A few interesting contrasts between life in China and life in the United States as I ramble from the Chinese Yuan to Fireworks to Freedom of the Press to Global Warming
by Jake, the Champion of the Constitution
Originally published Tuesday, January 27, 2009 at http://www.nolanchart.com/article5897.html
As a disclaimer of sorts, I have been based in Shanghai for the past 3 years. I rarely write about China (even though I have quite strong eco-political views) since it does not cross too much into this column’s purpose, namely to end the War on Terror and bring about Honest Money. Here are a few of my thoughts as Chinese New Year begins. I hope these contrasts spark a few thoughts for those who do not live here. However, I do not mean to insinuate in any form or fashion that China is “freer” than the United States.
Part 2 will reveal a recent discovery concerning the Federal Reserve’s manipulation of FOREX markets from 1961.
Barack Obama and Tim Geithner’s recent ramped-up rhetoric towards China as a “currency manipulator” indicates the Obama administration may show more aggression towards China than Bush. From the owner of the Petro-Dollar no less, and as the Federal Reserve has openly confessed to manipulations in the FOREX (foreign exchange) markets since 1961, this is both hypocritical and privately probably more amusing to America’s central bankers than anything else. Here is part of Geithner’s reply:
“President Obama – backed by the conclusions of a broad range of economists – believes that China is manipulating its currency. President Obama has pledged as President to use aggressively all the diplomatic avenues open to him to seek change in China’s currency practices.”
Of course, the overt reason for doing this publicly is for the US government to be seen as “taking a stand” against the Chinese government whom, yes, have taken a fair share of America’s manufacturing jobs, but only due to helping hand OF the US government. The standard American line is a weak Yuan makes Chinese goods cheaper for US consumers and American products more expensive for the Chinese. In reality, the USD-RMB exchange rate is a bit of a modern Sword of Damocles; if it falls, it could kill both parties. The Chinese economy is still painfully dependent on the foreign trade rather than domestic. As to why this is the case, one has no need to look farther than the socialist practices of its still-Communist government, which is just a survival adaptation that will eventually fail, just like it did for the USSR.
It is also true that if the Chinese government does allow its currency to strengthen, it will then appear to be executing the bidding of the US government. I want to quickly add here that there are those that claim that the Yuan (or Ren Min Bi, the “People’s Money”) is ‘pegged to a basket of currencies such as the Yen, Euro, and Dollar’ and comment that this claim makes no sense. The exchange rate is literally whatever the Chinese government wants it to be, plus a little daily jiggle so the graph does not look like a cardiogram plateau on a corpse. All that needs to be done to prove my point is to look at all the recent wild gyrations in the Dollar, Yen, and Euro exchange rates over the past 8 months or so and then stare at the recently horizontal Dollar-RMB chart.
However, if the Yuan were to strengthen significantly over night, the approximately 70% of the US GDP that is driven by consumerism could possibly KO the valiant shopper who went out to Wal-Mart after 9-11 to prove George Bush right and the terrorists wrong. American companies abroad, whose good and services are included in our GDP, would be adversely affected. Wal-Marts everywhere would have price increases for sure, and could possibly help lead to Jim Quinn’s “Ghost Malls.” Of course, Quinn predicts this will happen ANYWAYS. This, I offer for speculation, could quite likely lead to the Yuan appreciation. Right when China sees that generating more goods just leads to increased storage costs at Chinese wharfs, they may have nothing to lose by cursing the US for its financial ineptitudes and then have their central planners attempt to generate that domestic demand I mentioned earlier.
Of course, the famous massive positions in US Treasuries could unwind or even just slow. Another wildcard is Chinese monetary policy and its own M3 growth, which would be quite interesting to know. I have read quite a bit from many viewpoints from more M3 money supply expansion that even America, from imminent hyperinflation in China, to Tim Hewitt’s 15%, to much more conservative estimates. One interesting read is Douglas Gnazzo’s 2007 essay on “China’s Nuclear Threat The US Dollar.“ My opinion is that this is one card the Chinese government is holding very, very closely to their chests and this is one topic that I will have to wait for my famous 20-20 hindsight to finally clear up.
Next are a few contrasts that perhaps the average American might find revealing.
A TRIP TO THE BANK IN CHINA….
Here in China, the largest banknote denomination is 100 RMB, or close to $15 American dollars. A typical daily withdrawal limit was 5000 RMB ($730) in 2007, but is a much more reasonable 20,000 RMB right now, and only 100 RMB notes are dispensed. On a monthly basis I remove fairly large amounts. In December during one such withdrawal, I noticed that roughly 10 bills, all in a row, were the crispiest, newest banknotes I had ever seen.
Being an inquisitive person, I took a closer look, expecting them to be all printed in 2008. To my shock, they were all from 2005! I then proceeded to check the other 100 RMB bills all of them, no exceptions, were 1999 or 2005. Strange, I muttered in Chinese and then checked all of my smaller bills – all were 1999 or 2005!
