At The Atlantic, James Fallows comments on the brilliance of the new Citizens Against Government Waste ad.
While I agree that this ad will resonate with the American people, the economics in it is really stupid.
This idea that if China “owns our debt” that we “work for them” or that they “own us” is severely mistaken. They have pretty pieces of paper (cash and T-bills) which have no value except that they can be exchanged some time in the future for goods and services produced by Americans, at prices we then set. That’s it. They’ve spent decades working their people like dogs to produce goods for us and get slips of paper in return. This has been a huge win for the American people. I hope China takes a long time to figure this out.
Over at The Belmont Club, a guy named Kaspar made the great point that you only buy the debt of someone who has a future. China buys our debt, we don’t buy theirs. They buy our debt because they think we have a future (again, for their sake, hopefully a future where we can produce real goods and services to sell them for their otherwise worthless fiat money and T-bills).
Their very real problem is that they aren’t going to be able to “keep ’em down on the farm” any longer now that Chinese peasants are used to improving their lives by moving to the cities to get jobs in industry. If they try to stop this, they may have a revolution on their hands. And that almost certainly means they’ll continue to export goods at amazing prices, to our benefit, for a very long time to come. And our idiot politicians are going to try to put an end to this, in part inspired by ads like this — I guess because they’d rather we were the ones working to export goods to the rest of the world in exchange for pieces of paper. Why would anyone in his right mind want to spoil this great thing we’ve got going on?