And the 8:1 ratio has nothing to do with the depressed American dollar resulting from the furious printing of money and exploding budget deficits? The stock market is predicting a lack of economic growth driven both by assinine monetary and fiscal decision-making.
No. Because most currencies in the world are pegged to the dollar. China's is not.
In theory, if the value of the US dollar depreciates then this would ordinarily promote imports not exports. China's currency is not pegged to ours. They print at will. They have been doing this to promote the manufacturing export base which they now have. The next step is to focus on infrastructure.
Hell so long as there is a cheap labor pull, global inflation will be held at bay.
America wants some inflation 3-4 percent. That is why the debts ultimately do not matter. It is when there is deflation that you cannot ever repay the debt. Dont get me wrong we have been forced to borrow too much money this year. There is an imbalance.
You also have to consider the other reason Bush went to War. Iraq stopped selling oil for dollars. So long as the world finances its purchase of oil with the dollar there will remain a demand and the value of the dollar remains stable. Consider too, that oil consumption will remain on the rise at a measurable yearly increase, thus more dollar demand. Dollar demand holds the value up.
Our government is not as stupid as most think. They have the best economic minds in the world looking at the long run. We just have to step back and look at it the same way, then we can focus on the short run and predict policy changes and hopefully profit from them.