by Doug Casey, International Man:

International Man: While many have been distracted by the unrest in the US, tensions with China are soaring.

Recently, Beijing passed a national security law that would undermine Hong Kong’s autonomy. What comes next for US-China relations?

Doug Casey: I lived in Hong Kong, on and off, from 1985 to 2005. When I first moved there, it was a Chinese city, but there were a lot of Western expats.

When I returned most recently, it had transformed into a Chinese city with very few expats. They’d all gone to Singapore.

What’s happening in Hong Kong is unfortunate, but frankly, it’s none of our business. Unfortunate things are happening in a hundred places around the world. You just can’t solve other people’s problems for them, nor should you try. Nobody likes a busybody.

As I’ve said so many times in the past, the US government has got to stop sticking its nose in other people’s business. The US has been acting as the world’s self-appointed cop since at least WWII, as often as not stepping in on the side of the bad guys—whether it knew it or not— and bankrupting itself while making enemies in the process.

In the case of Hong Kong, my view is that the Beijing regime is totally wrong, but it would be a disastrous error for us to get involved.

The same goes for the South and East China Seas, which were in the news a few years back. The US is sending a bunch of aircraft carriers there to show the flag, which is dangerous and provocative and none of our business. Just as it would be none of China’s business if the US decided to make the Gulf of Mexico its own private backyard sea. Should China try to contest that? Should China step in if Mexico decided the Gulf is really its territorial water?

The fact is that Chinese and US businessmen get along just fine. If the Chinese prove to be unethical or dishonest, a US business should just stop working with the firm that cheats them. Why should the US government be involved?

The US and Chinese governments are posturing at each other like a couple of angry chimpanzees. The Chinese government and the US government are both dead hands on their economies. Neither serves a useful purpose. They’re the problem, not Chinese and American businessmen.

Taiwan is another simmering problem.

The Chinese government sees Taiwan as a breakaway secessionist province. They don’t recognize its independence, much as Lincoln didn’t recognize the Confederacy. I think it’s great the Taiwanese are independent, but it’s not our problem. It’s just as stupid for the US government to chance a war there as it would be for the Brazilian government to make Taiwan its business.

International Man: What does it mean for the economy and US politics?

Doug Casey: Well, there’s a huge trade deficit between the US and China, which Trump loves to point out.

I don’t see that as a problem at all.

The Chinese produce stuff and the US consumes it. It’s one-sided—to the American consumer’s benefit. We pay them in US dollars, which will soon be treated like Old Maid cards, created by the trillions. If the US government wants the deficit to stop, it only has to stop its printing presses.

The fact is that the Chinese economy has been tremendously successful because it dumped communism starting in 1980 and free-marketized. The progress that they’ve made in the last 40 years is totally unprecedented in world history as a result. Well, unprecedented for a country that size—because Singapore, Hong Kong, Dubai, all city-states—have done at least as well by implementing low taxes and almost no regulations.

That said, the Chinese economy could actually collapse. Why? Because the expansion that they’ve gone through over the last 40 years has been financed by hundreds of millions of Mrs. Wongs saving half of their income. They save it in Chinese yuan, and they put it in the banks. The banks lend it to governmental entities and businesses.

It’s a debt-driven economy, not an equity-driven economy. The PRC has made huge progress, but—unlike Hong Kong, Singapore, or Taiwan—it’s built on bank debt. The yuan isn’t a sound currency.

China has an active stock market, and it’s true that Mrs. Wong is involved in the stock market. But the Chinese stock market doesn’t raise capital so much as substitute for a casino. Mrs. Wong trades the stock market but treats it like a version of the Macau casinos.

Because the Chinese economy is built on debt from the banks, and because the government controls so much of the economy, a lot of that debt has been misallocated. And can’t be repaid. Remember, whenever the State is involved, things are done mainly for political, not economic, reasons. And there’s always corruption whenever government is involved.

Read More @ InternationalMan.com