I will br refereing this institutions graph as x then decimal poitns for each slide show.
http://www.washingtonpost.com/wp-srv/business/the-output-gap/index.html
Then I will br using this institutions graph which is on page 6 pdf page 5 document hold on. graph y. At your feet my love.
http://www.levyinstitute.org/pubs/wp_617.pdf
So we start with graph x.1 The US potential output.
Graph x.1 shows the US at potential output. You see a normal rise in output levels as population grows countries like China become more civilized and have a bigger economy to export too, etc.
Ok then we have graph x.2 shows the US's actual output.
so grpah x.3 the output gap which can show an imbalance. I believe.
Then on graph x.4 we have turbo charges and recessions. Which I will apply to the service industrial bell curve to see if my theory holds water. after I get through with this exercise.
So for x.4 we have the actual economic imabalnce of the US. Which is adjusted around the very low part.
Alright the meat of it is in graph x. 5- x.6 were it shows that the US is still far from its necessary output. This again I could imagine is from weathered loss of employment sectors do to Chinese inflated employment sectors through individual constant diffferiantual re-capatalizing of failing SOE's and conglomertating soe's plus constantly using SOE root products to prop up their free enteprises business. I believe we will not be able to touch potential until 2014 when the service industry kicks back in. Which is a problem.
ahh graph x.7 starts to explain that for the US to balance out in its economy we need to grow at a good pace.
grpah x.8 gives examples of necessary growth for balancing out our economy and our economic welfare. at least to output potential.
then graph x.9 shows necessary growth rates as applied to economic national security. As long time city builders now that there is an actuall calculation when held at a constant or when reaches a red line causes high civil unrest and implosion of quality of life via non productivity or very low earning potentials.
in in graph y why I have drown lines between 2000 and 2001, then I highlighted the middle of those lines. Then I drew lines going up to the blue top line of the graph from 2005 to 2007 then appropriately highlighted them.
Graph x.3 draw a line from the 01 on up to the top of the graph line.
next draw a line from the end of 04 on up to the top line.
ok next draw a line from the end of 07 on up to the top of the graph lines.
Then highlight the area from 00 - 01
Then highlight the areas from 05 - 07.
Ok os then have the two documents next to each other.
Well here is what I see:
Now what we can see is on graph y between 00-01 we see a a nice competitive rise together from the US and China.
Then we look at graph x.3 and we see that the US is doing good and above potential output when China is being comeptitive and fair. Then the .com bust happened around 2000 where we see the peak and then it starts to go slowly go down as my service bell curve theory predicts.
Then in graph x.3 we see like predicted a trough that was created by the .com service bell curve.
Ok then we have the areas of 05-07
As i thought the mortage industry which creates no output market for the GDP at an international level that would allow us to go above potential actually began to feel the effects around 06. I would then gather that the begging of 05 on up was a credit crunch sale of already bad mortage loans that would allow a huge foreign stake as those going under try and sell bad loans to places like foreign bank holders who bought huge amounts of free market mortage re-sold mortages.
New home records hit a high at 2006, non big banks did not understand and started buying up bad mortages, so that the bigger banks could re-liquify their holdings that other banks were trying to get rid of. This then allowed the free market sub-prime mortgage industry to stay off the trough that the .com service industry felt directly after the crash. However, it just made it worse. Along with that the .com bust did not create such a huge inflation of employment and currency stream as the mortage industry did. This then means once it crashed there left a huge void or whole in the economy, much like a nuclear economic bomb.
Then as the free marekts was more reliant on the mortage service industry for monetary than the .com as the mortage industry created more intra value. We felt the hit even harder from having to be reliant on service industries to to a centralized country that will not allow competitive competition in its market place through protected markets.
The reliance on Chinese exports is then shown through the 05 -06 graph y chart where there exports went up high while free market countries created a spiral of debt service style industries, that allowed for more intra consumption by free markets but was not able to create a proper outward export industry in which to create liquidity because of China's markets being protected. I would wonder what kind of tariffs and other protections China used during this time to create such high exports whilc the free markets were eating themselves through passing around debt from a service industry. Which from my service bell curve theory crashes employmet and then economic welfare. As this is due to the supply and demand curve of the employment sector, along with the ripple effect of a multiplier effect of jobs being lost do to major earning potential jobs being lost.
Then the rest is simple. After 2005 when the when China does some kind of movment to create more exports, the balance between the US (guessing free marekets as a whole can be applied) and china takes a mad curve upwards. Then around mid 2008 on both graphs we see a corresponding peak and then down turn. As such it seems that China's export and imports have a huge deal to do with economic imbalances of other countries. As 08 -10 on both charts show.
I just need more time and mentoring.
Thus the pressure on China to keep raising its currency rate in my eyes is proper. As such around the end of 2009 was when high pressure on China to revalue their currency began. Thus causing China to look outwards as a helper instead of inwards as an outwards conqueror, as 05 -08 show.
Then on the graph x. 3 we see as the years are placed into three month increments that once China started to raise its currency around July our highest output potential since the recession started. Primarlily as graph y shows China is suceptable to under the gun pressure as the savining and loan service industry boom bust that placed pressure on China allowed more imports, then the .com boom bust placed pressure on China to allow more imports, then now the mortgage industry is doing the same thing. I believe we need to stop this vicious cycle of China bowing, then coming up hard with an export strategy.
So to me to say that China is not the key factor in economic imblance is a hideous misstatment of economic principles. If a countries business cycle is based primarily on the fact it can't compete with another so has to keep creating service industries much like the US and other free markets like Greece, then the only way those countries get out of economic instability is when China allows more imports. I would say China is the key indicator for international economic imbalance. Thus anti-trust laws should be applied not just in a short three-4 year span but as a real is China allowing other countries to compete through a fair balance of trade.
Rider I
graph f- http://www.publicdebt.treas.gov/history/history.htm
Ok the main point I would like to show here is the years from years from 99 -03. As the rest is obvious as Chinese trade surplus grows so does the US GDP deficit. What you will notice if you look at graph y between those years that as the Chinese imports and exports rise they rise at a comparative level. This I am sure has something to do with Americans being able to actually lower the national debt. This could be many reasons. As China allows more imports into their countries other countries are more able to buy US products then allowing the US to pay off its debt with GDP of more exports. As I believe the US is China's biggest exporter and importer. However then as the mortgage subprime lending kicks into the debt ratio it completely abolishes the whole Chinese exports and imports rising together. Cause then by 2005 the US economy had layed off, not being able to compete in the market place as the credit crunch began. Then leaving China to keep up its exports at a level to a substantial difference between their imports and exports. Which could be another reason why the world crashed so hard. Because China kept re-capitalizing their business to keep prices low instead of having a market oriented economy. Possible.
The problem I believe is that China has kept up its trade surplus from about 94 all the way through 10. That is around 14 years. At least graph y shows that. This would mean that China has been improperly not allowing competition. Which many forms of protection still persist. Which as through anti-trust law could be a major macro international problem if they don't flucuate through markets and keep up their constant trade surplus.
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