That money is overseas.
Take a look at these graphics from the Wikipedia showing the world's foreign exchange reserves by country and/or region: China leads the world while the USA ranks a distant 15th -- China holds 20 times more foreign exchange reserves than the USA (!). Over the last many decades, the Chinese have been working -- working hard -- at low wages to produce goods and services for the Western world, and they have been getting paid to do so. THEIR bank account is FULL. But what about the bank accounts of countries such as the USA?
List of countries by foreign exchange reserves
|Rank||Country||Billion USD (end of month)|
|1||People's Republic of China [note 1]||$ 2648.3 (Sep 2010)|
|2||Japan||$ 1019 (Jun 2009)|
|—||Eurozone||$ 726 (Aug 2010)|
|3||Russia[note 2]||$ 476 (Oct 2010)|
|4||Saudi Arabia||$ 410 (Dec 2009)|
|5||Republic of China (Taiwan)||$ 372.06 (Sept 2010) |
|6||India [note 2]||$ 287.74 (Sept 17, 2010)|
|7||South Korea||$ 286 (July 2010)|
|8||Brazil[note 3]||$ 283 (Oct 2010)|
|—||Hong Kong||$ 266.1(Sep 2010)|
|9||Switzerland[note 4]||$ 262 (May 2010)|
|10||Singapore||$ 214.7 (Sep 2010)|
|11||Germany||$ 184 (Sep 2009)|
|12||Thailand||$ 159.1 (Sep 2010)|
|13||Italy||$ 144 (June 2010)|
|14||France||$ 143 (June 2010)|
|15||United States||$ 129 (July 2010)|
These finances have consequences for countries just like bank accounts have consequences for individuals. Countries that have money are in a position to BUY. Countries that have little or no money are in a position to be BOUGHT.
If you are thinking of voting for one of the often clueless populist opportunists running for office in coming elections, maybe you should first ask such a political candidate how that person thinks the USA is to rectify the current foreign currency situation, concentrating your questioning on: 1) WHERE is the money to balance the books going to come from?, 2) WHO is going to earn it?, and 3) DOING WHAT? ... 4) Toss in a question about global mining in rare earths for good measure.
Especially ask that candidate how HE or SHE is going to contribute to a rectification of the present financial and natural resources situation of the country and make them talk dollars and sense (we write sense instead of cents intentionally). Anyone can just hype nonsense about tax cuts and similar hot topics that are simply full of partisan air. The George Bush tax cuts produced worse than NOTHING of benefit for the American economy. More of the same? Only for those blind to the realities.
In reality, the USA has plundered its own natural resources and has exiled much of its own manufacturing sector abroad. Companies have selfishly outsourced the nation's jobs and industries beyond American shores in order to make greater short-term profits for themselves by employing cheap labor in China and elsewhere.
WHERE is that money?
Well, a lot of it is in China, not just in dollars and cents, but also in the form of new infrastructure, factories, transfer of technology and know-how.
In order to rectify the precarious financial state of affairs represented by the above foreign exchange reserves, countries like the USA must have the MEANS to earn the money to rebuild their finances.
WHERE in America is that money to come from in an economy which has squandered its natural resources and which produces less and less itself and spends more and more on goods and services made outside its own shores?
No nation can sustain that kind of unbalanced spending forever.
We talk here not about GOVERNMENT spending but about spending for energy resources such as oil, or for other natural resources such as the rare earths, and for other important goods and services produced overseas.
Mary Lane at Business Week wrote about the rare earths in Germany warns of China grip on rare earths market:
"China holds about 30 percent of global rare earths deposits, but controls the vast majority of the world's mines still in operation. The U.S., Canada and Australia all stopped mining rare earths in the 1990s, opting to import lower-cost Chinese supplies instead."A similar situation exists in a host of industries that provide goods and services, where America and the Western world have transferred their own technology and abdicated their own industries to cheap-labor nations.
There is a day of reckoning.
Ask your political candidate for facts and figures, not hype.