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(10 People Likes) Has China surrendered in the trade war?
amber feeds us, and look at the bigger picture. If China “surrendered” in the trade war, it would be a tactical move. They are going to overtake the US economy anyway, and from the Chinese perspective, the US might as well help them to do that. All Trump wants is to be able to say he “beat” China, and then it’s business as usual. If China wanted to, they could give him that. It’s unlikely that they will, but they could. Why you might ask? Well, because the existence of Trump or America for that matter is almost inconsequential for China. Sure it would help China a lot to have a good trade relationship with the US, but not having a trade relationship with the US might actually do more harm to the US than to China. Without China, the US market is basically the developed world, which already finds it difficult to resist the high growth rates China offers. China might be exactly as “evil” as the US media makes them out to be, but they’re developing awesome technology and make tonnes of money for their investors. So the US might hold on to their high-end market for a while but in the long run they will have a hard time competing against lower cost and higher value. On the Chinese side, China is playing a different game. They are developing their own market through the Belt and Road Initiative. They’re thinking outside the box. They’re basically helping developing countries to build infrastructure, moving their factories to these countries, creating jobs, and therefore growing their own international consumer market. In other words, they are literally creating the customers they need to buy their stuff. The US, on the other hand, chose to bomb or bully these developing countries or overthrew their governments, which caused poverty in these countries. In other words, while China saw the potential of an emerging consumer market in these countries, the US and their allies saw these nations as backward non-white countries that could be invaded, exploited or pushed around. In fact, Trump literally called this developing market “shithole countries,” which was of course considered to be rude by most Americans but rather because of his choice of words than their conviction that he was wrong. In fact, most Americans think Africa as a whole is a single country with flies crawling over everything that moves, because that’s how their media portrays the continent. So do Americans see developing nations as a potential market? No. And it is exactly for this reason that the US is not very popular in developing countries, countries that in fact show extremely high GDP growth rates. The problem the US has now is that it’s too late to turn around. For decades, the US used the business model of marauders. It worked well enough back then but it’s a primitive approach and has become outdated. Our cultures have evolved and we don’t want to deal that way anymore. Let’s face it. The US never had any intention to really help developing countries to grow their economies. The US only ever thought of growing their own economy. It worked for a very long time because their major and most important international market was made up of already developed countries in Europe. So the US was kind of a mall for rich people, with Americans just being happy to be rubbing shoulders with the la-di-da crowd in Europe like the Great Gatsby. But now the growth rates of these developed countries are slowing down. The populations in these countries are also growing at a slower rate. On the other hand, most developing countries have higher growth rates. Their populations are also growing. More people mean more consumers. But they don’t have money. Poor people can’t buy iPhones. So what do you do? “Make them rich,” says China. “Then they become consumers.” “Bomb them or bully them and take their stuff,” says the US. That’s how I see this playing out internationally. But what do things look like domestically if the US manages to completely isolate China and also manages to isolate itself, which is the direction Trump seems to be taking with his protectionist policies? Well, China has about 1.4 billion people. That’s about 1.4 billion domestic consumers. The US, on the other hand, has about 330 million people, which gives them 330 million domestic consumers. What this basically means is that China can weather Trump’s trade war and survive even if they sold their products only domestically. The fact that China has drastically reduced poverty in their country also helps. China also has more skilled workers, publishes more scientific papers, and is racing to overtake the US on research and development as well. Can the US say the same? What have the US done lately for the poor and the lower middle class? What does the US wealth gap look like? What do their wages look like compared to China? Can the US afford to create jobs for their huge number of unskilled workers based on these wages? How are small businesses taxed compared to major corporations compared to workers? Can US consumers afford to buy more expensive products produced in the US? So if China should decide to “surrender” in Trump’s trade war, they would rather be helping the US than themselves since the US needs this trade relationship more than they do. China has the superior domestic market and will grow anyway. On the other hand, the Chinese don’t mind helping other nations. Why? Because those nations then become their consumer market. So ironically, “surrendering” is potentially winning for China. At this point, Trump is more desperate for a deal than they are. He sounds tough but just like Mexico didn’t pay for the wall, China also doesn’t have to pay for it. They just have to give him a little something he can use for his campaign. A victory for Trump would therefore be superficial. For China, it would be like their restaurant placating an unhappy customer by giving him a free order of fries. The customer will likely calm down and come back tomorrow. Trump is shallow enough to take it and see it as a win. So what can America do? Very simple. The US should try their very best to get a cut out of the Chinese economic project through investment. In other words, repair trade relationships with China and join them as a major investor in the Belt and Road Initiative. In fact, that should be on top of the US agenda when they negotiate with China again. Sounds crazy, right? Join your enemy? Not really. But it does sound crazy not to bet on a winning horse… The fact is that America will have no say in what China does with the Belt and Road Initiative unless they sign up for it as a major stakeholder and keep it clean. The US might not end up being number one but at least they’ll remain relevant if they play a leading role in an equal partnership. Of course there will be conflict at times but that’s to be expected in any relationship. The aim should be to keep working together. The alternative is for the US to isolate itself with protectionist policies like Trump’s tariffs and to risk losing everything while China opens up. In other words, get rid of the stupid people in the White House and in the government — meaning Trump and his whole merry bunch of lunatics and sycophants. That’s the best thing Americans can do right now. Really. PS: Since there seems to be some doubt about my sanity, my argument for China’s growth and strategy is based on these economic projections and articles: The World in 2050 The Atlas of Economic Complexity by @HarvardCID Domestic product - GDP long-term forecast - OECD Data World Economic Outlook Update, January 2019: A Weakening Global Expansion Is China a global leader in research and development? | ChinaPower Project China declared world’s largest producer of scientific articles Belt and Road Initiative - Wikipedia Belt and Road Initiative List of wars involving the United States - Wikipedia Un
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