Just yesterday, President Trump announced delays in the imposition of tariffs on the Peoples Republic of China. Which encouraged the stock market, getting increasingly spooked by the inverted Treasury yield curve.
Inverted yield curve means that short term Treasury interest rates are higher than long-term rates. Normally, every longer term Treasury security has a higher rate than the next shorter term. Right now, 1-month bills are 2.09 percent, 5-year notes are 1.57 percent, and 30-year bonds are 2.15 percent. Not good, because the whole credit system works on the basis of longer term securities having a higher rate than shorter term.
An inverted yield curve is a recession warning. I'd say that the Fed should lower short term rates to 1.5 percent right now. But bureaucrats are slow and sluggish.
But never mind about us. Whatabout China?
China has a big problem. Its leaders are under the misapprehension that the name of the game is political power, political power for them and theirs. We, the leaders of the Chinese Communist Party, must have the power to Make China Great Again.
This, of course, is the reactionary doctrine running through all Communist, Socialist, Nationalist, and Fascist politics. That the key question is who holds political power, and what power plays are necessary to make the political entity powerful in the world and bring on a secular paradiase.
Whereas the lesson of the last 300 years is that the secret to success is to reduce political power to a bare minimum.
Put it this way. The peoples of the world who have become the most prosperous in the age of the Great Enrichment are the ones that embraced capitalism and free markets. The ones that crashed and burned are the ones that adopted some form of socialism or Communism, such as Leninist Russia, Maoist China, Hitlerite Germany, and Nehru's India. And of course there were lots of tin-horn dictators hither and yon.
The political movements that enacted the horrors of Communism etc., basically all made the error of assuming that the rising power of capital would replay the political story of the agricultural age, with a landed warrior class oppressing and impoverishing a landless peasant class. Only now it would be a capitalist class oppressing a proletarian worker class.
Only it didn't work out that way. You can see that in my chart of the Global Great Enrichment.
Do you see what is going on? India and China were stumbling along at agricultural-level income until they abandoned socialist economics and switched to capitalism about 1980. Soviet Russia was stumbling along half way between industry and agriculture. Bit of a sticky wicket after the end of communism. Etc. Notice WWII starting 1940: just about everyone took a dive except the good old US and A.
The Chinese government, inspired by President Xi, seems to think that they are going to rule the world by being rough and tough. Control their own people. Control all their tributary states with the Belt and Road Initiative. Steal everyone's technology.
Except that they are scaring the pants off all their neighbors. And the capitalists are starting to move their supply chains out of China because, well, just to be safe. And wealthy Chinese are panicked to get their wealth out of China, because, well, just to be safe.
My point is that if you want to be global hegemon then you ought to copy the British and the US model and at least try to be avuncular, rather than the roughest, toughest guy on the block.
Trouble is that everyone in politics has basically signed onto the roughest toughest hombre west of the Pecos model, from the Commies to the SJWs to AntiFa. Whereas the model that really works is to be the place where everyone wants to keep their money, from equities to real estate to government bonds. That means that you have to have limited government that lacks the power to stick people in jail when the mood takes it, and seize peoples' assets when the mood takes it, and name and shame individuals when the mood takes it.
Come on China! You chaps ae probably the smartest people in the world, after the Jews. Get with the program! Become the place where all the smart people want to live, where all the smart people want to invest, where all the smart people want to keep their money!
You'll be amazed at the results! So will we.
Inverted yield curve means that short term Treasury interest rates are higher than long-term rates. Normally, every longer term Treasury security has a higher rate than the next shorter term. Right now, 1-month bills are 2.09 percent, 5-year notes are 1.57 percent, and 30-year bonds are 2.15 percent. Not good, because the whole credit system works on the basis of longer term securities having a higher rate than shorter term.
An inverted yield curve is a recession warning. I'd say that the Fed should lower short term rates to 1.5 percent right now. But bureaucrats are slow and sluggish.
But never mind about us. Whatabout China?
China has a big problem. Its leaders are under the misapprehension that the name of the game is political power, political power for them and theirs. We, the leaders of the Chinese Communist Party, must have the power to Make China Great Again.
This, of course, is the reactionary doctrine running through all Communist, Socialist, Nationalist, and Fascist politics. That the key question is who holds political power, and what power plays are necessary to make the political entity powerful in the world and bring on a secular paradiase.
Whereas the lesson of the last 300 years is that the secret to success is to reduce political power to a bare minimum.
Put it this way. The peoples of the world who have become the most prosperous in the age of the Great Enrichment are the ones that embraced capitalism and free markets. The ones that crashed and burned are the ones that adopted some form of socialism or Communism, such as Leninist Russia, Maoist China, Hitlerite Germany, and Nehru's India. And of course there were lots of tin-horn dictators hither and yon.
The political movements that enacted the horrors of Communism etc., basically all made the error of assuming that the rising power of capital would replay the political story of the agricultural age, with a landed warrior class oppressing and impoverishing a landless peasant class. Only now it would be a capitalist class oppressing a proletarian worker class.
Only it didn't work out that way. You can see that in my chart of the Global Great Enrichment.
Do you see what is going on? India and China were stumbling along at agricultural-level income until they abandoned socialist economics and switched to capitalism about 1980. Soviet Russia was stumbling along half way between industry and agriculture. Bit of a sticky wicket after the end of communism. Etc. Notice WWII starting 1940: just about everyone took a dive except the good old US and A.
The Chinese government, inspired by President Xi, seems to think that they are going to rule the world by being rough and tough. Control their own people. Control all their tributary states with the Belt and Road Initiative. Steal everyone's technology.
Except that they are scaring the pants off all their neighbors. And the capitalists are starting to move their supply chains out of China because, well, just to be safe. And wealthy Chinese are panicked to get their wealth out of China, because, well, just to be safe.
My point is that if you want to be global hegemon then you ought to copy the British and the US model and at least try to be avuncular, rather than the roughest, toughest guy on the block.
Trouble is that everyone in politics has basically signed onto the roughest toughest hombre west of the Pecos model, from the Commies to the SJWs to AntiFa. Whereas the model that really works is to be the place where everyone wants to keep their money, from equities to real estate to government bonds. That means that you have to have limited government that lacks the power to stick people in jail when the mood takes it, and seize peoples' assets when the mood takes it, and name and shame individuals when the mood takes it.
Come on China! You chaps ae probably the smartest people in the world, after the Jews. Get with the program! Become the place where all the smart people want to live, where all the smart people want to invest, where all the smart people want to keep their money!
You'll be amazed at the results! So will we.
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