Insights: Famous Chinese Economist On US Economy 2024 

I visited the US several times (as a German) and each time I wondered about the huge and increasing social differencies and the common sense to accept these and this vicious development. A nation that puts much more efforts in saving or destroying the rest of the world instead of taking care of its own people, cannot survive much longer.

It’s called the American dream, because you got to be asleep to believe it. - George Carlin

The US national debt is more than $34 trillion, with 22% of it held by foreign entities. The US also has $40 trillion in unfunded Medicare liabilities and $26 trillion in unfunded Social Security liabilities. The US dollar is the dominant reserve currency, backed by its perceived strength, allowing the US to print unlimited dollars as long as the world maintains trust in it. The US dollar is the backbone of US power, and any actions that undermine confidence in the currency threaten to destabilize its position of dominance. Each unilateral sanction imposed by the US risk damaging the stability and credibility of the US dollar, leading to dire consequences for the nation's power and influence. The US is the only country actively undermining the strength of the US dollar. The freezing of Russia's $300 billion currency reserve by Western governments may lead countries to reconsider investing their funds in US Treasury bonds and finding ways to reduce their use of the US dollar. A significant portion of US dollars is held outside the US, estimated at 60-70% of all US dollars in circulation, due to its status as the dominant reserve currency and wide use in international trade and finance. The one trillion dollar trade deficit of the US is a consequence of being the reserve currency, as a strong dollar makes it difficult for US businesses to export goods and services while simultaneously making it easier for other countries to sell to the US. Countries are expending resources and labor making goods and shipping them to the US in exchange for green pieces of paper. The US is sending back mostly empty containers. The US budget deficit is $1.7 trillion in 2023 which must be paid for by selling more Treasury bonds. The interest on this debt is greater than the military budget. To pay the interest on its debt, the government sells more Treasury bonds, leading to a cycle of increasing debt. The US printing of dollars has been exporting inflation in other countries for decades, but will eventually increase US inflation. Raising interest rates to fight inflation decreases consumer and business spending, increases the trade deficit, and higher interest payments on government debt. Other countries will respond to the US raising of interest rate by raising their interest rate, risking global recession. The Plaza Accord addressed this issue in the past, but it will be challenging to implement such measures now. A well-run country collects taxes to fund essential services and infrastructure. In the US political system, wealthy corporations and individuals can lobby for tax breaks. The shortfall in funding for the US government has reached $34 trillion. Instead of collecting taxes from wealthy corporations and individuals, the government pays interest to them. The top 10% of earners (36%) and corporations (9%) together contribute 45% of total federal revenue. Banks hold Treasury bonds for their safety, liquidity, regulatory compliance, and potential profitability. When interest rates on Treasury bonds rise sharply, the decrease in existing bond values reduces liquidity and makes it harder for banks to raise cash quickly. This causes depositors to lose confidence, triggering a bank run. In response to the current bank run, the government is issuing Treasury bonds to raise funds to compensate depositors for any lost funds. There are $19 trillion in deposits in US banks. The estimated unrealized loss on US banks' financial assets is $1.94 trillion, while the total size of their equity is $2.1 trillion. SVB had taken a $15 billion loss, while their capital is $16 billion. Around 2,315 of the 4,800 banks are currently sitting on assets worth less than their liabilities. It's a systemic issue. A similar issue is being played out with risker Mortgage-Backed Securities (MBS) valued at $12 trillion. The new Bank Term Funding Program (BTFP) helps prevent discounted bondholders from taking losses when they have to sell them urgently. The BTFP accepts discounted bonds at face value to be used as pledges for loans to inject more money into the economy. Risking more inflation. It's a Ponzi scheme. Ponzi scheme cannot taper. We reached the can and there is no more road.

I listen to Jeffrey Sachs, and Michael Hudson. Great to hear about this Chinese economist who i have no access to, nor the Chinese language skill to understand even if I do. Thank you for introducing his thoughts though.

Right now, the US' only focus is to serve one country in the Middle East. If I name that country, my post will be deleted by RU-vid.

