THE SECRET OF CHINA’S MIRACLE ECONOMY: THE GOVERNMENT OWNS THE BANKS RATHER THAN THE REVERSE

While the U.S. spends trillions of dollars to bail out its banking system, leaving its economy to languish, China is being called a “miracle economy” that has decoupled from the rest of the world. As the rest of the world sinks into the worst recession since the 1930s, China has maintained a phenomenal 8% annual growth rate. Those are the reports, but commentators are dubious. They ask how that growth is possible, when other countries relying heavily on exports have suffered major downturns and remain in the doldrums.

Read more here –
http://www.webofdebt.com/articles/secret_of_china.php

45 Responses

  1. […] Source Share and Enjoy: […]

  2. Thank you Ellen. Your knowledge and insight never ceases to amaze me. And you write in a style that we simple laymen can understand.

    I came across this just after reading your article:

    Wall Street leads to the Great Wall
    China is the future of Wall Street. But Wall Street may not be in China’s future.
    http://www.marketwatch.com/story/china-is-the-future-for-wall-streets-fortunes-2009-08-18

    Thanks for all you do to help educate and point the way out of America’s debt-peonage future (and present).

    -Deb

    • Thanks Deb and you’re welcome!

  3. Hi Ellen this is my first time posting on here and I have to say another excellent article Ellen!

    I’ve read your book Web of Debt, and been reading these articles for a couple of months now, I have to say that reading yourself and another writer Michael Rowbotham’s book The Grip of Death has really opened mine & my father’s eyes to the fraudelent banking/money system, and how these people control our lives through controlling the Money, media & politicians.

    This article demonstrates how the Chinese leaders/ National banking system is looking out for chinese people and their national interests, as opposed to the leaders/banking system in Britain and America parasiting off the people and looking out for the ‘elites’ interest!

    The problem now is making ordinary britons & americans aware of the corrupt money system(most haven’t got a clue) and building pressure on our politicians!

  4. Good to see your article so visible in HuffingtonPost. The comments were excellent.

    My comment was rejected. Maybe it was the part about sending the marines to shoot up Goldman Sachs . . .

  5. It is fashionable now for pundits to counsel us to learn Mandarin. The Chinese themselves do not believe in miracles. There are no more practical practical people on the planet. In ’05, there were 87,000 “mass incidents”, what we might call “civil unrest”, and that unrest has not gone away. In ’07 there were 73,000 incidents, showing some progress in the Party’s plan to increase employment and reduce corruption, and spread the benefits of capitalism with Chinese characteristics around.

    When demand for exports fell off abruptly, the Party undertook stimulus to create domestic consumer demand because they know their legitimacy depends on it and the civil stability of that grossly overpopulated nation is at stake. The Party knows that these mass incidents could combine into a great catastrophic conflagration.

    Personally, I hope Jim Rogers gets his ass burned to a crisp.

    But here’s my question, Ellen: how does the Party finance its stimulus spending? Private capital here is forever trembling lest China refuse to buy our debt. But who buys China’s debt? One never hears about the China’s foreign debt, only about its inequitable balance of trade.

    So, is China truly practicing the “American system”, which is to say, issuing debt free money? Are they borrowing in western capital markets, or are they simply printing up what they need at the same time they take investment from foreign devils like Jim Rogers. His children are learning Mandarin, by the way, while he dumps our money into the Chinese sump and drives commodities through the roof so that his own countrymen are feeling the hurt.

    • For most of my life, people have said our world is too populated and will not be able to support everyone. That comment about China being “grossly overpopulated” falls right in line with that thinking.

      However, those places on earth with the greatest wealth – both in total and per capita – are the world’s largest and most densely populated cities. At this time India has a larger population than China, yet I understand that its average population density is no greater than Europe (and possibly less). Since China has more land mass than India, it will have an even lower population density.

      Furthermore, the world’s annual food production is more than sufficient to feed every man, woman, and child. The problem of starvation has a lot to do with inequitable distribution – not lack of food.

      Henry George, an economist nearly a century ago, noticed the same things I’m pointing out. People were claiming that the earth was overpopulated – or quickly moving in that direction – but empirical evidence proves that the world can sustain far more people than it currently supports.

