Chinese Growth on a Mountain of US Debt


Americans must be the most gullible simpletons in the world. They will believe anything. No fantasy is too absurd. No lie is too ridiculous. Much of what they now take for granted an earlier generation would have taken for preposterous, outrageous, and criminal.

According to presidential candidate Donald Trump they are prepared to believe that China is to blame for their financial problems… No kidding. When asked what he’d do to fix the US economy, ‘The Donald’ says he’d ‘get tough with China.’

What dastardly thing are the Chinese doing? What devious, underhanded act are they committing?

Ah ha! An act of commerce! They’re delivering quality products to America at discount prices! Trump says he’ll slap a 25% tariff on Chinese-made goods.

How exactly this would be better for Americans he didn’t explain. Says our old friend Grover Norquist:

“Tariffs are not paid by the Chinese. They’re paid by Americans who buy things made by the Chinese.”

Americans are barely able to keep up with their expenses already; raising prices wouldn’t do them any favor that we can see.

But in the US, crackpot ideas are as common as democrats.

In the ’90s, Americans thought they could get rich by buying companies that weren’t earning any money. Then, they thought they could get rich by buying a house. When that went bad, they whined for bailouts and handouts. And now they think the feds are helping them by printing more money. Honestly, you can’t make this stuff up!

But their delusions don’t stop there. They also believe that for the last 10 years the world’s only super-power has been at war with 372 Muslim extremists. And that somehow we’ll be safer if we let TSA agents grope our grandmothers and pat down our toddlers.

And how about this? It is obvious to the whole world that US Commander- in-Chief Obama ordered a hit squad to disappear Osama bin Laden; but in the USA, people think the SEALs were conducting a heroic military operation.

And they dumped his body in the ocean because they didn’t want to offend the Muslim brotherhood.

You have to like people who would believe something like that. They’re loveable half-wits…earnest morons with the skeptical intelligence of a puppy.

Nor does it bother them that their national financial plan is a calamity. Everyone who has thought about it for more than a second realizes that the secret to gaining wealth is to make money…save it…and invest it in new and more productive business opportunities.

And yet, the government’s financial strategy for 4 decades has been to encourage consumer spending and borrowing, a program that is sure to lead to poverty.

This strategy did not boost real economic growth in the US. But it did wonders for China. We are now on a plane, en route to Shanghai from Beijing. China is supposed to be a poor country. But there is no evidence of it so far.

Instead, there are automobiles, highways, skyscrapers – as far as the eye can see. Factories by the thousands. Warehouses. Docks and freight yards. Plants. Mills. Apartment blocks that New York would be proud of. Office towers that Baltimore would envy. Trains. Loading platforms. Bridges. Storage yards. Assembly units. Round buildings. Square buildings. Rectangles. Ovals. Low rise. High rise. The scale of activity is breathtaking. And we haven’t reached Shanghai yet.

Is there any description of China that doesn’t end in ‘st’? It has the biggest, newest, most daring and innovative buildings. It has the fastest trains…the most roads and cars. The richest. The poorest. It has everything.

It has people too… Smart, hardworking people. Instead of borrowing to boost their standards of living, the Chinese save their money in order to reduce their standard of living…boost the next generation’s.

The Chinese have already pulled off a miracle. It has only been 32 years since Deng Xiaoping opened up China to making money. In that time, the nation has gone from a third world dump to the world’s 2nd largest economy…whose growth rate continues to be shocking.

What’s their secret? China is a zombie-free zone. The ‘safety net’ is thin here. There is plenty of corruption and inside dealing, no doubt. But people work hard…save their money…and expect to live by their own efforts.

But the Chinese have gotten a lot of help from America. The feds encouraged Americans to buy things they didn’t need with money they didn’t have. The Chinese merely took the orders…and the money. Now they have the biggest stash of dollars in the world, while the US has the biggest, stinkiest pile of debt the world has ever seen.

And more thoughts…

We have just had our best airport and hotel experiences ever. Arriving at our hotel – the China World Hotel in Beijing – the staff again met us at the entrance. They greeted us by name and showed us directly to our rooms. There was no waiting to check-in. There were no lines. There were no incompetent or surly flunkeys.

Then, we drove to the huge Beijing airport – the largest in the world. There, uniformed airline employees met us at the curb…took our luggage…and whisked us through the check-in security process. The whole thing took only minutes, with almost no waiting at any step. It was a pleasure.

*** “You haven’t seen the real China,” one of our Dear Readers who has lived in China for many years explained. “You’re just looking at the top cities. It would be like going to the US and only visiting New York and San Francisco. You wouldn’t have a very good idea of what the country is like.

“If you go out to some of these second and third tier cities, you get another picture all together. They’re pretty grim. And poor. And there are still millions of people who earn almost nothing.

“These poor people keep coming to the cities to find work. The government knows it has to keep the economy growing so that these people don’t become a problem. But so far, I’ve been very impressed. The people running the country may be communists, but they’re not stupid. And to tell you the truth, this is a much better system than we have in America.

“I don’t know why the US would want to push democracy on the whole world. And I don’t know why Hillary Clinton would want to lecture China about human rights either. China isn’t intentionally killing people. China doesn’t have troops in other countries. China is minding its own business…and building its economy – just like America used to do.