In principle, the United States could have addressed the growing problems in US and global economics by conference and cooperation. The reason they do not is the inevitable outcome of their Liberal economic model. The corporations control the government not the other way round. So they will double down in a headlong rush toward war and economic collapse.

your quite correct, this is a time where either civilization moves forward or descends into the ugly times past

Australia here, recently found your channel, enjoying the content and the different perspectives. Listen to all, follow none, walk your own path as best you can…

Hey thee i just discovered your Chanel this mid nite…cannot sleep …thank you for sharing your views…they were in sight full.

I have been trying to understand 卢麒元 for so long and it's amazing to see somebody translate what he's saying to english. thank you! It seems like the only factor of the 3 outlined that will come to fruition is that europe will be harvested, but that's it.

The real doomsday problem for the USA is the annual interest it must pay on its ever escalating debts. Those payments will soon reach the total of its GDP. At that point it has no further hope. The problem is is that such a catastrophic failure will destroy the economies of many other countries, especially those closely tied to it. Brics is just the symptom and pragmatic solution by those that already realise that this is inevitable. It is not a matter of if, but only when..

Fantastic assessment of my country!! Peace sir! Great job. ❤

Lu is a true scholar, unlike most economists recognized in the mainstream media of the US.

Hi: I’m a retired US lawyer; I have also worked part time as a professor of entrepreneurship, and as a social entrepreneur. I have lived and worked in a number of countries, including Thailand, Saudi Arabia, Kenya, and Colombia.

To understand USA today, study the last 10 years of Qing dynasty reign. Eerily similar. Having gone tru an open trade policy for a long time Qing dynasty closed its door to international trade trying to protect its interest, prevent trade deficit and also in the name of national security. Sound familiar? In the end implosion takes place and US style capitalist economic system and rules descend into chaos and uprising of the people against the oligarchs 1% by the 80% poor cannot be avoided. New form of government and revolutionary leader similar to Dr. Sun Yet Sin emerge. Just my 2 Yumao for you.

I had to re-listen again to understand that he was referring to de-dollarization. In that case, the 4 year-forecast is probably correct. A process that was supposed to take decades has been accelerated by the US's very wrong decisions to impose financial sanctions on anyone that displeases the US, like Russia and to freeze the financial assets of such countries. The threat of sanctions has caused the process of de-dollarization to accelerate. For example, trade between Russia, China, India and some arab countries can now be done in local currencies. Russia has proposed a new mechanism to trade grain and other foods. BRICS is planning the same, to trade using local currencies. Regarding "harvesting" he probably refers to Swift, the settlement of trades using US dollars worldwide and the debt (cheap money to finance its budgets and all the wars). The risk of the debts is that, for example, China may suddenly sell all its remaining US bonds and create a US financial crisis. For this reason, China, Russia and many other countries have bought lots and lots of gold. Regarding the 3 factors, I agree with you. The extreme polarization of US politics will prevent the proposal and execution of rational policies.

I find it Interesting that the use of “harvesting” of Europe. It is more like a “leaking tap” that never stops. The owner complains but accommodates the leak. A harvest has a completion date. The leaky tap, however, will continue as long as the owner does not interfere. China, unlike the Europeans, does not accommodate the constant economic drain. There is no harvesting dateline for China.

Very well said

Yes to all!

Good video. Very informative, and important. Thank you.

new subscriber here. really like how you convey your story

The world's richest and most powerful country faces these problems: Economic inequality, inflation, stagnant real wages for the last forty years, costly healthcare, an expensive education system, student loan debt totaling $1.7 trillion with an average balance of $38,000, poor public transportation systems, racial inequality, mass incarceration, the militarization of police, deteriorating infrastructure, housing affordability, homelessness, the opioid epidemic, and gun violence. Instead of prioritizing the welfare of their people, they meddle in other countries to spread their version of democracy. The question is whether the USA can continue to survive with its version of democracy, not whether it can have any role in the global order.

Thank you for your insight.

I watched professor Lu’s videos after your introduction, and found them very insightful. Wish you can bring more of his videos in English to general audiences for discussion. Especially on the topic of Society vs Capital, both Marx and Mao struggle with it during their later years.

To dokładnie dlatego wyprowadziłam się z tego kraju. Ja też jestem ciekawa, ile jeszcze ma czas. Mam nadzieje, że system finansowy chińsko-rosijski będzie już w porządku, kiedy wszystko się upadni.

Please leave your comment below. Thanks for your support!

