US-China Trade Deficit Hits Record

The U.S. has exported inflation not only to China but to Korea.  Korea has bought the U.S. treasuries as well.  As mentioned many times, the Asian mercantilist export-led model has been possible due to its unique relationship with the U.S.  Now this model is broken.  Global imbalances are by design since it has served interests of a chosen few well.

From Zero Hedge:

The US Census Bureau reported that in October, the total deficit with China hit a record $29.5 billion. What did America need to export so much that it is willing to impair its GDP (net imports are a GDP drain) and boost the GDP of China? "Primarily computers and toys, games, and sporting goods." In other words, gizmos and iPhones. And no, China did not buy US bonds - recall that China has boycotted US Treasurys for precisely one year - so the age old equality that we export China worthless paper in exchange for just as worthless gizmos, yet somehow everyone benefits, is no longer valid. What the US does, however, export to China, is inflation, courtesy of the USDCNY peg, and is the reason why the PBOC is still terrified, and certainly will be after Bernanke announces QE4EVA (RIP QEternity) tomorrow, to ease more as the last thing it can afford is to create its own inflation in addition to importing America's.


http://www.zerohedge.com/news/2012-12-11/chart-day-us-china-trade-deficit-hits-record