Treaty and Inflation

During lunch conversation from some co-workers in the high-tech industry in the Silicone Valley recently, I found an interesting thing to suggest to Mr obama and Hu, which is for China to factor into current talks and negotiations a treaty with the United States in which Chinese visitors can more easily gain access to the United States and that Chinese immigrants have an extra tax break.

And the deal would be structured in such a way that Chinese government forgives a portion of American debt in exchange for an equal amount in tax credit for Chinese immigrants. Further more, as America opens up to China for cultural exchange and visitors, this will truly facilitate a mutually beneficial resolution to the mounting debt America owes China.

It's almost free money to the US, and it gives China face when America puts back on the bully face, and China finds out that once again, it is really very lonely in the world of developing and developed nations.

Chinese government's investment arm can certainly purchase companies founded by Chinese people in America, that way, the debt won't be lost completely to inflation and other occurrences that reduces their real value. This can be done immediately.

It's kind of surprising that there hasn't been very noticeable inflation for the consumer. For businesses, they are probably starting to feel it, but for consumers, bread is bread, and in recent few months it seems that price has gone down by maybe 10% to 30%. Looking it up, it seems that this link says that there are several factors. The high unemployment is listed as a top problem, because, basically, inflation will not occur in the United States to cause people to not have food to eat. When wages are low or none, inflation cannot happen, because there is no demand for stuff.

Other reasons listed are Tight money (suspicious), low oil price, lack of debt driven consumer. Well, money doesn't seem to be tight, given historical low rates. (The actual reason being the conditions for obtaining the loans are stricter, but that just means there aren't as many good businesses out there as there ought be). oil price is out of control and debt driven consumerism is dead, hopefully.

As I talk about this, I'm growing suspicious of this low wages and unemployment being a deterrent of inflation. When was the last time, when I wanted something, and seller said to me: "hey, kid, look, I know you can't afford the price, so I'm going to not increase the price to support my own business, so you can have what you want." I mean, that's basically what this unemployment relieving inflation is saying, and I just don't buy it.

Perhaps, collectively the businesses of America is fighting the government's attempt to inflate the dollar by charging each other low rates for service rendered and products provided in order to punish the government for the war. No inflation means they cannot pay back war debts, which forces them to end the war.

I hope that's the case, because the war is almost over and let's inflate prices and our salaries.

bubblies for everybody, and an authentic bottle of maotai for me.

;-)