Food prices will go up and there will be more incentive to produce more, there will be a spike in cost of food that will be due to lowering of the supply, but following that there will be a glut of supply coming to the market, as the futures markets would allow new capital to float into the food production.
That's how it should be done and not with subsidies of any kind.
Ask the factory workers if they would like to go back to subsistence farming. The printed paper that they get buys food and shelter, albeit at a lower exchange rate than they should be getting if their currency could float.
- I think I'd rather ask them if they are interested in having inflation at 15-25% annually, as they just had last year, or would they rather prefer to be able to buy more of the products they actually build with their own yuan?
Of-course people buy because they have trade surplus. But you still don't get it at all, do you?
If China sells its bonds, the interest rate on those bonds would HAVE to skyrocket, or everybody will sell them, because the price will crash.
Do you understand the consequences of paying interest on, what is it, 13-14 trillion just now of those outstanding bonds, interest that's in double digits for example?
The US Fed would likely buy all those bonds from China, instead of allowing them onto the market, but that would crash the US dollar. US will find itself with a dollar, that can't buy anything from anybody.
It is as easy as: you let those who fail, fail, and never, under any circumstances 'bail them out' for any reason at all. Only then people would make sure that their investments are not going down the drain.
As to your assumption that 'first there is demand' - I did show that it is wrong. First there is an IDEA for some product or service, then there is search for capital, then there is development and then, once there is a product it may sell.
All of this is taking a HUGE risk, and if the product succeeds, then there will be enough demand to recoup the costs and make plenty of money on top.
That's how they do stuff in real world - not this gov't BS., where presidents says: we will ensure you have a market for this technology that the market actually is not interested in itself.
First there is production. Then there will be demand (money). Whether the demand is big enough to offset the costs and make money on top is called risk.
Well, the important thing is to find a place that is not bankrupt already, that has a booming economy, rather than a dying one, so this excludes USA, UK, most of Europe.
The rest of the world may have some forms of so called 'social security', but there are places where it's really spectacularly sane, like Hong Kong, you pay just a bit over 1500 dollars a year, regardless of your earnings.
But again, the important thing is not to be in the system that has all the insane taxes and destroys business at the same time, like US does now.
That 10% drop in bond purchases would be annoying, but not fatal.
- except that the consequence would be an appreciating yuan, this, coupled with the fact that US Fed buys 30% of all US Treasury issued debt now, would force interest rates up for US bond holdings.
Also IF China off its bonds, do you for a second believe that other countries would KEEP theirs?:)))))))))))))
God. This would mean 2 things:
1. US Fed and Treasury default. 2. Insane interest rates.
Start taxing imports from China at the rates we're taxed back
- China gets what back from US?
China imports raw materials mostly, so whatever their import taxes are, they are already part of the export cost of their finished products.
USA does not export to China, not because US made products are too expensive for Chinese market but because US does not produce much of anything that can be imported into China (safe for weapons and airplanes. Well there is also GE, but I don't think they are now competitive on Chinese market either.)
But US has 50 Billion/month trade deficit with China. That means that those products are imported from China because they are much lower cost than any domestic products, and likely there is nobody in US manufacturing the same stuff that is being imported.
The only thing you'll get out of tariffs is higher prices.
Of-course it's OK to do that, if you decided to fund the government that way and abolish income taxes. If USA does that (and abolishes business regulations and closes down government departments and gets rid of the main spending items: SS, Medicare/Medicaid/Wars), then USA may just gain enough advantage to invite the investment capital back into the conutry.
Banning US banks and institutions from deepening the debt of US toward China would actually be a good idea IMHO.
- ???? That's not how US dollars make it to China.
Chinese exports their shit, US buys the shit and pays in US dollars, which were just printed and lent out by US government to the population in form of SS checks or other type of debt.
Now Chinese exporter has all these dollars, he takes them to Chinese bank. The bank takes the dollars to the national bank and it gets back yuan. The national bank prints yuan to buy the dollars from the other banks, who got the dollars from the exporters, and then China uses these dollars to buy more US Treasury bills.
That's how the debt to China grows and grows and how Chinese destroy their own currency, because they print the yuan and they keep a exchange rate.
