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Chinese stock market tumbling...
Howard Richman, 1/18/2015

It's midnight here in Pennsylvania, but it's Monday morning in China and the stock market is already down 6.3% today. Go to the following website to see where it stands right now:

http://www.bloomberg.com/quote/SHCOMP:IND/chart

This from Bloomberg News today:

[S]tocks in China headed for their biggest drop since 2009, spurring demand for haven assets.

Chinese brokerages tumbled after regulators took measures to rein in margin trading at three of the nation’s biggest securities firms....

So how does this play out?

It's 1929 all over again, except that the chief mercantilist countries in 1929 were the United States and France while the chief mercantilist countries today are China, Japan and Germany. The chief victim in 1929 was Great Britian, while the chief victims today are the United States and the Southern European countries:

  1. Victims stops growing, ruining the export markets for the mercantilist countries. 
  2. Mercantilist countries stop growing.
  3. Stock markets crash in mercantilist countries.
  4. Crash spreads to victim countries.
  5. Mercantilist countries double down on mercantilism, but it no longer helps.
  6. Victim countries balance trade and exit the worldwide depression.

Great Britain had an economic leader, John Maynard Keynes, who taught them how to balance trade. Who will lead the United States and Southern Europe out of the depression?

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    Wikipedia:

  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]