Thank you.
I have heard the story long before.
I kept thinking if it was true, our nation would disappear very soon.
Why this didn't happen?
Here is my understandings of the upper model.
In short,
It may overlook the following economic outcomes.
1. output via currency inflation
With low currency position, Chinese product is super cheap in global market. Actually, a lot of U.S. companies went bankrupt for shrinking gross margin. The business own has to go to somewhere else to run their business, normally in China. The net revenue will be shared among Chinese government, shareholders and local employees. On the other hand, U.S. will suffer corresponding loss.
Meaning, there will be more and more fruit grown up here.
2. interest and investment income
It is true we buy a lot of U.S. debts, we also invest in its equity market. It is not free lunch. The more debts we get, the more income we will gain. It's true, there will be some bad debts, however, in general, we get our earnings from our investment.
Meaning, we also grasp a lot of fruit from U.S and EU in return.
The U.S. dollars and Euros are not worthless paper at all.
In summary, the economic model presented in the story is pretty interesting.
However, there are lethal defaults.
We enjoy it, but we should know, "Calmer heads will always prevail."
(National income from global economy is different than social security distribution, it is another story. Thank you.)