Sunday, October 24, 2010
Quick note on a video that's been circulating the web. Citizens Against Government Waste portrays a Chinese professor lecturing in some not so distant future about the downfall of great societies, and lo and behold there's Lincoln and an American flag up there after Rome and Atlantis etc etc. The classroom titters as he pronounces that America now works for China. And the reason for the epic downfall? DEFICIT SPENDING. Oh right, duh.
As far as I understand it, the seeming reliance of the Fed now on quantitative easing - basically making more money - has been an enormous sore point for China in the middle of the heightened tension over RMB appreciation, and the "currency war" fear that looms at the core of the current G20 meetings. An article in the NYT last week explicitly pointed to the confusion and frustration of high level Chinese officials that direct stimulus programs weren't a stronger part of the American recovery plan. But, fiscal stimulus?! Off the docket of conversation as we face a hard wave of Democratic losses in midterms. [Detailed destruction of the ad from Matt Yglesias here.]
In short, the cutting irony for a lefty/Keynesian etc watching this is that the video's purpose itself (successful Tea Party and the likes rallying against government spending) is a far more likely cause of the dystopic future envisioned therein.