Love thie soft music with such dark themes! Will read the Hudson book

Very good assesment, thank you!! 👏👏

Voice in English is so clear thanking you

US debt already reached 34,6 T to date. may be will be 37 T debt by the end 2024.

You have a strong point there, you can fiddle all you like with quick computers, but to build a strong industry to expand your economy, you need buildings build, machines made, people educated... it all takes a lot of time.

Yes, if we do not bring production and manufacturers back. We have sold out to the lowest bidder when we can build everything here. But big company CEOs do not care. They care about making millions for themselves, regardless of whether this country or their fellow citizens suffer

Gut feeling. We, Chinese work with facts not gut feeling.

Community and regional banks in the US used to be very safe, but struggling now with existential problems. When a bank closes, a bigger organisation will "save" them by a take-over. Then they also absorb the problems. When many small banks are to close, these problems may endanger the bigger banks too, and cause an escalation to even bigger banks. A financial melt down. It is common that workers in the US have more than one job for a living, and no savings nor pension. That means that they have to work almost lifelong, or face extreme poverty. Those who have a pension may see the inflation and bank failures cause the destruction of their savings, causing poverty too. In 10-20 years from now the internal consumption may go down. Shops have to close.

Thank you for sharing.

Harvesting means inducing a foreign financial crisis, usually through high interest rates on the USD, then coming in and buying the distressed foreign assets at low prices with USD, (which by that time is usually at a lower interest rate as well). He gives it 4 years (2028) because all of that $34 Trillion in debt (printed money) if not soaked up overseas will come flooding back to the United States looking for something to buy and induce a huge/hyper inflation. And, as T-Bills will no longer be sought, the buyers will be looking for tangible assets. In other words, a "Reverse Harvest" will occur. If no one wants USDs, the only place that will accept them is the United States, so they go back to get redeemed.

God Bless CHINA.

Good video

This was so interesting to listen to. 10 out of 10 for this video.

Thank you for this. Critical events have occurred that have already set the path forward. First, XJP deciding who is the key ally. Secondly, everything that has happened in the Eastern European Conflict. Thirdly, the immense difficulty the USA is experiencing to transitioning to renewable energy and BEVs.

My interpretation of a financial harvest relates to mortgages. You give a loan at a cheap but variable rate. The cheap rate raises prices of said industry, ‘housing’ for example. Sometime during the term after the bulk of interest has been paid, you readjust the rates higher. The price of industry crashes and the poor mortgager is back to square one and you successfully harvest his labour as he struggles to pay something that was overpriced to begin with and now collapsed in price. They are harvesting me here now, my mortgage has been reset and is as high after 10 years as at the very start. I’m being successfully harvested. The only difference is, due to insane immigration, our housing hasn’t collapsed yet. But our living standard sure has. I imagine you do the same on a national scale, but it’s more sophisticated and requires rate and currency manipulations.

I would like a video on his views on china's economic issues and his advice to China too

excellent

Thanks!

‘Financial harvest’ … how ominous. 😮

This is a huge subject to tackle. I agree that the US cannot run it’s insanely large, interventionist and extractive empire based solely upon current economic systems. What I do see is the United States being compelled by dominating capital interests to maintain the forces of empire so that those capital interests can continue their highly extractive enterprises no matter how destabilizing the practices actually are. It is the nature of capitalism to cycle through expansive and recessive periods and to run into outright market collapse and we will continue this habit and extractive capital interests will continue to operate in their extra-national and vampiric ways as any set believing they can profit from chaos and collapse, if for no other profit than the greater domination of one or another market. The United States itself is primarily the fattened goose from which two centuries of capital growth can be bled out. This will only make the US more dangerous in the short term though as capital interests will care less and less about the effects of their very demanding proclivities on the body politic in America. The transformation of the country from a very imperfect liberal democracy to one or another form of totalitarianism (most likely a techno-feudalist authoritarian model) is the more amenable transformation for capital interests and it is a very realizable model. And the US will be harnessed to yoke as many other nations into the selfsame system and to adapt as many international institutions as possible to the changed order. China offers a direct challenge though and so China will experience an increasing willingness of capital to use American power to either convert China’s own system to the same techno-feudal model (not a hard sale to make if China permits an entrenchment of oligarchic interests) or more likely a not so cold war where America is made to risk itself as the mercenary for capital so that China’s own extractive interests are corralled and fenced off from a generally western global elite’s fat flocks. China of course stands a wonderful chance of subverting the ranks of that global elite and thus playing a key role in the world economy’s transformation, but it is the well-earned hubris of that elite to believe that those who enter its ranks will forgo the prioritization of national interests and will instead work to maximize the fat flocks they can routinely fleece. Can China preserve national interests and welfare as it merges into the greater order and can it both introduce its own global institutions (like BRICS), subsume the dollar to the yuan, and avoid being either corralled by the west or subverted by global elites? And amidst all of this I see little chance of the west rising to the challenge of climate collapse. The lords of chaos do not fear chaos. They fear the inability to profit off of it, but if averting it is too costly then they will just institute a different ledger for a different set of interests in the post-collapse world. This is all very depressing, but in all of it China does still possess the possibility of assuming the leader’s mantle. Will it be to ride the spire amidst its collapse or to lead the way to a new order that averts or ameliorates it? One thing is sure, it can’t accomplish the latter while either prioritizing national interest nor while forgoing it for the sake of profiting off of existing models. That is my nearly hopeless forecast.

