China makes a toy that costs $5, and the retail price in the U.S. is $100.

Chinese factories make only a few yuan in profit, and the workers are as exhausted as oxen.

So where does the rest of the money go? The brand owners, shipping companies, and retailers in the U.S. all take a share. A change in packaging, adding a logo, and some advertising easily nets them $80.

China receives this small profit and has to deal with the dollars. Besides buying commodities like oil, chips, and food, the remainder often goes to buying U.S. treasury bonds.

In other words, a large portion of those hard-earned dollars ends up being lent back to the U.S. government.

Then Americans look at their accounts and see a terrifying deficit, completely stunned:

"Why have we spent so much money? Where did all the money go?" #币安LaunchpoolINIT $BTC

The biggest beneficiary of global trade, the U.S., begins to feel it's been taken advantage of.

At this point, the media and politicians quickly jump in to tell the public:

"OMG, China has stolen $100 from your pockets!!! This is unfair! We must have a trade war!"

In reality, most of that money never even left the U.S. It ultimately makes a circuit and returns to the pockets of the Treasury Department in Washington.

So the question arises, where exactly did all that money go?