China’s Factories Moving to America?

The Great Onshoring [The Daily Reckoning] April 10, 2024 [WEBSITE]( | [UNSUBSCRIBE]( China’s Factories Moving to America? Annapolis, Maryland [Brian Maher] BRIAN MAHER Dear Reader, Treasury Secretary Yellen recently took an airplane to China. To our everlasting astonishment the aerial machine arrived intact. It was — after all — “constructed” by Boeing. In China the American potentate read her hosts a severe lesson… and wagged a lecturing finger in their stern faces. She bellyached and moaned about Chinese economic “overcapacity.” China — in Ms. Yellen’s telling — is overproducing and underconsuming. This condition represents a dreadful menace to the United States. Thus the lady mumbled that: I am particularly worried about… China’s enduring macroeconomic imbalances—namely its weak household consumption and business overinvestment… China has long had excess savings, but investment in the real estate sector and government-funded infrastructure had absorbed much of it. Now we are seeing an increase in business investment in a number of “new” industries targeted by the PRC’s industrial policy. That includes electric vehicles, lithium-ion batteries and solar. China is now simply too large for the rest of the world to absorb this enormous capacity… When the global market is flooded by artificially cheap Chinese products, the viability of American and other foreign firms is put into question. What Yellen Really Said Last week we placed within our stable Mr. Andrew Zatlin — “The Moneyball Economist.” Here he strips the preceding mummery to its nuts, to its bolts, to its washers and screws: China has built a massive manufacturing base and they continue to build out the factories. It’s reminiscent of what Japan did in the ’70s and ’80s, which was to rapidly industrialize and get rich quick. The Chinese government is taking a page out of that playbook. Basically, you make a lot of stuff, you sell that stuff to other people. Janet Yellen said she’s particularly worried about how China is enduring macroeconomic imbalances. What does that mean? It means China’s making a lot of money and saving it, resulting in weak household consumption. We want China to have a consumer economy… and to stop building factories that are making cheap products that are overwhelming us. Quite frankly, it’s all about jobs. If the U.S. is flooded with cheap Chinese products, U.S. companies go out of business and we lose jobs. And that's the message from Janet Yellen to China: You're doing the same thing that Japan did, and we're going to stop it. [Offer Pending: Please confirm your address…]( Your name is on a list of people eligible to claim the “most dangerous book in America.” We with only 500 copies left, we may run out of stock soon. So, here’s how to claim your copy: - [Click this link to watch Jim's short message.]( - Review your account information. - Confirm you’d like to accept Jim’s offer. And I’ll get your copy of the most dangerous book in the mail right away. [Click Here To Learn How To Claim Your Copy]( Will Chinese Factories Move to the U.S.? How did the United States stop Japan?? In the 1980s, Reagan starts pushing hard on Japan. Just like with China, they wanted Japan to boost consumer spending and stop flooding us with their cheap goods. You know what happened? Japan moved their manufacturing over to the U.S. Honda and Toyota opened production lines here. By 1996 there were three factories that Toyota was running building cars. Thus Andrew expects China to pursue the Japanese example. Chinese factories will take ship at Shanghai and offload at the Port of Los Angeles… where they will board trains for the American interior. Upon arrival American laborers will empty into them. With these factories comes investment opportunity, says Andrew: So what's the investment play here? Power generation. More U.S. factories mean a higher demand for reliable electric generation. I like infrastructure. Go [here]( for his entire commentary. The “Evils” of Excess Savings Treasury Secretary Yellen refers to “excess savings.” “Excess savings” is a devilish condition that — happily — your editor has never endured. He can scarcely conceive its terrors. He would be reduced to purchasing all his goods and services with money in his actual possession. A credit card would be an unknown. As would monthly interest payments at 23%. Thus he would shatter the central pillar of American economic life — debt-based consumption. Pity the forsaken land of excess savings, unblessed by debt. Its debt-to-GDP ratio is not merely zero. It is negative. Contrast this hell with the debt-blessed American paradise. United States national debt runs to $34.6 trillion. United States total debt — both public and private — runs to a divine $98 trillion. And the nation’s debt-to-GDP ratio scales 120%. Gloria in excelsis Deo! Then you have those poor Chinese… Say’s Law Chinese households, alas, are afflicted with the plague of excess savings. Their owners fail to appreciate the infinite wonders of debt. They are evidently slaves to Say’s Law — that production must precede consumption. That is, a man must produce before he can consume. [What a Trump Win Means for the U.S. Dollar]( [Click here for more...]