I have just joined this channel due to its non-mainstream media point of view and the well-presented comment from its viewers. Well, the majority of them anyway, allow for educated debates which is rear in RU-vid. Financial Harvest in my view descript the circulation of US dollars around the world for the last 50 years. When circumstances suit them, they are lending/investing to foreign countries at very low interest rate with low exchange rate which are welcome by poorer and underdeveloped countries. Then at time of harvest, interest rate increased by FED at an unbelievable speed which also push-up the US$ exchange rate. "My currency, your problem" created victims all over the world, latest being Sri Lanka.

Great Video Thank You For The Information.

The current market/economy is unnecessarily tougher for boomers/senior citizens, I’m used to just buying and holding assets which doesn’t seem applicable to the current rollercoaster market plus inflation is catching up with my portfolio. I’m really worried about survival after retirement.

The US with close to 200% GDP dept is already bankrupt and the only straw maintaining its current position is the US Dollar and the military hegemony both increasingly challenged by other Global South players.

Thank you for thoughtful presentation, history has shown the empires do not fix themselves they just go bust...''The Indispensable'' are just full of themselves and blinded with arrogance and greed....no hope.

Greatest analysis with think-thank👍👍👍.

What does he mean by harvesting. Can u explain

The USA has alreay started to financially harvest Europe, in the promotion of the war with Russia, this cut cheap energy from Russia, for the US to impose sanctions, and force we europeans to buy US LNG at 3 times the price, also the US has passed the inflation act, granting European companies to move to the USA with aid packages and tax incentives available for european companies that move. In 2022 Reuters published, US economy saved via exports to Europe", thanks again for your analysis, and straight talk.

Very good analysis

I like the channel and respect what you do! Greetings from Russia! When you said that the US is too invested in its matters abroad to invest in infrastructure and (especially) education, I immediately thought that important thing is not only spending money on a subject, but also efficiency of this investment. I read that US education problem is complex and spending more money on it gets very diminishing returns, results of students fall lower every year.

Your discourse was so good, educated and visionary.

I'm afraid that Mr. Lue (Sp?) needs to drill down deeper. Only 15% of US GDP is based on foreign imports/exports, half of that from Canada & Mexico. This In spite of the US being one of the top exporters of Oil and LNG in the world now. The US created Globalization but never tied its economy to it. The US is currently building back out its economy which is inflationary. Finally, the US has exited every decade since 1860 with a stronger economy. The causes and structural reasons that have led to this have not changed.

Great video! Do you know of any Chinese economists that either speak English or have English translations of their work? I’m a huge fan of Cheng Enfu and want to read more work by Chinese economists.