I’ve since won a few wagers at the company lunch table as I bet some Chinese colleagues (they LOVE to gamble!) I could predict the years in which all of their banknotes in the wallet at that very moment were printed. Unfortunately, word spreads quickly, putting a quick end to this scheme, but I can now assert with confidence that China most likely printed up an enormous amount of cash in 2005, and releases it to the public in controlled amounts or to replace worn or ripped notes.
This month in January, my withdrawals found stack of about fifteen 100 RMB bills all in a row. I then bought some fruit and received 70 RMB all in brand-new 10 RMB banknotes. Having bought fruit from this stand for over a year, and having dealt in ratty old notes the entire time, I was a bit surprised. The owner showed me a wad of about eighty 10 RMB notes he had got from the bank since he was running out of change for the 100 RMB notes.
However, I am sure it’s just a coincidence and that I am paranoid.
….AND IN AMERICA
Last year, I returned only twice to the US. During my July visit I stopped at a bank ATM and withdrew over $10,000. This is not a particularly bright move, as due to PATRIOT-Act-type legislation this is reported by the banks to the government, but I figured, hey, it’s my money, I earned it and had it taxed by the government fair-and-square and frankly I did not have time for silly games like withdrawing over multiple visits.
In November, I went to the very same bank ATM and tried to withdraw over $1,000. A message came up saying that $1,000 was my maximum daily limit, similar to the limits installed by China. Holding my rage in check, I marched inside and politely and calmly explained to the teller that I wanted my money. Fortunately, the bank tellers inside were willing to give me cash for the remainder, all of it in (used) $20 bills plus all their copper and nickel 5-cent pieces.
Now, when I remarked on this episode to a friend, he related to me that when he tried to take out $1,200 for some construction supplies, he was informed that his credit union had ALSO put in place a $1,000 daily withdrawal. He was reduced to cajoling the teller into giving him his “extra” desired $200. If the US has a banking holiday under Obama, I do not think my buddy will be getting his extra $200 anymore!
In both of our cases, my friend and I had no idea that there was a daily withdrawal limit until we tried to do so. I also have no idea if this is occurring at other banks or credit unions. If anyone wants to act a little atypical and withdrawal from a bank ATM and then even just immediately redeposit it, I would be interested to hear about your results.
BUYING GOLD AND SILVER IN CHINA….
In Shanghai, a Chinese citizen can enter any major branch and exchange fiat Yuan banknotes for gold bars. Some banks even allow foreigners to do so. There are plenty of jewelry stores with ornate gold and silver metal available at about 20% over the COMEX spot price, or official shops like China Gold Coin with rates just a little worse than the banks. A gold and silver coin market supplies 1 oz. gold Pandas at about a 5% premium over the COMEX spot. Silver Pandas are much higher as China controls the cost of silver, with a fluctuating premium of 50% when the price of silver was at $20 per troy ounce last year and at about 80% premium right now.
….AND IN AMERICA
If you tried to buy gold or silver at a US bank, you would be laughed at. However, there are plenty of coin shops, online stores, and there is always EBay!
SETTING OFF FIREWORKS IN AMERICA….
Do you have a permit? Is it the Fourth of July? Are the neighbors OK if you make a little noise if, like the Chinese, you just want to scare the ghosts away for awhile starting at 6AM in the morning? Did your fireworks dealer have a license to sell them to you?
….AND IN CHINA
To help celebrate the Year of the Ox, a friend bought a gunpowder bandolier wrapped in red paper that advertised in Chinese “2,000 Big Explosions.” It was probably strong enough to blow off someone’s head if they were dumb enough to wrap it around their neck and light it.
Well, proving my Darwinian survival skills are still functioning, we walked down to the street with it wrapped around my neck, but I can proudly report that I did not light it! She said the sidewalk should be fine and I placed it down on the pretty nice cobblestone and took out some matches to light the fuse.
There were people and cars milling around everywhere, but in China fireworks act as some type of magnet, keeping people far enough away to not get hurt too badly but close enough to see the action. Well, what I did not expect was two police officers running towards me shouting to not light the fuse. I had to quickly decide whether to put on my patented “stupid-foreigner-who-doesn’t-speak-Chinese” act (my Chinese is pretty decent) and just light it anyways, but I decided to stop and hear what they had to say.
To my surprise, they simply moved it 5 feet to an area that was not cobblestone. Then they grinned and stepped back. I lit off the 2,000 explosions that could blow somebody’s head off. What happened next was a bit of a surprise; the police officers came over laughing and then proceeded to sweep up the mess, minus the gray gunpowder trail that they did not want to get on the cobblestones. They would not even accept my help. Weird, huh?
FREEDOM OF THE PRESS IN CHINA
Ha! Ha! Yeah right! But the funny thing is, everyone knows it! Actually, most people have a good laugh or two at the State’s expense, including the super-obvious blank-out during Obama’s inauguration speech when he bragged about how the USA defeated communism and fascism.