“And not having a democracy is really a good thing. A benign dictatorship can make the kind of changes you need to make. That’s what they do here. They can do things that require huge capital investments but only pay off far in the future. They can do things that are unpopular, because they don’t have to stand for election every 4 years.

“That’s why the US is such a mess. We’re digging ourselves a deeper and deeper hole each year. But nobody can stop it. Because every member of Congress has to face the voters. And the people who vote are also the people who benefit from government spending – especially teachers and retirees. So you can’t fix the problem. It just gets worse and worse until it falls apart.

“Democracy is very overrated.”


Bill Bonner
For Daily Reckoning Australia

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Bill Bonner

Latest posts by Bill Bonner (see all)



  1. …should a visitor to china, who is unable to wander freely as he could in america (well except for area….51 or the maternity ward at kapoliolani hawaii?) be expected to remind himself of the glowing reports of orchestras and theatre presentations at various “death”camps around germany in the 1930’s and 40’s…?…

  2. Yes, because someone with an intellect like Trump said that, all Americans are simpletons. I’m sure there is nobody in the US as smart as Bill Bonner. He probably said so himself.

  3. BILL.

    LOVE IT! thanks for not beating around the bush and telling it how it is.

    “loveable half-wits…earnest morons with the skeptical intelligence of a puppy.” All those years of Oprah, Jerry Springer, The View etc……has finally caught up and infected an entire generation.

    I intend to read more of your blogs from this day forth!

    May 16, 2011
  4. In a democracy you get governed by people who are good at winning elections.

  5. @ James

    He is using poetic license. Take it with a grain of salt, add a dash of context and make the idea reasonable. Ubiquitous statements nearly always contain caveats. It’s been a long time coming for the US to deteriorate, and with that comes systemic issues such as the population’s health and education diminishing. It’s a poor system, the people suffer for it and they reap what they sow.

  6. So whats next? I heard on the news today that the US wasnts to extend its debt to 21 trillion because if they dont the whole system will collapse. But then what? Can they realistically pay off 21 trillion dollars of debt? and what if that doesnt work…What is the reality of this situation? Would the US defaulting be the highest probability scenario?

  7. Problem is the USA is a plutocracy not a democracy. Lobbyists have the congressmen and congresswomen in their pockets. Wall Street bankers, Health Managed Care insurers, Big Pharma etc somehow receive a disproportionate amount of greenbacks, Big Business has become used to Capitalist Welfare.

    May 17, 2011
  8. Bunch of nonsense. They need us to Spend spend spend. The US economy is based on deception and always will be. And thats the way we like it. You sound More Like a Socialist-republican. You like the sound of spending and more spening on Corporate welfare. Then ready to pass on your Failures by socialing it. HAHAHA. Your not funny; remember we’re in the boat together. The Vietnam war was based on the reasoning that Communism was anti-Commerce. The war based on Oil that turned out to be green Oil. So what’s next…QE3 AKA increase of Dept ceiling. MOre money printing because Corporate America is just sitting and hording Cash. Just ask the Banks. They’re supposed to lend. They not doing what they were created to perform. Yup look for more Taxes. I hope that Corporate America pays their Fair Share. IF not QE4, QE5 QE6 are around corner aka cieling enhancements.

    May 23, 2011
  9. This is a truly remarkable article. Bill Bonner, best-selling author and quintessential capitalist criticizing the largest capitalist economy and heaping praise on Communist China. Yes, while China has pursued capitalism to a large extent they are still a totalitarian regime that has a Communist foundation. Bill starts out with the premise that Americans will believe anything. No fantasy to absurd. No lie too ridiculous. And there in lies the rub. Bill has told some whoppers in his article. Whoppers, even Americans won’t fall for. Yes, I’m American and I’m not buying into this stuff.

    He starts off okay. To be frank, even I have had some serious reservations about the intellect of the American people. Our IQ does seem to have diminished ever since Ronald Reagan took office. But, Bill lays too much blame on the American people and too little on the idiots and criminals that caused our problems…..namely “Banksters” and “NEOCONS”. These people gave loans without doing due diligence and gave loans to people that simply couldn’t afford their loans. Then,they packaged them into CDS’s that hid their negligent/criminal business practices. Then, they sold them to anyone that would buy their AAA rated garbage. So, I guess you can add the unethical rating agencies that made this financial garbage look like crown jewels. And let’s not forget the NEOCONS that had to make war on Iraq lying about Weapons of Mass Destruction (WMD). That little excursion cost trillions with thousands of our best and brightest killed and injured, to say nothing of the hundreds of thousands of Iraqis caught up in the destruction.

    I’m not going to criticize his entire article. He does make some valid points. For instance, we should not have invaded Iraq and should have focused on Afghanistan. We started out right, but, the phony WMD issue blurred our vision. Probably one of the biggest frauds ever conducted on the American people. Second only to the fraud perpetrated by the “Banksters” and rating agencies. We would have been done with this terrorist threat five or six years ago if we conducted our operations on terrorists properly. I will say that the SEAL team that took Osama bin Laden out, did the world a HUGE favor. He deserved what he got and “Deep Sixing” him avoided all kinds of issues. Our President simply could not have done it any better. It sounds like Bill would have erected a statue in Osama bin Laden’s honor and given him coupons for free ice cream. I don’t think the people that died in the World Trade Center would agree with him.