( Donald Trump has vowed to reverse Biden’s plan to replace the U.S. dollar… but it may be too late. Even a Trump win can’t save us from the “death order” that Biden signed. In fact, it could accelerate his plans. Remember — even a Trump win won’t save us… [See How To Protect Yourself Here]( The government Ms. Yellen represents has long revolted against Mr. Say’s iron law. It goes along under a sort of Keynesian anti-Say’s law — that consumption precedes production. She herself rises in active revolt against Mr. Say and his universal law. She does not believe in it. What does Ms. Yellen believe in? Ms. Yellen believes in the theory that consumer spending represents 70% of the United States economy. Let us now proceed to a central assault upon the consumption theory itself — the nearly universal theory that consumer consumption constitutes 70% of the United States economy. It likely constitutes far less. Consumption In Only 30% of GDP Official calculations of the gross domestic product neglect tremendous piles of economic goings-on. These goings-on include business investment and spending on “intermediate” goods. These are inputs required for the production of final goods — hence they are intermediate goods. The steel in the automobile, the sugar in the candy, the wood in the furniture… these are intermediate goods… for example. Yet their purchase does not classify as consumer spending — else they would be double-counted in the ledgers. Explains economist Mark Skousen: GDP only measures the value of final output. It deliberately leaves out a big chunk of the economy – intermediate production or goods-in-process at the commodity, manufacturing and wholesale stages – to avoid double counting. Now mix in expenditures on intermediate goods. What do we find? We find that consumer consumption merely constitutes perhaps 30% of GDP. Skousen: I calculated total spending (sales or receipts) in the economy at all stages to be more than double GDP… By this measure — which I have dubbed gross domestic expenditures, or GDE – consumption represents only about 30% of the economy, while business investment (including intermediate output) represents over 50%. To emphasize: Consumption represents a mere 30% of the gross domestic product. Not the commonly accepted 70%. We therefore incline toward the business investment gauge of economic vigor. And business investment — over 50% of the gross domestic product — has been steadily shedding steam. Thus we harbor a hearty suspicion about the lovely economic reports in current circulation. We do not believe them. More tomorrow… Regards, [Brian Maher] Brian Maher Managing Editor, The Daily Reckoning [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) Editor’s note: We don’t often discuss cryptocurrencies around here. But there’s an [upcoming crypto development so dramatic]( we simply had to bring it to your attention… [Bitcoin’s Fourth Halving.]( It could create fortunes. And this coming Sunday, April 14 at 7:00 p.m. ET, top crypto expert James Altucher is hosting an urgent online strategy session... To help you prepare for the Fourth Bitcoin Halving that’s guaranteed to happen this coming week. This Sunday, James will discuss his top six coins for the coming Bitcoin halving, each with the potential to turn $1,000 into a six-figure nest egg in the next 12–18 months… Why he believes this will be a halving on steroids that could send these coins higher than anyone can imagine… And James will even give you the name and ticker symbol of one of those coins, completely free of charge. Are you in? [Click here to automatically RSVP.]( Clicking the link above automatically registers you for The Countdown To The 4th Boom. By reserving your spot, you will receive event updates and offers. We will not share your email address with anyone. And you can opt-out at any time. [Privacy Policy.]( Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) [Brian Maher] [Brian Maher]( is the Daily Reckoning's Managing Editor. Before signing on to Agora Financial, he was an independent researcher and writer who covered economics, politics and international affairs. His work has appeared in the Asia Times and other news outlets around the world. He holds a Master's degree in Defense & Strategic Studies. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your The Daily Reckoning e-mail subscription and associated external offers sent from The Daily Reckoning, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@dailyreckoning.com. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. 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