Keep doing the good job, se need more videos and youtubers like this , to tacle out the hypocrisy of US an Europe across the world

Pozdrav iz Srbije gde Kineze smatramo braćom 👋

850多个军事基地，和胡塞打的有来有回的

Excellent Analysis

To understand why China is collapsing, we need to go back to 1993, when Beijing raised its tax on local governments to 50% from 20%. Local governments continued to be burdened with 80% of expenditures; so, Beijing allowed the local governments to control the banks. The developers get loans from the banks to lease land from the government for 40 years. (No one owns land in China.) Then the developer “pre-sells” the condo to individual buyers to construct the condo. Then the developer takes that money and gives it back to the government to take out another loan to lease more land. A fraction of the money goes to actually building anything. Most of the money goes to the government. So, for instance, in 2020, 60% of the money of “homeowners” went to the government. Out of $100, $48 pays the government for the land, $12 for taxes, and roughly $30 goes to construction. About 50% of the local government’s operating budget comes from leasing land. This is an incentive for the government to raise the price of the land. In the last ten years, the price of land has increased 250%. This process has transferred debt from the local government to homeowners via individual mortgages. Mortgage debt to GDP rose from 16% in 2011 to 34% in 2021. Household debt was 5% to GDP in 2000. Now it is 62%. This crisis affects everyone in China, both the poor and the rich. In essence, as much as 90% of bank assets are tied up in land leases and development projects serving as milk cows for local governments to pay the onerous 50% tax to Beijing - a tax they cannot pay. Then there is the problem with the BRI. All contracts in the Belt and Road Initiative are secretive after 2015, thus undermining the financial world order. All of China's loans in the Belt and Road Initiative have "cross-default clauses": if one loan is defaulted on, all loans can be requested for immediate payment in full. And non-Chinese lenders do not know what China will do in each case, as each contract is secretive. 42% of the Belt and Road Iniative is for cheap energy extraction with the biggest clients being Russia, Saudi Arabia, Qatar, UAE and Nigeria. These cheap energy investments take a very long time to complete and take a long time to turn a profit. The other countries, like Pakistan, and many African countries, are on the verge of collapse. China's total debt exposure in the Belt and Road Iniative is 600 Billion dollars with an average partner rated at B3 / B-. the lowest possible rating.

4 years! Hope it happens sooner...can't wait for the day!

Hearing this and watching the history of many decades, and watching the practice of the american political class nowadays, I remind that book of a southamerican writer, The Chronicle of an Announced Death. Free translation. About history classes on ancient civilizations of Greece and Rome, I remember the teacher saying: the empires are born, they live and lastly dead. To scape that death, the solution, I think, is the transformation from the unilateral domination to the multipolarity without domination. China makes a great point in this aspect. Respect, mutual benefits, etc. I saw the recent reception given to the President of Micronesia visiting Beijing as I have seen the similar receptions of heads of state of great or short countries, and the respect is the same, and I get moved. That protocol is an example of the china's mind about multipolarity with respect and equal treatment, and only a high mind has that ability. I don't find that in western or westernized countries.

good tube and for aaaanglish audience.

Very interesting also please read Ultra Imperialism I would love to know your opinions.

Original, anti-neoliberal economics should be finally validated and recognised in China and the global south today. Wen Tiejun is one great thinker and compatriot of Lu.

Thanks for introducing professor Lu’s view on U.S. economy, I agree but suspect timing will be more like 10 years than 4. Although possible second ascent of Trump might accelerate the timing.

You hear the word “ harvest” a lot among Chinese economists or geopolitical commentators. It’s not a lexicon among American economists. The harvest in general refers to US exportation of inflation and the consequential benefits ripped off from other affected nations.

Hope and wish it could be sooner.

The problem is that people who make decisions are too isolated from normal people both financially and emotionally, and they don't have any connection anymore.

So what does the 34 trillion debt mean to a real economist? please elaborate

nice subject, for some time now I wanted to know how much time US has, thanks

Great I look forward to more of your analysis. We shall see how the US deals with it's problems, and have to hope the natural American tendency to reach for a gun is tempered. 4 years? hmmm maybe, I had thought they had halved it to 10 years with the attack on Russia, but they aren't learning and accelerating toward the catastrophe, so perhaps you're right. I really don't think there is the surplus in Europe for the "Harvest" due to liberal ideology, and doubt that China will accede to such a tax.

I think the crisis in US could become a much worst disaster in other countries.

Wow this is best news .

Where can I watch his interview in Chinese version?

Thank you for sharing the economists analysis. How he came to 4 years may be considering the October surprise. I don't think the economist understands the role of the Federal Reserve. The U.S. current debt and GDP to spending ration are what they were at the close of World War II. When the U.S. and our allies defeated the Japanese Empire and Nazi Reich. Look to what the U.S. government and Federal Reserve did to reset the debt after WWII. That will be your answer, I think. Cheers.

