I posted an article this week about the “new economy”, financialization (debt creation) and the service economy. All our new economy is producing is debt, inflation, and crappy jobs. Meanwhile, one of the most lucrative career choices is welfare.
Our trade deficit continues to grow, month after month, year after year. We issue IOU’s and countries like Korea, Japan, and China send us good. We issue IOU’s and countries like Saudi Arabia and Russia send us millions of barrels of oil. When are these countries going to wise up and quit taking our IOUs?
When your economy survives on debt creation and service jobs, you’re living on borrowed time.
Shocking Facts About The Deindustrialization Of America That Everyone Should Know
By Michael Snyder, on April 3rd, 2014
How long can America continue to burn up wealth? How long can this nation continue to consume far more wealth than it produces? The trade deficit is one of the biggest reasons for the steady decline of the U.S. economy, but many Americans don’t even understand what it is. Basically, we are buying far more stuff from the rest of the world than they are buying from us. That means that far more money is constantly leaving the country than is coming into the country.
In order to keep the game going, we have to go to the people that we bought all of that stuff from and ask them to lend our money back to us. Or lately, we just have the Federal Reserve create new money out of thin air. This is called “quantitative easing”. Our current debt-fueled lifestyle is dependent on this cycle continuing. In order to live like we do, we must consume far more wealth than we produce. If someday we are forced to only live on the wealth that we create, it will require a massive adjustment in our standard of living. We have become great at consuming wealth but not so great at creating it. But as a result of running gigantic trade deficits year after year, we have lost tens of thousands of businesses, millions upon millions of jobs, and America is being deindustrialized at a staggering pace.
Most Americans won’t even notice, but the latest monthly trade deficit increased to 42.3 billion dollars…
The U.S. trade deficit climbed to the highest level in five months in February as demand for American exports fell while imports increased slightly.
The deficit increased to $42.3 billion, which was 7.7% above the January imbalance of $39.3 billion, the Commerce Department reported Thursday.
When the trade deficit increases, it means that even more wealth, even more jobs and even more businesses have left the United States.
In essence, we have gotten poorer as a nation.
Have you ever wondered how China has gotten so wealthy?
Just a few decades ago, they were basically a joke economically.
So how in the world did they get so powerful?
Well, one of the primary ways that they did it was by selling us far more stuff than we sold to them. If we had refused to do business with communist China, they never would have become what they have become today. It was our decisions that allowed China to become an economic powerhouse.
Last year, we sold 122 billion dollars of stuff to China.
That sounds like a lot until you learn that China sold 440 billion dollars of stuff to us.
We fill up our shopping carts with lots of cheap plastic trinkets that are “made in China”, and they pile up gigantic mountains of our money which we beg them to lend back to us so that we can pay our bills.
Who is winning that game and who is losing that game?
Below, I have posted our yearly trade deficits with China since 1990. Let’s see if you can spot the trend…
1990: 10 billion dollars
1991: 12 billion dollars
1992: 18 billion dollars
1993: 22 billion dollars
1994: 29 billion dollars
1995: 33 billion dollars
1996: 39 billion dollars
1997: 49 billion dollars
1998: 56 billion dollars
1999: 68 billion dollars
2000: 83 billion dollars
2001: 83 billion dollars
2002: 103 billion dollars
2003: 124 billion dollars
2004: 162 billion dollars
2005: 202 billion dollars
2006: 234 billion dollars
2007: 258 billion dollars
2008: 268 billion dollars
2009: 226 billion dollars
2010: 273 billion dollars
2011: 295 billion dollars
2012: 315 billion dollars
2013: 318 billion dollars
Yikes!
It has been estimated that the U.S. economy loses approximately 9,000 jobs for every 1 billion dollars of goods that are imported from overseas, and according to the Economic Policy Institute, America is losing about half a million jobs to China every single year.
Considering the high level of unemployment that we now have in this country, can we really afford to be doing that?
Overall, the United States has accumulated a total trade deficit with the rest of the world of more than 8 trillion dollars since 1975.
As a result, we have lost tens of thousands of businesses, millions of jobs and our economic infrastructure has been absolutely gutted.
Just look at what has happened to manufacturing jobs in America. Back in the 1980s, more than 20 percent of the jobs in the United States were manufacturing jobs. Today, only about 9 percent of the jobs in the United States are manufacturing jobs.
And we have fewer Americans working in manufacturing today than we did in 1950 even though our population has more than doubled since then…
Many people find this statistic hard to believe, but the United States has lost a total of more than 56,000 manufacturing facilities since 2001.
Millions of good paying jobs have been lost.
