The US has outsourced its savings (capital creation) and its manufacturing to Asia. The only thing the US still contributes that is vital to the world economy is its currency which is the medium of exchange in virtually all international trade.

Dollar became the world’s trade currency because it was hands down the best. It was the currency of the top manufacturer and exporter in the world, and the only currency which retained at least some connection to gold until 1971, which served to dampen the natural government impulses to inflate.

But because dollar was essential to world trade the US governments discovered they were in a position where they uniquely in the world didn’t need to cover their imports with exports.

Everybody wanted dollars, and they had an infinite amount. Where every other country, to keep manufacturing booming has to impose austerity either on its government or those seeking special privilege through the government or both, the US government uniquely could be everything to everyone because its manufacturing could go to hell and living standards would not be affected. They would not be affected because the US uniquely could conjure up the world’s trade currency out of thin air, and INCREASE its imports by leaps and bounds even as its exports went nowhere.

Far from being the world’s piggy bank, the US has been riding the Asian gravy train for decades, bringing in increasing amount of goods it does not pay for with exports in the other direction but by conjuring more and more of its paper currency.

China buys MUCH less from us than we buy from them, by almost 500 Billion Dollars, so we are in a fantastic position. Make your product at home in the USA and there is no Tariff. You can also buy from a non-Tariffed country instead of China. Many companies are leaving China….. — Donald J. Trump (@realDonaldTrump) May 14, 2019

….so that they will be more competitive for USA buyers. We are now a much bigger economy than China, and have substantially increased in size since the great 2016 Election. We are the “piggy bank” that everyone wants to raid and take advantage of. NO MORE! — Donald J. Trump (@realDonaldTrump) May 14, 2019

Consider the US-China trade from the other side. Every year China brings over and leaves on US loading docks $500 trillion in goods on US shores, only a third of which are paid for by US goods to China. The rest is paid for by paper notes the value of which China itself has to help prop up or they become worthless.

Far from raiding a “piggy bank” the Chinese loose on both ends of the trade. The Chinese would actually come out ahead if trade with US stopped tomorrow.

Trump’s comparison would make some sense if the US was giving up something tangible such as gold. If the US had the world’s largest gold reserves (which it allegedly has albeit they haven’t been audited in 50 years) that were slowly diminishing because the US was using them to pay for its imports, then we could talk about a “piggy bank” but that isn’t the case.

As is the case now what the Chinese bring to the table takes real savings, labor and natural resources, where what the US brings takes the press of a button on a computer.

Donald is doing a wonderful thing for the Chinese in threatening to end this uneven relationship. If he is successfull the Chinese can direct all those productive resources into something other than subdisidizing living standards in the US, and the US government will be forced into a painful decision; either cut spending and corruption, and make it up to the citizenry in lower taxes and end to corporate rent-seeking, or risk their wrath.

And if the spending cuts are on the Empire, it will be a favor to the entire world.