11 Key Numbers to Watch in 2011

Trade deficits do not destroy wealth. When the US runs a $30 Billion trade deficit with China, all that means is we owe China $30 Billon worth of goods. We are pretty much selling them green paper for actual assets.

When we buy goods from China, Chinese vendors sell the $ to the Chinese Government for Yen. When the US government runs a deficit, the Chinese government sells the US government $ for a government note. If you truly want to get rid of the trade deficit, we must first stop the government deficits, because that's the only way money is recirculating back into the US to buy more Chinese goods.

If we didn't do this, China would literally be sitting on a giant mound of green paper that it wasn't doing anything with. The more dollars they sit on, the lower the value of the dollar, which would make the dollar cheaper to buy with foreign currencies. This would artificially make American goods cheaper than Chinese goods until the dollars came back to America.

It's a self fixing process, we just have to get rid of our government deficit to all the process to start.

Economics Wiz of TX 3:32PM January 13, 2011