As a result, the middle class is shriveling up, and at this point 9 out of the top 10 occupations in America pay less than $35,000 a year.
For a long time, U.S. consumers attempted to keep up their middle class lifestyles by going into constantly increasing amounts of debt, but now it is becoming increasingly apparent that middle class consumers are tapped out.
In response, major retailers are closing thousands of stores in poor and middle class neighborhoods all over the country. You can see some amazing photos of America’s abandoned shopping malls.
If we could start reducing the size of our trade deficit, that would go a long way toward getting the United States back on the right economic path.
Unfortunately, Barack Obama has been negotiating a treaty in secret which is going to send the deindustrialization of America into overdrive. The Trans-Pacific Partnership is being called the “NAFTA of the Pacific”, and it is going to result in millions more good jobs being sent to the other side of the planet where it is legal to pay slave labor wages.
According to Professor Alan Blinder of Princeton University, 40 million more U.S. jobs could be sent offshore over the next two decades if current trends continue.
So what will this country look like when we lose tens of millions more jobs than we already have?
See picture below:
U.S. workers are being merged into a giant global labor pool where they must compete directly for jobs with people making less than a dollar an hour with no benefits.
Obama tells us that globalization is good for us and that Americans need to be ready to adjust to a “level playing field”.
The quality of our jobs has already been declining for decades, and if we continue down this path the quality of our jobs is going to get a whole lot worse and our economic infrastructure will continue to be absolutely gutted.
At one time, the city of Detroit was the greatest manufacturing city on the entire planet and it had the highest per capita income in the United States. But today, it is a rotting, decaying hellhole that the rest of the world laughs at.
In the end, the rest of the nation is going to suffer the same fate as Detroit unless Americans are willing to stand up and fight for their economy while they still can.
Take your children on an educational tour of Liberal Cities across America. See first hand the effects of the Regressive Socialist Policies that have made these cities what they are today: wastelands suitable for use as movie sets for classics like Mad Max and Escape from New York.
The tour starts in Detroit where we will get close up to laid-off City Union Workers who have also lost their pensions and have resorted to eating their old contracts.
In Camden, NJ we will talk to the members of the now defunct Camden Police force.
The tour will include the wastelands of long-time Democrat stronghold New Orleans, as well as the wonderfully community-organized gang war zones of Cincinnati, OH, Oakland, CA, and the still thriving capital of American Progressivism, Chicago, IL.
I so like Michael Snyder, thanks for sharing AWD.
My only quibble is the continued bullshit about it being the fault of the WAGES that the jobs moved.
We could compete – thanks to cost of freight – if it were only wages.
But it is not. It is the strangulation of regulation at all levels.
It is the gifting of regulations that force the little guys to get out (which is exactly what has happened with our pharmaceuticals, only those with giant money to play the FDA game can play.) Discoveries in small labs are over. Scary that a handful of people now totally control it.
But to see the big picture, and really see just how insidious this has been, you have to realize that at the exact same time our regulatory burden became too burdensome, they started importing new tech grads whom are willing to work at 60% of the wages a new American grad wants.
Of course, while all this is going on, our jobs, and food, and our resources, are being shipped out of the country to allow the 3rd world to make the true wealth on turning them into salable products. Yet our personal regulatory burdens and costs have grown. As have everyone’s income EXCEPT for the small biz and working men. Government workers, politicians, old guard at unions (new guys get screwed like us), entertainers, sports guys, media, advertisers, college Deans & tenured profs, they have ALL gotten more. The rest of us are getting the bills for it.
Llpoh can attest to the difference in regulatory costs for business over the past decade or so. The time, effort and money required to attempt to stay in compliance with it all has EXPLODED. I can’t believe just the damn difference in the cost of paying the CPA to file taxes. Insanity, and another reason why their are fewer jobs, and fewer that pay well.
The absolute meltdown headed our way isn’t only due to shipping our jobs oversees, it is the absolute result of undercutting our wages with foreigners while layering the mandated, mandatory and predatory costs upon our families and small businesses.
In the past decade, every fee we pay, every fine we pay, every license we are forced to buy, our educations, our interest rates, our food, our energy, our car insurance, and now our very health, has doubled in cost, or worse, by some freaking bureaucracy or already rich guy.
Yeah, flat screen tvs and smartphones may be substantially cheaper than a Compaq PC was in 2000. But I cannot eat, nor be warmed, by them either.
Intentionally, systematically, slaughtered.
Meanwhile the inevitable results of the USDA stopping radiation testing has been ‘discovered” by school kids doing science products. Our seafood is now irradiating us. I’m sure that has NOTHING to do with cancer rates exploding. Warn me away from iodine, the sun and real fat again please.
