, because Obama's excessive spending will result in Fiscal Inflation. This occurs when there is excess government spending. Fiscal inflation originated in the US in 1960s at the time President Lydon Baines Johnson.
This Debt Exchange would make America markets healthy again indeed, because they no longer have such a heavy debt around them...which would unfreeze banks and lending would take hold again
The Amer-China Exchange deal also would be for Chinese prices to come to America to help Americans create jobs in making products that the Chinese and Asian markets will want to buy and can afford.
China has a billion more people than America, so this theory is that the 8 trillion debt could actually be paid off more quickly; because China would create more jobs for the people, and the revenues that came in..would literally disappear much faster, than from the American side of the equation.
There could be a provision that said if the deal was made, perhaps 2 trillion could be simply written off as the deal in an underwriting write off....for getting the transacted deal legally arbitrated.
China would not need to buy any more T-Bills....In fact China could use those T-bills to trade in their IOU's at given earmarks while also getting lower interest loans generated from the US Banks. The dollar would strengthen, and remain the world preferred currency..and China's currency would become more of equal value along side the US.
I would say 2 rmb to 1 US dollar. This would balance things and our markets would be more open for business around the world
America would be opening up a wider and bigger market to sell in China now.. while the millions of unemployed in both countries will find work, and generate incomes from each other.
The protracted inactivity and depression is something we can not solve unless we are both willing to work and help each other. I think this would be a win win for both countries, and change the view of Economic Relationships in the world. Indeed other countries could also subscribe to a similar National Debt Exchange, to promote well being in the world.
If China accepted US debt...the US could arrange deals in Alternative Energy use and help put them in the China market place.
The Exchange of Debt is not an idea of IOU's any longer, but a systematic way of transferring debt in order that the stronger currency provides the market place for China goods, while giving US banks no burdens so they may invest in other rich resource countries for trade such as in Africa, and in outer space....with the space programs.
Think of the other things that could benefit Americans by learning about Chinese Medicine, and how well it works. Afterall they have more people and live long lives....they must be doing something right...In fact Americans could also get the healthcare they have been dreaming about for all these years...
I just think we should consider this avenue and approach to World Economic Prosperity, and finally Killing the Era of Depression, and Recession. I am sure other countries in the world such as Japan, Britian, Russia, Germany, France, and Canada would welcome the approach.