Imagine what a mature consumer driven Chinese economy would entail. They have already the means to produce domestically at incredibly low costs.
Higher demand for the natural resources required to satisfy a growing consumer culture would cause those resources' prices to increase. The cost of
extracting resources rises because more players have entered the game. How is the oil going to be divided?
What would they need international trade for when they already have a vast amount of land, are used to low production costs, are seeing a rise in
internal demand, and are dead set on acquiring more natural resources for themselves?
If the U.S. has little to offer in exchange for those limited resources, we are left with hundreds of millions of starving people with no means to
have the life they want.
I agree with Mr. Schiff in that prices need to come down for education. We need more University graduates. We need to create more complex, more useful
and more in-demand goods and services so that the rest of the world will want to trade with us when these new economies, such as China, India and
perhaps Brazil enter the fray as mature, competitive players.
I just see this whole thing as a simple transition onto a new economic stage. With more competitors for resources we have to be as diverse and smart
as possible. We can only rely on spending to "fuel" the economy so far as long as we have very few competitors who aren't spending their own money
on excessive personal rewards themselves.
[edit on 15-4-2009 by cognoscente]