You still telling people to eat “heart-healthy” salmon, while telling them to avoid their only source of iodine, salt, AWD?
Seeing the evidence of the outright, intentional, planned, destruction of the American people, while continuing to follow – and convince others to follow along too – of ANYthing these monsters tell us is insanity.
We are being CULLED. If cancer, or the cure, doesn’t kill us, suicide or murder resulting from financial collapse sure as fuck will.
I am so out. These bastards have all the roads to freedom shut down, and they are shooting at us 100% of the time. Picking off our grandparents, our very children, our friends and our families.
From now on I just need to focus on figuring out how to outsmart the tyrants. At least I (now) have my health, and a box full of natural remedies to fight most anything they can throw my family’s way.
GLA, once China quits, or stalls, shipping to us, it will quickly be game over for the remaining middle.
Ah well, at least we’ll have the bureaucrats left in the middle. They deserve it. They have been working for decades to create this shit. /sarc
Z here’s y we intervene in the ME
US Threatens Russia Over Petrodollar-Busting Deal
http://www.zerohedge.com/news/2014-04-04/us-threatens-russia-sanctions-over-petrodollar-busting-deal
I wish some one would post this. The next war starts here
Remember, two years ago obama promised to double exports in five years.
Every promise made turns out the opposite. Sensetti, that’s some real writing on the wall there.
@sensetti – agree 1,000%. “Defending” the petrodollar down to the last American will be scary.
Murray N. Rothbard (1926-95) was an economist, an economic historian, and a libertarian political philosopher. This article first appeared in the June 1992 issue of Chronicles.
” Unfortunately, paying off a national debt that will soon reach four trillion dollars [in 2014, $17 trillion] would quickly bankrupt the entire country. Think about the consequences of imposing new taxes of four trillion dollars in the United States next year! Another way, and almost as devastating a way, to pay off the public debt would be to print four trillion dollars in new money—either in paper dollars or by creating new bank credit. This method would be extraordinarily inflationary, and prices would quickly skyrocket, ruining all groups whose earnings did not increase to the same extent, and destroying the value of the dollar. But in essence this is what happens in countries that hyperinflate, as Germany did in 1923, and in countless countries since, particularly in the Third World. If a country inflates her currency to pay off her debt, prices will rise so that the dollars or marks or pesos the creditor receives are worth a lot less than the dollars or pesos they originally lent out. When an American purchased a 10,000-mark German bond in 1914, it was worth $7,000; those 10,000 marks by late 1923 would not have been worth more than a stick of bubblegum. Inflation, then, is an underhanded and terribly destructive way of indirectly repudiating the public debt; destructive because it ruins the currency unit, which individuals and businesses depend on for calculating all their economic decisions.
I propose, then, a seemingly drastic but actually far less destructive way of paying off the public debt at a single blow: outright debt repudiation. Consider this question: Why should the poor, battered citizens of Russia or Poland or the other ex-communist countries be bound by the debts contracted by their former communist masters? In the communist situation, the injustice is clear: that citizens struggling for freedom and for a free-market economy should be taxed to pay for debts contracted by the monstrous former ruling class. But this injustice differs only by degree from “normal” public debt. For, conversely, why should the communist government of the Soviet Union have been bound by debts contracted by the czarist government they hated and overthrew? And why should we, struggling American citizens of today, be bound by debts created by a past ruling elite who contracted these debts at our expense? One of the cogent arguments against paying blacks “reparations” for past slavery is that we, the living, were not slaveholders. Similarly, we the living did not contract for either the past or the present debts incurred by the politicians and bureaucrats in Washington.”
http://www.chroniclesmagazine.org/2014/April/38/4/magazine/article/13642/
I largely agree with Teresa, as always. Regulation and rules and taxes are strangling business, especially small business. However, I mostly disagree with her comment re being able to offset wage differences owing to the cost of transport.
A container fron China to the US costs about $4000.
The basic analysys is that large, cheap items are uneconomical to ship. Small and cheap or large and expensive goods are where the differences in wage costs offset the transport costs.
If there were no payroll axes, workcover taxs, Obamacare taxes, OSHA costs, land taxes, etc. then the net wage/cost differential would be perhaps $25 per hour.
Dividing 4000 by 25 = 160 hours. Thus, if the goods inside the container require under 160 hours of labor to produce, US manufacturers win. Otherwise, China holds the edge.
China kicks my butt on cost, but cannot compete re service and response time and design change response. I get a thirty percent premium for those things. If it s cost only, I go quickly broke.