    And more thoughts….

    I’m sure if you went on a junket to Hell your travel to and from would be lots of fun and the climate would be great down there… first, second, or third degree burns there! And of course, you’d be greeted by all the best looking little devils, by name, and escorted to your plush air conditioned suite. There would be no waiting to check-in. There would be noooooo lines. There would certainly be no incompetent or surly flunkeys. You meet them when you move in permanently Bill, and no timeshare there, but, the real estate is cheap. So when you move to China from the comfort and freedom you enjoy in the United States keep this analogy in mind.

    Democracy is a messy business. Not always easy. But, it beats the “my way or the highway” approach you’ll find in even a “Benign Dictatorship”. Oh, by the way, the highway really isn’t a highway; it’s a ticket to prison. Disagree and you disappear. Democracies are generally self correcting. At least there is permissible discourse to analyze, discuss, and reach a consensus on a solution. In a dictatorship that simply doesn’t happen. As far as human rights are concerned, the reason Secretary of State Clinton would lecture China on human rights is, they need the lecture. There are large portions of Chinese society that are being repressed. That is just a recipe for disaster and any thinking leadership in a “Benign Dictatorship” would understand that it is not in there own interest to suppress descent. It will come to bite them. And when it bites them they will stop being “Benign” in a “New York minute”. I find it hard to believe the “Benign Dictatorship” characterization of China and regard that as merely pandering to the Chinese dictatorship and Communist Party. The reason you think they are so benign is the Chinese government won’t let you see how repressive they really are, or, you simply choose to ignore it. The Chinese aren’t even opposed to throwing foreign businessmen, like you, in jail on trumped up charges if it suits there business strategy. Cases in point would be Matthew Ng and Rio Tinto executive Stern Hu. Believe me, there is nothing “Benign” about these episodes. I won’t even mention Tibet where war was conducted on a peaceful nation. I guess in your estimation the Dalia Lama is a real criminal. I could probably write a book on Chinese repression of its citizens. These few examples simply don’t do the subject justice. Bill, you must have some serious business interests in China to be spreading propaganda for them.

    I lived in a country once that denied civil liberties to a large portion of its population for two centuries. Yes, the United States. It came to bite us, and rightfully so. But, because we live in a democracy, because we fought a long and terrible civil war over slavery, because we had a tradition of discourse and freedom, we worked through our difficulties. We still have a ways to go, there is still an undercurrent of discrimination that is slowing subsiding, but, we are much better as a nation having gone through these tribulations”. Let Freedom Ring”!

    There is little doubt that America has some trials to go through on our way to recovery. And our politicians will have to learn to work together soon or we will be in deep trouble, if we aren’t already and just don’t know it yet. But, we’ve had problems before and we have worked through them and came out a better nation. I can remember vividly, when Ronald Reagan left office, we didn’t know how we were ever going to pay down the debt he incurred. You remember him don’t you? He’s the “NOT SO FISCALLY CONSERVATIVE REPUBLICAN” that spent money like a drunken sailor. I also remember when the Japanese were buying up America and seemingly threatened to own us “lock, stock, and barrel”. In ten years, our debt was paid down and we were wondering what we would do with the surplus. Additionally, Japan was no longer an economic juggernaut that threatened our economic supremacy. I would be remiss if I didn’t mention that George Bush figured out what to do with the aforementioned surplus. You remember him don’t you? He’s the other “NOT SO FISCALLY CONSERVATIVE REPUBLICAN” that could spend money like a drunken sailor. Indeed, he made Ronald Reagan look frugal.

    So, in conclusion I would say that the game is far from over. Our politicians will have to get their act together and start representing the American people instead of their own interests and those of “Banksters and NEOCONS. They will have to increase taxes on the rich who take their tax breaks and invest them in emerging markets instead of the United States. We will have to reduce our military interventions and let the world police itself. We’ll have to conduct the war on terrorism more like a police problem than a military problem with unmanned vehicles and small groups of highly trained professionals like those that put an end to Osama bin Laden. Most importantly, we will have to exercise some austerity measures and rely on ourselves for many things the Chinese provide us now at less monetary cost, but, much higher social costs than we ever imagined. Yes, we will have to start living within our means and saving just like good little Chinese. As for democracy being “Overrated”, tell that to the “Greatest Generation” and those who came before them that sacrificed their lives, their fortunes, and their Sacred Honor in the defense of Freedom. Their sacrifice set the stage for your success Bill, and, the freedom you and your family enjoy in, of all places, the United States of America. I’m sure your article won’t be well received in Australia either……a more freedom loving people cannot be found.

    Democracy isn’t overrated.

    Democracy is an essential element of life that has to be fought for every single day. I learned that from the same people that were denied civil liberties for two hundred years and finally prevailed.

    Let freedom ring.

    Michael Johnston
    May 23, 2011

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