China large purchases of America bonds for whose benefit?

At present, many Americans didn't like lots of money Chinese to Obama, Ji Wanyi, Ji Wanyi gave Obama the chance to spend money in disorder. This group of people in the middle of a very fashionable to say that is Chinese to American transporting large quantities of cheap goods, change it back to a group of foreign exchange. Then the hands of the Americans to spend money spent, no money, go back to the Chinese government money, then come back and spend. As for the future, American government put the money spent how to explain, at least the Obama administration did not carefully thought about it.

From a purely economic point of view, American government spending, is a result of spending to stimulate the economy. The federal government spending for the one trillion USA a family of four, is thirteen thousand yuan. If the government put the money directly to the old people, it will solve the problem of food and clothing to many people, to give more people need money. But in doing so, Washington bureaucrats don't use spending to buy political influence. In exchange for political capital by spending (donation), government spending to who, always very picky. For those key members, in order to get their votes, by a big spending plans, the government at certain constituencies spend heavily to buy these members in billion. It takes down the money, if you can have the efficiency, that is the sun rises from the West came.

Time is wasted on this money largely, America domestic bond market will be because of government borrowing caused by monetary policy too tight. Normal economic activity will not get the money, so harmful American economic recovery.

On the other hand, a lot of money by government spending into circulation, also did not effectively improve productivity, which will produce a market on money goods (including products and services) the situation. In this scenario, an inevitable consequence of inflation. Currently anchored dollar area (such as Hongkong), overheating situation has gone up. However, because USA bank within the territory had problems, loan very carefully, so America domestic overheating situation has not yet formed, but the company loan is difficult, the effect is to curb the economic recovery. (that is to say, there is no free lunch.) A phenomenon caused by this situation is called mezzanine loan is very fashionable. Congress has just passed the national health insurance, so the country greatly spending battle has just put out, highlight yet.

For example, USA to Chinese borrow money, Chinese adults, American children. Adult education of children, should not be when he needed money, endless give him money. So, money slowly in the child's eyes, just like the white water, not worth the money. In this case the children, spending behavior will become. So, how much money will be in a very short period of time was spent all. Moreover, such spending habits of children, is simply not possible to himself a world. Because the money and spend more than, is a very difficult thing.

From a political economy perspective, Obama dare one trillion and ten thousand more money, will not fear of inflation, because of his political backing is those who have no money. Moreover, relative to those of conservatives, no matter how bad Obama paid for the benefit, he is still in the money, at least to improve people's quality of life. At the same time, under the global economic competition environment, some people have to give up USA America dream, let the government take over everything, it seems that everyone can have a comfortable life. Although these are few in number, but does not fundamentally change the USA qualities, but they would select such as Obama, his mouth about free economy (free enterprise), the actual socialist activities of the people.

From a long-term point of view, the company Obama nationalised, was difficult, in the hands of the government, not a few make the dead come back to life. Finally, the nationalization behavior, is not how much the votes for Obama. Moreover, each year one trillion white people money of "good day" is not long. When the time comes, will soon America debt, coupled with inflation, this situation will soon emerge. On that day, the Conservatives would come out of the beaten in the situation, may rise in politics, and reverse the situation.

Chinese government money to buy USA bonds, will to a large extent, for the long-term interests of the American disservice. Naturally, America inflation once started, the Treasury will decline, then, Chinese cheap goods back those dollars, have very big one part, will really become waste paper.

My personal view is that the crisis of 2007, is caused by the investment bank. The government can let them down. After all, most banks did not do America. Still very healthy. Since it is a free market, do not be afraid of those who failed the bankruptcy risk. When Bush mistake is a problem, especially the Wall Street big banks problems, he felt USA to The nation is in peril., so use people's money to pay for those banks. This is he doesn't understand the economic problems caused by.

Of course, Wall Street America influence throughout the government, and most voters don't understand economics, so up in Wall Street adventure, a matter for the government to pay, as expected.

From the Chinese aspect, China government's problem is how to dispose of the hands of these dollars.

First, the government had so many dollars is a foreign exchange control results. The biggest problem of exchange control brought about by the government don't know how to deal with money in hand. Because to decide to invest in what local government, does not have what difference and government spending. That is to say, lend money to people not to consider how to do this thing too. With government money business, everyone's concept, and pay taxes almost: I made money will give you a part; not to make money, then you can take me? So, for Chinese government, buy America debt in dollars, is one of the most insurance practice. When Zhu Rongji was clearly on the reality that feel helpless.

However, the money, the best way is to use money to make money, rather than lend to others spend. If China government can find an effective way, take the money to put into production, the benefit will naturally give America congress members, let them buy by money laws must be high.

Secondly, the effective way to solve this problem, is the foreign exchange control. Say simply, is the abolition of exchange controls, given the wealth to the people. By the end of 2009 to open the working conference of the Central Committee is the spirit. However, is not related to the foreign exchange control. The abolition of exchange controls, there will be a great resistance. The hands of the exchange, what they do? Many people will take the foreign exchange to overseas investment, and consumption. In fact, this is a situation come very naturally. When too much money to the Japanese, USA investment, is one example (of course, it was a failure example). In order to avoid the outflow of funds, the government of China controls on foreign exchange, will come very naturally led to the dollar in the hand, be at a loss what to do the.

In fact, is to let those who earn foreign exchange businesses earned the money back to the American, is a very far sighted approach. You know, America consumers spend time to buy Chinese manufactured goods, and not most of the money to China go, but let USA side of the retailers, distributors to earn. China products itself, there is no brand, so there is no intellectual property composition, sold to USA only cheap labor. Chinese products in the America based, on the USA retail network (such as Wal-Mart) and middlemen brand. If China businessmen can directly into America market, they can make their own brand of one of the world. I worked in a Japanese Fuji Film in those days, we can see clearly that Japan attaches great importance to the America division. Results the play out of the brand, including Fuji Film, can travel all over the world.

However, the overseas investment benefit, will be far more than the money lent Obama squandering ba. The problem is Chinese government must understand two things: (1) investment to America not to earn dollars in vain, automatically get American. If the product is hard to American earn money, then to American brand is to make the soft money. In the foreseeable future, through the hardware to make money, will be more and more difficult; and through the software to make money, the profit rate will be higher. (2) understand the America market, and based on the understanding of their own research and development, from the long-term point of view, in a fairly long period of time, to a support role for China economy. Now the Chinese economic status, or a cheap labor market. Tomorrow in other countries cheaper labor than China USA, these companies will give up China, go to other countries. However, if the brand and product in the hands of the Chinese hands, even if the factory opened in third countries, Chinese this link will not be jump. In fact, this link (R & D, brand and so on) is the real brains to make money. In this regard, and American divides a cup of a thick soup, the only way out is the steady development of economic Chinese next step.