FREEDOM OF THE PRESS IN AMERICA
All Americans think they have it to some degree, but many still do not recognize the censorship and false reporting that occur daily from our corporate news and entertainment services – CNN, NBC, ABC, CBS, and FOX.
General Electric owns CNBC. MSNBC? That would be co-owned with GE by MicroSoft.
CBS Corporation is the Westinghouse Electric Company.
- FUN FACT: Frank Carlucci sits on Westinghouse’s board, and is the ex-Chairman of the infamous Carlyle Group. Carlucci served as the CIA’s Deputy Director, and was Secretary of Defense under Reagan. Carlucci mentored Donald Rumsfeld, who followed in Carlucci’s corporate-military footsteps and signed several letters from the neoconservative war think-tank, the Project for a New American Century.
ABC is owned by Disney.
FOX is owned by Australian-born billionaire Rupert Murdoch‘s News Corporation. News Corp has global media reach, especially in Australia, the US, and the UK. The Wall Street Journal and roughly 113 Australian newspapers top the list. Murdoch’s third wife, Wendi Deng (half his age) is native Chinese and was VP of News Corp’s Chinese STAR TV when Rupert found her. She is the director of the company licensing Murdoch’s MySpace technology to China. The Financial Times reported that Murdoch met secretly with Obama over the summer at New York’s Waldorf-Astoria Hotel and FOX agreed to scale-down the anti-Obama rhetoric in exchange for Obama appearing on their shows from time to time.
CNN is owned by Ted Turner’s Time Warner mega-group. AOL, TNT, TBS, HBO, New Line Cinemas, Cinemax, DC Comics, Time Magazine, Comedy Central, the Atlantic, Elektra, and EMI record labels all belong to this group.
Ted Turner is a vivid proponent of “sustainable development” or totalitarian population control, aka as eugenics, since he believes that global warming theory (my view is here “Anthropogenic Global Warming or an Ice Age, Which Is It? (PART 2/2)“) will do this:
“We`ll have eight degrees — we`ll be eight degrees hotter in 10 — not 10, but in 30 or 40 years. And basically none of the crops will grow. Most of the people will have died, and the rest of us will be cannibals.
“Civilization will have broken down. The few people left will be living in a failed state like Somalia or Sudan, and living conditions will be intolerable.The droughts will be so bad, there will be no more corn growing.
“We`re too many people. That`s why we have global warming. We have global warming because too many people are using too much stuff. If there were less people, they`d be using less stuff.” (hour video with Charlie Rose) (portion) (partial transcript)
Turner’s overall worldview has been fairly consistent since the 1990s when he infamously uttered (and meant): “A total world population of 250-300 million people, a 95 percent decline from present levels, would be ideal.” Nowadays, I think he is OK with a couple billion of us, and gives high praises to China’s One-Child Policy.
Well, on the bright side, the Year of the Ox is beginning with bright blue skies over Shanghai! While the air certainly isn’t clean, there have been great strides since I first moved here in 2005. In fact, I think the air right now compares pretty decently to that of Los Angeles in 2005, where I lived previously. Unless there are wildfires, in which case I prefer Shanghai!
Hope you enjoyed this article and my rambling for a bit!
Jake, the Champion of the Constitution
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
As always, unlike the NFL, the author grants full permission to allow any accounts of, rebroadcasts, retransmissions, repostings in part or full of this article to your blog or anywhere else in order to promote the Restoration of our Republic.
Veritas numquam perit. Veritas odit moras. Veritas vincit. Truth never perishes. Truth hates delay. Truth conquers.
Other Recent Articles by the Author
“Oh-Bomb-Ah” Launches First Attack on Pakistan – THE OBAMA WARS PART 1/2
Published: January 24, 2009
“We must make it clear that if Pakistan cannot or will not act, we will take out high-level terrorist targets like bin Laden if we have them in our sights.” – Barack Obama, July 2008.
Obama Takes One Big Step Forward on Guantanamo Bay!
Published: January 23, 2009
In his first Executive Orders, Obama restores habeas corpus and declares the shuttering of Guantanamo Bay within a year.
The Oath of Obama, Why His Stimulus Plan Will Fail and What to Do Instead
Published: January 22, 2009
Keynesian and Monetarist economic central planning always comes to a nasty end, as shown by the Austrian School’s Henry Hazlitt, F.A. Hayek, Ludwig von Mises, Leonard Read and Ron Paul.
Barack Obama on Gaza and Mumbai – Hypocrite Extraordinaire
Published: January 18, 2009
It is just going to be too easy to “Deep Fry the Barackcuda” during his Presidency… it’s almost as if this guy is George Bush!
Anthropogenic Global Warming or an Ice Age, Which Is It? (PART 2/2)
Published: January 15, 2009
Barack Obama just crowned socialist and environmental regulator Carol Browner as our Climate Change Czar. Propelled by her English degree, Browner is a vocal proponent of Anthropogenic Global Warming Theory. What if her pet theory is wrong?