Close association between Wall Street Journal and barren right wing economic ideologues are revealed in a WSJ editorial. Each line of the editorial is either a self-refutation, an inaccuracy, a distortion, a made-up issue, or an outright deception. Is that serious? Yes, it is serious - the electorate is almost entirely captured by inadequate economic proposals that will sink America. And the politicos think only of catering to the electorate; not educating it with sensible policies, and only interested in winning an election. The United States is moving towards an economic sinkhole in which the Tea Party and Wall Street Journal complement one another.
Wall Street Journal, August 11, 2011 Editorial:
"These examples show that China is no "miracle.' Running a trade surplus while accumulating and sterilizing foreign reserves succeeds for a time. But inflation is only deferred, and the more that is stored up, the worse the hangover afterward. Investments that were predicated on the good times lasting forever must then be written off. Subsidized exports must shrink to a more appropriate share of the economy. There is some irony here in that one of the reasons Beijing has refused to change its monetary arrangements is that it doesn't want to repeat the experience of Japan. That was understandable during the Asian monetary turmoil of the late 1990s and again during the panic of 2008-2009. But in economics what can't continue won't. Tokyo pursued a policy of reserve accumulation for too long, making a difficult transition inevitable. Stagflation is a warning to Beijing that it is running out of time to avoid that fate." Wall Street Journal - subscription required.
China is no "miracle.
If we speak of a German miracle and Japanese miracle, then certainly China deserves the expression China miracle. Like all the others, the 'miracle' was actually worthwhile economic policies.
Running a trade surplus while accumulating and sterilizing foreign reserves succeeds for a time.
Does the patronizing WSJ believe the Peoples Republic government, which has steered a totally deprived nation to become the second largest economy in only thirty years, doesn't know the care of foreign reserves? Meanwhile, the country is growing at a rapid rate.
Does China sterilize foreign reserve? Doesn't the government buy the dollars, increase its money supply and invest the dollars in foreign assets?
Inflation is only deferred, and the more that is stored up, the worse the hangover afterward.
In 1995, China had a 25% inflation rate and a miniscule trade balance. Now it has a 6% inflation rate and a major positive trade balance. A 6% inflation rate is already a relatively high rate and so the government is not storing up anything.
Subsidized exports must shrink to a more appropriate share of the economy.
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