      He also pointed out that wealth is not money and that wealth is created by people working on land or with the produce of other people’s work on land. The reason large cities have greater per capita income is because larger populations support greater division of labor, making the production of wealth (real goods and services) more efficient. So long as our economy provides sufficient ability for people to produce wealth, the world’s net wealth and per capita wealth will increase with the world’s population. If all that produced wealth can be turned to solving ecological problems and ensuring adequate distribution of essential goods and services to everyone on the planet – we could have paradise on earth even if our population were to expand a hundred times.

      This does assume our monety, economic, and political environments permit everyone to produce wealth and direct it toward solving real problems – rather than self-gratification or playing the lottery (er… stock market)

      • Here is an opposing point of view on the subject of overpopulation from Truthdig columnist Chris Hedges:

        http://www.truthdig.com/report/item/20090309_we_are_breeding_ourselves_to_extinction/

        Hedges says in part:

        “By 2050, if we continue to reproduce at the current rate, the planet will have between 8 billion and 10 billion people, according to a recent U.N. forecast. This is a 50 percent increase….

        “A world where 8 billion to 10 billion people are competing for diminishing resources will not be peaceful. The industrialized nations will, as we have done in Iraq, turn to their militaries to ensure a steady supply of fossil fuels, minerals and other nonrenewable resources in the vain effort to sustain a lifestyle that will, in the end, be unsustainable. The collapse of industrial farming, which is made possible only with cheap oil, will lead to an increase in famine, disease and starvation. And the reaction of those on the bottom will be the low-tech tactic of terrorism and war. Perhaps the chaos and bloodshed will be so massive that overpopulation will be solved through violence, but this is hardly a comfort.”

        • Chris Hedges’ article simply repeats the Mathusian hypothesis that human population will exceed the bounty of nature to support it. Hedges has another hundred years of human impact on the environment to add to Malthus’ theory. But he totally ignores the power of humankind to overcome problems.

          This link goes to an online edition of Part II (Chapter 6) of Henry George’s “Progress and Poverty” book. George spends the entirity of Part II (Chaptes 6, 7, 8 and 9) refuting Thomas Malthus’ theory of population. “Progress and Poverty” was first published in 1879 – 130 years ago. Malthus’ theory of population was written about a hundred years before that.

          http://www.henrygeorge.org/pchp6.htm

          Henry George basically states the inequitable distribution of wealth robs people of the means of production, leaving many unemployed and with no reserves for handling disasters. This is the cause of all current examples of people running out of resources. He then goes on to explain how human productivity increases faster than population – even faster than that population uses up or degrades the natural resources on which they exist. And this occurs even with an inequitable distribution of resources!

          • Great comment! But this is one area, and perhaps the only one I’ve found so far, that I have problems with George, and agree with Hedges. I don’t think George was taking into account the exponential increase in the “inequitable distribution of resources and wealth between the time he wrote and now.

            Therefore I think Malthus and Hedges have good points to make. Just as there cannot forever be an exponentially increasing money supply based on debt, there cannot be an ever increasing population without reaching a breaking point, especially in a dysfunctional economic system such as we now have. The exploitation and expropriation of resources was probably unforeseen by even a genius such as Henry George.

            Glad to see you posting here. I have not had much time to keep up with the forum.

            Thanks for the link! 🙂

      • Great post Zarepheth. I’ve been a fan of Henry George’s philosophy for a decade or so. One of the world’s all time greatest thinkers. Which is why his ideas and ideals have been suppressed.

  6. Hello Ellen.

    Just wanted to say hello and it’s nice to see that Gary Null is posting your articles on his site.

    http://www.gnhealth.com/GNeconomyarticles1.php

  7. Hi Ellen, I would just like to say hello as reading your articles/book along with people such as Michael Rowbotham and his book The Grip of Death has really opened mine and my father’s eyes to the fraudelent debt-money banking system we are enslaved to.

    I have to say another great article Ellen, the Chinese are obviously using their banking system for their people’s benefit, unlike our ‘elite’!

    I just hope we can get some momentum going with the people in Britain and America to reform our money systems to work for the people and not enslave the people!

    • Welcome Mark. You are certainly on the right track. We are totally enslaved YET. But that day may not be far off without correct action, and that means accurate facts, information and education about the real source of our malaise.

      • Hello Jere, thanks for the welcome. We certainly are becoming more and more enslaved by debt, and I just hope the masses of the general population who rely on our dumbed-down corporate controlled mainstream media for their news, can somehow be reached by people like Ellen and others and educated with the truth of about our evil money system both here in Britain and in the States.

  8. Hello,

    Great posts on a fine article!

    Does anyone know how much China lend/spends into their economy?

