Thank you host. Firstly, I want to introduce myself. I have directly and indirectly engaged in currency trading for nearly 30 years. I can say that most of my wealth accumulation is related to currency, During the last 30 years, I have been trying to understand the nature of currency trading every day. A few years ago, I finally found a code to understand the currency problem in the mess of seemingly simple mathematical principles and logical confusion in Western economics. I believe I find a way to crack the dollar trap for the Community of Destiny for Humanity. But so far, I have not seen this idea widely recognized by the public. Below, I’ll share my view on the dollar problem and my cracking plan with a series of lectures, and we’ll explore ways to get rid of the dollar trap for China and the rest of the world. This is a very grand subject. We will explore it in different pieces with a kind of magical skilled craftsmanship just like the cook Ding. Today, I’m going to take a look at what Warren Buffett said, starting with Buffett’s 2003 essay, ” America’s Growing Trade Deficit Is Selling the Nation Out from Under Us:”
Buffett put it this way:
Assuming that there are only two villages in the world, called the thrifty village and the waste village, the villagers each work eight hours a day to live a happy and self-sufficient life. Later, the residents of the thrifty village wanted to have more savings, working 16 hours a day and exporting another eight hours of labor to their neighbors the waste village. Waste village was very happy to take it. Now they do not have to work hard to get food and goods. However, there is no free lunch. Waste village never produce enough income to buy goods from thrifty village. Therefore, the village of thrifty demands the waste village to issue bonds in exchange for goods, and the waste village readily accepts it. The waste village gets what they want without working hard, but the bonds being issue is getting more and more. As time goes by, the thrifty village have accumulated substantial amount of waste village bonds. Some people in waste village finally realize that if the situation goes on, they would leave their children with huge amount of debt to repay in the future. Don’t we have to double our work while we must earn our living and repay the huge debts? Unfortunately, the waste village just ignore the fact. On the other hand, the thrifty village begin to worry about whether the neighboring villages could honor the bonds, so they change their tactics, selling most of the bonds back to the waste village for money and buying the waste village’s vast amounts of land, factories and buildings. Gradually, the village bought all the valuable assets of the waste village until they do not have any more assets to sell, so the whole village becoming the colony of thrifty village. This is Buffett’s true description of America’s current situation and future destiny. Buffett’s wake-up call was in 2003, and since then America’s external debt have been accelerated rapidly. The U.S. total foreign debt was $11 trillion and net debt of $2.3 trillion in 2003, and by 2018, the U.S. total debt amounted to $35 trillion, or 166 percent of its gross national income. Net external debt amounted to $10 trillion, equivalent to 50 per cent of gross national income. Net debt of $10 trillion corresponds to $11 trillion in global foreign exchange reserves, which means that the global foreign exchange savings have been consumed by the United States! The global reserve bank, run by the dollar, is essentially bankrupt!! That meant our 3 trillion-dollar foreign exchange reserves have been watered down! America’s external debt problem has reached the point where it cannot sustain! To be sure, sooner or later, China must replace US. The establishment of a new monetary system should not replicate the old way of the dollar pawn country. This is what I want to work with you to explore the issues, to find a solution to the problem …
Well, let’s start from here today. The dollar problem concerns all of us. I believe when the dollar collapses, the global financial system will collapse as well. The globalization that each of us tied to is a global chariot. It is important to have a correct understanding of the dollar, a clear understanding of how the great changes of the century would take place. Not only can we avoid suffering from loss of wealth caused by such collapse but also make good money out of this big move. That’s why I’m running this lecture series. Thank you for listening. Let’s see you again soon.
November 4, 2019 Ma Xia
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