Taunter Media

Chinese Premier Wen Jinbao addressing US economic policy:

We have lent a massive amount of capital to the United States, and of course we are concerned about the security of our assets. To speak truthfully, I do indeed have some worries.  So I hope through you to again call on the United States to maintain its creditworthiness, abide by its commitments and ensure the security of China’s assets.

Just figuring out your problem now?  You lent us the better part of a trillion dollars on terrible terms because you wanted to depreciate your currency and keep your factories, and the workers inside them, occupied.  You achieved your goal – you and your buddies did not exit Tiananmen Square Ceausescu-style, and China is now dramatically more productive than it was in the summer of 1989.

We also achieved our goal.  There are granite countertops and great rooms all over the desert southwest.  Where did you think we were going to put the TVs you built?  Employment for you, cheap debt for us.

Your government has its dirty secrets.  For example, you don’t crack down on Kim Jong Il because you like the fact that he’s crazy.  He keeps our soldiers tied down twenty miles from Seoul, instead of along your border, and every time he jumps up and down about launching a missile we come running to you to beg for your help.  You could end the regime in one go if you just announced that you would accept all North Korean refugees; the country would vanish across the Yalu, and the population change wouldn’t even be a rounding error on your own census.  So you lie to us.  You tell us you are doing your best, and we know you are lying, but what are we going to do about it?

Well, we have a secret as well.  We aren’t going to pay back the money.  We aren’t going to be so rude as not to give anything back, mind you – we’re not that kind of operation.  But we have no intention of returning you the value you lent us.  We will inflate our way out of it, one way or another.

As noted in The Weight of the Yen, about a different Asian nation with a similar problem twenty years ago:

I am 56 years old.  If I were a Japanese nearing retirement, and enjoyed a life expectancy which in that longevitous country, I am told, would be about 85, I would not look with equanimity on my generation’s converting, year after year, $50 billion of current output into financial claims on a foreign nation over which my government seems to exert relatively little influence.  I would rather see some of that output sold at home in a way that enabled me to accumulate financial claims on my neighbors.  Our social bond and my vote will allow me to collect these claims even in times of stress.  Americans are and show every sign of remaining, in contrast with Japan, a short-term oriented, mercurial, polyglot, multiethnic, mobile, and heavily armed people.  Claims on such people need to be accumulated and exercised with care.