Jonathan, a long-haired, self-described computer Geek, form Connecticut, who is literally selling “everything he owns” on Ebay, is currently enjoying his fifteen minutes of fame. Having today appeared as a guest on CNBC’s Squawk Box, John is selling all of his worldly possessions for the sum of $40,000, because he believe this to be his only alternative to bankruptcy. In effect, he is selling all of the stuff that he accumulated on credit to pay off his debts.
Whether a publicity stunt, or an honorable attempt to avoid bankruptcy, I think that Jonathan’s case is significant as it provides a glimpse into what many Americans may face in the future. When the dollar collapses, heavily indebted, unproductive Americans will be forced to sell their many possessions, just to afford the basic necessities of life. And to whom will they sell? Certainly not other Americans, since most of them will face similar circumstances. My guess is that a lot of America’s ill-gotten consumer goods, will be sold to the Chinese. Think of it as repossession on a national scale. All of the goods the Chinese worked so hard to produce, and which they sold to Americans on credit (they received U.S. dollar instead of real goods), will be returned to them.
Why would Americans sell all these goods back to the Chinese? For the same reason John is selling his stuff, they will have no other alternative The cost of living is going to rise so much in the United States, including the burden of higher taxes and interest, that they only way many Americans will be able to afford the very necessities of life, will be to hock their stuff. Who better to buy then the Chinese? After all, there are plenty of them, and they certainly need a lot of things. When the Yuan is allowed to float, the cost of basic necessities will plunge for the Chinese, leaving them with plenty of purchasing power to buy back the merchandise which their American customers can no longer afford.
In the end, that giant sucking sound that Ross Perot used to speak of will actually be the sound of used consumer goods being suck out of America by China. Its unfortunate, but since most of America’s industrial capacity is gone, the only goods Americans will have to trade for necessities such as oil, will be the used goods that they already possess. That the Chinese might benefit from America’s misfortune seems only fair. After all, as the Chinese produced most of those products in the first place, they should at least get a little enjoyment out of them.