    Larry

  9. Larry–

    Not sure you’ll see this–considering the post i left a week ago is still waiting approval–

    China pumped in 64% of the total amount of investment into their economy–lol
    I think they might be at the end of their rope–
    Either they take their deflation medicine or they hyper-inflate–
    I think they’ll chose Deflation–
    I mean they can build all the toys they want–
    The question is–sell them to who?

    • jim,

      Thanks for the response – do you have a link to substantiate the 64% pumped into their economy and how they did it?

      Larry

  10. Another great article, Ellen! You truly are a hero.

    I found a couple of articles that people might be interested in:

    http://www.examiner.com/x-18425-LA-County-Nonpartisan-Examiner~y2009m8d22-Monetary-reform-reclaiming-1-trillion-every-year-through-public-creation-of-money

    http://www.examiner.com/x-18425-LA-County-Nonpartisan-Examiner~y2009m8d22-Americas-brightest-historical-minds-speak-to-you-about-monetary-reform-Part-1

    http://www.examiner.com/x-18425-LA-County-Nonpartisan-Examiner~y2009m8d22-Americas-brightest-historical-minds-speak-to-you-about-monetary-reform-Part-2

    • Goo catch Ann. These are all great articles by one of the brightest teaching minds dealing with economics and money reforms today: Carl Herman. He is an economics teacher from California, and one who really “gets it” about economics and money reforms.

      I also highly recommend his articles.

  11. Keep posting, Ellen!

  12. “On January 26 2003, George Soros granted an interview to the BBC in which he warned that ‘globalization is at risk’ and that the world stood at the brink of deflation. According to Soros, deflation would only benefit one nation, the nation that was capable of making goods for the lowest possible cost: China. For every other nation, deflation would ‘exacerbate the global economic downturn.’ I wonder what will happen if Soros ever acknowledges Peak Oil. Soros is now funding a major effort to unseat George Bush who has exposed the game and become bad for business….”

    –from Crossing the Rubicon, by Michael C. Ruppert (2004)

  13. found great information here, it nice to read your article, i will visit this blog again and again, just keep posting usefull information like this, thanks

  14. Ellen, I keep seeing blog posts about how China is overbuilt similar to real estate in rest of world, empty shopping malls, empty commercial towers etc…

    Peter Schiff and others keep talking about China being able to de-couple from US/Europe/Japan, and with banking control and all the natural and manufacturing resources they have, it seems that would be possible, but it does not seem to be happening.

    Is China’ economy doing way better than US/Europe? I keep hearing about workers returning to villages away from urban manfuccturing centers.It doesn’t sound like they are now buying the goods they are making but rather the factors are idle because neither American nor Chinese are buying the manufactured goods.

    Honest question as I agree with most of what you write.

    • I too only know what I read, and I’ve read that there are definite problems with the Chinese “boom,” but they are still doing better than we are, because the money is at least getting out there into the economy. They may have made poor choices on WHAT to build, but they’re hiring workers and getting money flowing. Our money is going to try to clean up the hopelessly bad books of corrupt banks.

      • agreed, we have plenty of empty buildings as well, and with the way govts mess with econ data hard to know how overall econ of anyone country is doing.

        when I think about what we could have done with just the $trillion dollar given directly to bank/aig bailouts…figure something like 5 million people paid a salary/benes and given supplies that add up to 100k for a period of two years…think we might accomplish a few things with that…

        heard scientists were checking on GDP growth claims by analyzing satellite images of night time lighting, turns out Myanmar is lying to look better than they are and the Dem Repub of Congo is actually doing better than thought.

  15. Do you China’s state owned banks provide money at interest for private and local government? I assume they create the money for free and then profit in lending it out.

    Does this income stream eliminate or greatly reduce taxes federal taxes?

    Does anyone know if China spends interest and debt free money into the economy? Any links would be greatly appreciated.

