China’s Invisible Working Class

The Chinese Economic Bubble


Film Review

The Chinese Economic Bubble offers a unique perspective from two low income Chinese – a taxi driver and a construction worker – on China’s so-called economic miracle. Their commentary is interspersed with that of two Chinese economists. The latter discuss the growing Chinese real estate bubble, empty high rise buildings, rent-seeking and corruption, as well as the thousands of government officials who go to jail every year. These vignettes are interspersed with scenes of lavish media events celebrating Chinese millionaires and billionaires.

There is repeated emphasis on the immense sacrifice made by ordinary Chinese workers to create such phenomenal wealth. When the film was made in 2011, the construction worker early only slightly more ($4,200) than the national average ($4,000) for highly dangerous scaffolding work. At the time average global per capita income was $9,000. In 2014 the average Chinese wage had risen to $8,655, compared to an average global wage of $18,000.

A Warning on the Bitcoin Bubble

A Bitcoin is a type of alternative, computer-based currency known as a cryptocurrency because it uses cryptography (i.e. specialized digital security technology) to make it difficult to counterfeit. Up until a few months ago, interest in Bitcoins was limited to computer nerds seeking to opt out of the bankster-controlled monetary system. In the last few months, Bitcoins have become a hot investment as the value of a Bitcoin has shot up from $43 (when I first blogged on Bitcoins back in March) to over a thousand dollars. The value of a Bitcoin peaked at $1,200 on Dec 4. It has since dropped to $917.10

Below are three short videos presenting differing perspectives on Bitcoins.

The first is by Bill Still, the filmmaker who produced Money Masters and The Secrets of Oz. According to Still, the main reason the value of Bitcoins has gone through the roof is because China is investing its trade surplus in Bitcoins and other cryptocurrencies rather than dollars. Back in November China announced  it would cap future purchases of US dollars and treasury notes. At present, China owns $1.3 trillion of US debt.

Prior to April 2013, China was using a substantial proportion of their trade surplus to purchase gold. However after Chinese State TV aired a documentary on Bitcoins in April, the Chinese have been really bullish on Bitcoins. The video is in Chinese. To view English subtitles click on the YouTube icon to view in YouTube. The subtitle icon is fourth to the right at the bottom of the screen.

Still is obviously really bullish on cryptocurrencies, particularly the quark. In contrast the following video by Storm Clouds Gathering warns that the Bitcoins is in the throes of a speculative bubble. It also has a basic design flaw that will eventually squeeze small Bitcoin traders out of the market.

The design flaw? To enter into any transaction involving Bitcoins, a client is required to download a block chain consisting of every single Bitcoin transaction ever made. With the surge of interest in Bitcoins in the past two months, the size of the block chain reached 11 gigabytes in November. It’s expected to reach 250 gigabytes in two years. Eventually it will reach a terabyte, and small users will be totally shut out unless the system is totally restructured. At some point, it will most likely be centralized in super nodes requiring massive industrial sized servers. These super nodes will essentially function as banks, totally defeating the purpose of starting a decentralized currency.