New US Economy Policy Message Board

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Strategies & Market Trends : New US Economy Policy

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From: Arthur Tang	6/15/2007 5:24:36 PM
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Globalization and the use of complementary and supplementary economy ? Complementary economy is defined as total cooperation of economy of two countries. Currency exchange rate has to be pegged or fixed, so that each monetary policy which provides credit and liquidity is used by the other complementary economy. We have People's republic of China as our complementary economy for over 16 years now. Every Renminbe printed is fraction of a dollar printed. We exchange products and services where we have shortages. China has much infrastructure to be built up, and our business can participate. Trade imbalance in the beginning is expected, and trade balance takes time for individual wealth in China to catch up American wealth. Their population started with 1% of their people with wealth as much as the middle class of Americans. Now their 5% population is as rich as American middle class. Their manufactured products are low priced. Our manufactured products are higher classed. That is the reason it is called complementary economy. If one third of their population is equal to our middle class wealth, we will have trade balance. After that we will have trade surplus. Mexico is the other complementary economy we selected. Supplementary economy is not as tightly coupled economy. Products and services are selectively supplementary. Each other trades according to their preference(likes and dislikes). The whole South American countries are our supplementary economy. their 1% population is as rich as our middle class. So, trade balance will take many more years, because their products and services are also lower priced. Their economical monetary policy and provision of credit and liquidity is only supplementary to our monetary policy in a very small way. After 20 years, they will become important trading partners because of their markets, which will then support higher class products and services from America. This is how globalization is developing, patience is needed not to upset the trade development and ultimate trade balance. Developed countries are trading partners which we like to do more export and our currency is weaker by choice; except Japan which does not give us that choice. They like to more or less pegged their currency to ours.

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