    Larry

    • China is all about wealth consolidation , and once this has been accomplished they will pull the plug , and thery just about have consolidated all the Raw material Wealth around the world , suing the Dollar as the Instrument to facilitate the consolidation , now that this has happened , the call for the dollar to be changed as the reserve currency will get louder and louder . Watch what happens in NY at the UN this week around Dollar Reserve Talks , the dollar cannot hank onto this mantel much longer ……..here is why ;

      Through August, the federal deficit hit $1.38 trillion, or three times last year’s all-time record deficit of $454.8 billion. And in September alone, the administration expects another $200 billion in red ink, bringing the total for the year to $1.58 trillion.
      The U.S. government’s official debt is now at an all-time high of $11.8 trillion, or over $100,000 for each and every household in America.
      Both the administration and its opponents agree that, over the next 10 years, the cumulative federal deficit will be another $9 trillion, driving the burden per household up to $177,000.
      The Federal Reserve is also in hock up to its eyeballs, with more than $2 trillion in liabilities on its balance sheet. That brings the total burden up to $194,000 per household.
      Perhaps worst of all, the government’s unfunded obligations for Social Security, Medicare, and Federal pension payments are also ballooning higher and now stand at an estimated $104 trillion, or $886,000 per household.
      Total burden per household: More than $1 million!

      • The dollar works as a reserve currency for one major reason. All OPEC oil must be paid for in US dollars. Any nation wanting to buy oil must first convert their currency into US dollars, and that allows the dollar to be kept at a high value.

        If and when that ever changes, if we haven’t already done major money reforms, the dollar will plummet, and we will see the greatest hyperinflation ever seen on this planet… by far.

        BTW, Ellen Brown’s book is an excellent primer on these matters. Have you read it yet?

        • The Power in the BRIC is going to replace the Dollar as Reserve Currency , soon …..sooner than you think .

          • Oh c’mon. Get real please. BRIC doesn’t even have a currency yet. The Euro will replace the dollar first, but only after the dollar sufficiently collapses to make it unwanted by OPEC. Right now the world is running on petrodollars.

    • Larry, I don’t think reliable figures exist to answer your questions in precise ways. China is as opaque with their central banking numbers as our own precious Fed is; maybe more so.

      China’s central banks are government owned, and so I would suspect profits from money and interest go to reduce taxes. However, they also allow a certain percentage of foreign banking investment, perhaps 20 or 30%. I think you’d have to be a real insider to know for sure.

      A main point is that China has a much higher percentage of savings per capita than the US, and what that actually means is that most of their capital investment money actually comes from savings, as capital is supposed to originate from.

      Here, on the other hand, we incorrectly call borrowed money “capital”. Capital is correctly defined as wealth that is apportioned or set aside to invest in the production of more wealth. Borrowed “capital” is not true capital; it is wealth or money that is lent at interest to be used in the production of additional wealth. In other words it is “someone else’s capital”.

      The import and irony of this is that China is apparently in fact more “capitalistic”, in the true sense of the word, than we (the US) are.

      Anyone ready for the red pill yet?

      • You can’t respect the dollars value unless you respect the labor that uses that dollar to produce a basic need with . once we took that capacity away from the citizen that works in the dollar economy , you lost the value of that labor , and disrespected that persons commitment to create value in that economy .

        If China was using the dollar in its economy to produce with then the labor in both USA and China would be equally respected as would the value of the labor that creates the needs of these societies .

        Until this inequality finds a balance , we will continue to see the dollar devalue towards the lower valued currencies , as these all trade in the same markets , with no counter balancing method , like Tariff trade , to maintain the respect of currency values that represent its economy and labor .

  16. Regardless of who owns the Banks , the effects on Purchasing power that Monetary policy set by GOV brings upon its people , for whatever reason , must be addressed …..if Freedom is to be sustained .

    Subject: – John Maynard Keynes, 1920 “By a continuous process of inflation, governments can confiscate

    “By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose.”

    — John Maynard Keynes, 1920

    Pay special attention to Keynes’ statement: Not only is he 100 percent right, but most politicians today subscribe to Keynesian economics, making this perhaps one of the most dangerous times for your money, ever.

    Subject: The dollar has lost 98 percent of its purchasing power

    Since the depths of the Great Depression in 1932 (when Keynesian economics really took hold in Washington) …

    The dollar has lost 98 percent of its purchasing power …
    But gold has soared in value by more than 4,300 percent.

    Put simply, $100,000 of cash in 1932 is now worth merely $2,000 in purchasing power …

    … while $100,000 worth of gold bought in 1932 is now worth $4,449,313!

    • The value of the dollar has gone down on purpose, as a result of private Fed money policy; the value of gold has gone up as a result of Fed money policies. Both of these are the result of planned inflation and the transference of gold wealth into private bankster coffers since 1913.

      You’ve just clearly pointed out why the Federal Reserve Act was the greatest theft in the history of the world.