Waiting for that DAY!

A nation that does not make it's children, their education, and their proper development it's number one priority is doomed to failure!

Excellent Presentation

The specific avenue that would lead the US out of crisis in this instance is an economy that became marvelously more productive, and therefore would continue to maintain the debt ties that bind it together as a nation. This is not an impossible scenario, because you can find arguments for this decade being full of technological disruption, e.g. Tony Seba's lectures showing many of this changes taking place in terms of exponential cost curve shifts. The biggest problem faced is that our existing productivity measures are inadequate to the task: they're all based on the spreadsheet-optimal paradigms that set in with computerization in the 1970's, which favor financial gamesmanship and burning through the labor stock. This economy was designed to keep the Baby Boomers happy, since they were the largest cohort, but since they're on their way out now, their assets can be devalued if needed. The desire to please one cohort comes from the dependencies on election-night results: most US national narratives are set through election cycles, and the US system, since it's laden down with checks-and-balances, does not turn around as quickly as parliamentary systems that can rapidly change ruling parties and give seats to small parties. It's easier to focus on a small loyal base within the two-party system, and therefore lack of representation is a common problem with the system as a functioning democracy. The turmoil seen in national politics reflects a kind of scramble to find out what the Millennials(the next largest group) will prefer. The technology we need, economically speaking, is a shuffling around of which pieces are centralized: e.g., if a spreadsheet can tell a business what is best for it individually in terms of assets-and-liabilities, a combination of blockchain and AI might be able to describe what is optimal across a capital and labor market, if deployed in a more intentional fashion than present. Within US mythology, this would be preferable to having the government visibly directing industries, even if the rules used for the tech enact a kind of kayfabe to get the same kinds of results. The US performs this kind of kayfabe on a regular basis - it's a major part of electoral narratives: the ruling class markets the kind of country they want to the public in two variant packages, and the public selects a party based on which package is slightly more appealing. Therefore I don't think this social role truly depends on the core inventions, although I believe they both have merits: the technology is what occurs when we decide to depend on the invention.

"Famous" Chinese Economist is amusing. he know every ne else problem, except his own country China.

The US is also capable of changing global political equations and alongwith 'disruptive' technologies like AI, blockchain, quantum computing etc.. no one can predict the future of economies, even the Americans do not know how it would play out. But one thing we have to give credit to the Americans is that they allowed technology to be accessed by all other countries regardless of the outcome - it could even be a disadvantage for the US itself. If China possessed these technologies first, it would never have allowed other countries to access it.

How do you spell in English the name of the economist mentioned in this video?

I want hear his take on the current economic situation of China.

I agree with you. A political course correction cut address and improve some of those basic problems. BUT real change will not come. The political donor class will not let that happen. My hope is for a smart Chinese leadership (maybe inspired by a philosopher like Sun Tzu) to not fall into the trap set by the US military/industrial complex, but to continue and build productive, positive infrastructure both in China and through the belt and road initiative also in other parts of the world. This will eventually force the US to change.

100% agree with you! It's unlikely for US to fix the structural issues in 40 years, let alone 4-8 years. There is simply too strong of established forces, which benefit from the status quo, that form a resistance to structural change

Excellent, I love discovering new interesting channels. Subscribed 👌

2 minutes in and i like this guy already

There is a bountiful, one time harvesting going on in Europe -- German industries are already relocating to US, and European capital will follow if it can somehow be managed to discredit (pun intended) Euroclear. The way "harvesting" was referred to seems to imply long threads of discussion and research the speaker and his intended audience were already familiar with. It would be awesome to know more about this topic.

The harvesting i understand. It’s the bond purchases and land purchases

It depends on when you were born, did you invest, or squander your money?

Paul Kennedy’s book The Rise and Fall of The Great Powers (1987) argues the same point. The engagement of economic superpowers in military dominance to sustain their status quo inevitably leads to a negative vicious cycle of increased defense expenditures and reduced investment in civilian sectors, eventually causing a decline in their overall power.

Im an americain, and i will say, that he is right about our situation, he is very wise

They to speed a little more quickly and save the time of the audience! Congratulations for content!

That’s quite ironic when the Chinese economy is correctly tanking!

We need more Chinese economists commenting on the US economy