We certainly do live in modern times with serious world trade only starting in the 1840's with the advent of steam. If you are fascinated by disruptive change in wealth building and management you will find many parallels in disruption placed upon us by connectivity whether electronically or via modern shipping efficiency.
Let's discuss the adventures of the Chinese, very much like the travels stories of the various gods that are fun to the reader and serious to the characters. It's not been fun for the Chinese to be currency manipulators through the past 10 years and in 2018 we are back at 7 yuan to the dollar. They know, especially now for several reasons we will not discuss but are freely available in Wall Street Journal articles, they are breaking the linear economic codes as an economic entity increasing exports will their currency is devalued: ask Adam Smith and he will answer other influences are dominating rather than just trade.
Let's define the Chinese pararmeters:
- They haven't had a powerful dynasty since 1600.
- They understand clearly they need a nave to protect against foreign gun-boat diplomacy.
- They have a long, long history of manufacturing
- Paper money was being used after Kubla Khan conquered the south and created mostly what we see today on a map
- Marco Polo was there during this time and his book, real of not real, has basically nothing in it except how all these towns specialized in some vertical markets and very wealthy. I have seen the artifacts of this period at the NY Met museum and, yes, they were very wealthy and the Chinese, now foreign interference is finished the Chinese think they should be the world's production facility and be just as wealthy.
- In the last 450 years China has never dealt with foreign trade except as the foreigners extracted.
Now the Chinese are not only smart, additionally many Chinese have been educated in the U.S., Europe, and even Russia. Nevertheless, even when they copied the best currency operators they cannot control the flow of wealth in any manner that does not raise flags around the world.
The rules of international trade have caused great confusion: they are structured for the U.S. to have a deficit as a normal way of life. Of course, until the pharmacueticals made trade agreements impossible - the PPA - all tries benefited the producing states rather than the consumer states. Chinese took advantage of the structure not realizing the structure was fast becoming out-of-date. The U.S. just ignored the loss of jobs and the flow of wealth to others and boldly stated how natural deficits could be.
Let's look at the American parameters:
- Got very rich starting in 1941 with expansion of governemnt spending
- Became even richer when the government aided vets to become moe successful
- Deferred consumption in WW II drove the economy during the transition to consumer spending
- Until the 1970's we were still the major manufacturing center of the world. Philadelphia was thelargest manufacturing center in the world during WW II.
- The dollar became the gold standard whether we met at xxxWoods after war