      Thanks

    • hungry4food, on September 21st, 2009 at 2:35 pm Said:

      Regardless of who owns the Banks , the effects on Purchasing power that Monetary policy set by GOV brings upon its people , for whatever reason , must be addressed …..if Freedom is to be sustained.
      ___________

      I would agree IF government was setting monetary policy. However it does not. The privately owned and operated Federal Reserve Banks set monetary policy, and have done so ever since 1913 and the passge of teh Federal Reserve Act.

      **********************

      “By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose.” — John Maynard Keynes, 1920

      Pay special attention to Keynes’ statement: Not only is he 100 percent right, but most politicians today subscribe to Keynesian economics, making this perhaps one of the most dangerous times for your money, ever.
      ___________

      NOT 100 % correct. It would be 100% correct IF, in place of “governments” it said “the money creation authority”. Since 1913 that has NOT been “the government” but the privately owned, for-profit Federal Reserve Banksters. It is they, not government, that is doing the confiscating, and causing the inflation and the destruction of value. The people being enriched are the banksters. Those that are being exploited are the average citizens, and the crimes the banksters are committing are being pinned wholly on the government.

      That is the entire point behind Ellen Brown’s book, Web of Debt. I highly recommend that you read it sometime.

      Incidentally, Keynes can hardly be a revealer of obscured truths about corrupt money policies and the reason for the most dangerous monetary policies ever. Perhaps the nature of this obvious contradiction escaped you.

      • Why then is the Administration enlisting Keynes Economics into the Spending programs , and why did the Administration reinstate the term of the Fed Chairman for another term if the Fed is doing the wrong things , and Keynes is wrong on monetary Policy ??

        • There are underlying assumptions in your questions that have not been established. After you satisfactorily establish them the validity of your questions would be on former ground.

          The assumptions are, of course, that Keynesian Economics is being “enlisted” by this administration; or that the Fed is following Keynesian policies.

          The entire issue of Keynes is simply out of place here, and has nothing to do with real issues. In other words, it is a straw man.

          As I said, if you read Ellen’s book, you might not be so far off into right field. You might realize that this administration is only allowed so much “wiggle room” in the debt spider’s web. Obama’s not running anything but what the banksters allow, and the replacing of Geithner, Sommers, or Bernake is not allowed… at least until there is massive public support clamoring for him to do so, and we’re not there yet, or anywhere close.

  17. “… while $100,000 worth of gold bought in 1932 is now worth $4,449,313! ”

    If you were to sell your gold coins, who would buy them from you? Not many people have that much cash, except bankers.

    • Right, and the bankers set (manipulate) the price of gold and silver on the world markets.

      • Which means that simply owning precious metals like gold will do nothing to protect you from financial calamity – unless you are part of the “in” club monopolizing those metals’

        • Exactly.

    • using Gold or PMs as a store of value , and it act as a hedge against inflation , is the only worth it has , not as a replacement for paper currency .
      The world right now has no faith in its monetary system , and the Government that represent the system is not trusted either , and this is leading to the alternative investments like PMs .
      The supply-side markets are saturated , and with the developed nations capacity to manufacture durable goods like at mach 10 speed , there is no way that demand for durables can last long enough for sustained economic value growth to grow a stock value , before the market a company represents is flooded . High Tech CNC manufacturing and the billions of people in Asia that are tooled up now is why we see even credit not able to feed the supply-side machine .

      This is why we can not grow ourselves out of debt .

  18. Money gets its value by law, not by the commodity on which it is stamped, printed, coined, or whatever. Although, we also know that it can lose its value if there is too much of it. Basically, any nation whose government issues money of any form and demands that same money in payment of taxes will see its money accepted as money. It won’t matter whether it’s seashells, gold coins, electronic bits, or toilet paper.

    In the international marketplace, however, there is no issuer of money. By convention, the United States Dollar is used for Oil purchases, which is adequate reason for most of the world to demand U.S. Dollars. If that changes, the dollar may lose an incredible amount of value compared to the rest of the world. Assuming our nation is still capable of producing its own food, energy, and other commodities, life in the U.S. could go on unchanged.

    The only hitch, is that we require Oil to meet the energy needs of our economy. I suspect that a sudden rise in oil prices within the U.S. could fast-track nuclear power plants and spur massive research into alternative energy – and is probably the reason OPEC increases production and lowers prices whenever our nation starts moving in that direction.

  19. I have kind of a diffrent outlooks on this article. I agree with the author but some points I have diffrent views on.

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