The calculation is a pretty simple one. I use $5000 for the Chinese cost of transport and labor per container (the $1000 dollars for Chinese labor is an estimate, but it is good nough for raw calcs). Then I calculate materials, which tend to cost the same world wide. If materials plus $5000 divided by the number of units that fit in the container exceed the local manufacturing sales price, then China can take that business if they are quick and act before their costs rise. It really is not much more complex than that.
That’s the reason I’ve posted in the past , we end up in a full blown major conflict Waaaaaay bigger than anything we’ve done in the Middle East to date. You will see this war before you see the dollar collapse. Iran here we come, this shits gonna get real, it’s all about the petrodollar.
Posted this comment before, but what the hell? Maybe someone forwards this article & everyone’s comments wake someone up.
Trade deficit with China, in billions, 1990-2013:
$10 billion + 12 + 18 + 22 + 29 + 33 + 39 + 49 + 56 + 68 + 83 + 83 + 103 + 124 + 162 + 202 + 234 + 258 + 268 + 226 + 273 + 295 + 315 + 318
=
$3,280 billion = $3,280,000,000,000 or $3.28 trillion
$3,280 billion * 9,000 jobs lost per billion = 29,520,000 jobs lost.
Those jobs cause a decline in spending, which leads to more job losses, which leads to decline in spending which leads to more job losses, …That number has probably close to doubled & the real unemployment rate is close to 30%.
These jobs ain’t coming back, no Dumbocrat or Decepticon will change this unless The People rid themselves of the Federal Reserve, stupid foreign policy, follow The Constitution, & get rid of taxes on individuals.
Just some number crunching to pass along to other fellow Americans U may know who don’t get the fucking picture.
Greetings,
Michael Snyder often posts some incredible facts and then follows it up by the question: How Long Can This Last?
Allow me to take a moment to answer that for all of you. It can last a very long time when the nation in question has thousands of thermo-nuclear weapons, chemical and bio-weapons enough to turn the entire planet into an horror show that would make people long for something less sinister like, say, Noah’s Flood.
It can last a long time, too, when the nation in question has, in its 238 year history, used its military more than 148 times to terrorize the entire planet. I’m 47 years old and this nation has been at war with someone, the majority of my life. Vietnam, Cambodia, Laos, Lebanon, Grenada, Libya, Reagan’s Dirty War, Panama, Iraq I, Somalia, Bosnia, Haiti, Afghanistan, Iraq II, Pakistan, Yemen, Libya and whatever else I forgot to mention. Everyone knows we mean business.
We can maintain this for as long as we can maintain our weapons.
Sensi is right. That is the war coming and we loose it all. We have lost all creditable reasons for support from other nations. We can not even make our own war making machines without help from the very nations who want to end the dollar. They know it and are making their move. O nut case with the help of bush fundamentally changed us to third world. Enjoy what you have the time with your family. Now we reap the whirl wind of revenge from irresponsible behavior as a nation.
TE is right. Llpoh is dead on. NickelthroweRs’ point is questionable. However, Nickelthrowers’ point is also being illustrated as we speak.
They just allowed a Commander to retire and fired one entire command chain (including supervisors, launch officers and probably the janitor) at Malmstrom Air Force Base (where a wing of Minuiteman ICBMs with MIRVs live) because all of them cheated (and were allowed and/or encouraged to cheat) on readiness exams, security procedures and launch simulations.
Might this mean we are in the early stages of loosing control of the effectiveness of our weapons systems and the quality of the military manning them is running off as well?
We all know what happened to Russia (well before they collapsed too!) with submarines that could not go to sea, missiles that wouldn’t launch, a Navy that never existed except on paper, one half-assed good fighter aircraft and so many other inoperative military elements that Poland may have been able to invade(in the Spring) and succeed. (All of Russias’ wars have been won by the weather – just ask Napoleons’ or Hitlers’ ghosts.) The Russians did better when they used horses.
I remember back in the early ’70’s when Harry Browne wrote “How I found freedom in an unfree world” (which is still a great read!), he asked “How long can the United States go on when our one semi-productive activity is selling each other hamburgers”.
I think we’ve run way past that expiry date and are hurdling along on lies, smoke,mirrors and inertia. For some reason, the rest of the world still wants dollars when they seek “safety”. So when we loose control of something else, more people try to trade whatever they have in exchange for US dollars. What a joke on them…
The Forth Turning continues to grind on, very slowly for a bit yet, then very rapidly when the “knee” is reached and the supply chains start to develop holes in them. Then, what will be of value will be what you hold in your hand – and paper dollars won’t do shit for you..
MA
Dammit, Muck, and I was having a good day.
@Llpoh: Yah – sorry about that.. You need a Muck Filter to screen the comments you want to read..
MA