Paul Krugman? Same Krugman who said on radio that having government coming up with projects, even if that's just digging ditches / filling ditches up is useful, because it puts people to work?
Yes, that Krugman is an idiot.
As to China building empty towns and malls and stuff - so? There will be loss of money in some of those projects, certainly. As long as the government does not bail out the companies who did that, it's all fine, it's just somebody didn't pull their investment out of that thing quick enough.
--
Production IS economy. Without production there is no consumption - 0 consumption. Consumption is consequence of production.
iPads did not exist and there was no consumption of them. Suddenly Apple built them and now everybody must have one.
Maybe they will someday be able to consume the stuff the produce, but today that is not realistic. They need the US and Europe as markets for their goods right now.
- no, they do not. There is not a single reason for the Chinese people in China to want to build products so that those products then could be exported to other countries, who give them back..... printed paper.
That's crazy, that's not a fair exchange on the market from point of view of those, who produce. But it's great for those, who get subsidized with all that production, while themselves not having to produce anything to exchange back with that's of any actual real worth.
So let's stop with all of the nationalistic bravado and just admit that any economic war between the US and China would bring everyone pain and misery.
- I am not Chinese, if that's your question. However I see this as currency war and whoever wins that type of a war, wins misery for their people, who won't be able to buy anything with their worthless currency.
If they keep up this backlog thing, they'll be losing their accounts. However yes, the US government is making their bids. Presidents personally go to visits to other countries to sell Boeing's products.
However Boeing DOES manufacturing in USA, and that's very good for USA.
But aerospace does not employ the entire nation of US of A, does it?
There will be a standard of living collapse in US and many other Western nations before it will get any better, do not mistaken. The debts will not allow an easy way out of this. Of-course the debts will cause the US to print its way out, but the interest rates for the US bonds will go through the roof (I expect 30-50% long term interest rates), because the bond vigilantes will not let US to get away with this murder, of completely writing down the debts with devalued currency.
I actually believe there is a high probability, that USA will spiral into hyper-inflationary depression, but the boundary between what's 'hyper-inflationary' vs what is just inflation that is very high is not very clear to me. If inflation runs 'only' 20% annually (as it can be calculated today), than is it not bad enough already? Does it have to go to 200% or 2000% or 2000000% / year (or a month) to be really bad? Because what' the difference between having to pay 200% vs 2000000%? At that point it could be 200000000000%, doesn't matter, nobody cold pay it.
Are you seriously using iPad mobs to claim that the Chinese has an economy just waiting to boom
- of-course.
I am saying that Chinese are PEOPLE, like everybody else, and they want to spend and consume, no less than Americans are. Besides, this is crazy, there is a huge Chinese population in America. Aren't they consuming just as much as any other average Joe over there? Saying that a country is unwilling to consume for some moral reasons, all while relying on legal theft of income taxes and on panhandling from China (of both, money and goods) is preposterous.
The reason China has poverty is specifically because it subsidizes the rest of the world.
They really need to stop doing that and concentrate on their own market. They will have more companies catering to the internal market than they have companies today at the moment the government lets go of currency controls.
China will have higher currency value and higher interest, and money will be flowing into it even more, as foreigners would want a piece of that interest pie. All this would allow enormous internal capitals to form, that would allow many startup companies, as well as allow current companies to increase production.
They are on a verge of huge economic growth, and all it takes is to have the government removed from making the decision about the worth of their money.
Switzerland is doing OK. It's attracting people with capital and with real business sense, not your average Marxists, you can check the exchange rate, it's doing better than ever.
As to my opinions and people agreeing with them - why, do you want everybody to be as brain dead as the rest of the Keynesian Marxists? Do you really want to live in your beehive utopia of group think? Do you enjoy being impoverished by your government? Do you really prefer to live in society that destroys wealth and punishes success?
I have an account with Excellent karma to garner a karma bonus. I just don't like posting under it
- so which account is it? Why aren't you comfortable posting from it? See, I post my opinions consistently, at least my stand is clear. As to/. moderation and other problems, I actually said something about it just a bit earlier. - I think it's wrong to have a moderation system that allows group think to down-mode certain unpopular opinions (just like my comment, that was a response to yours is now down-moderated with a 'flamebait', which it is not.
China is manipulating its currency, while the US allows the dollar to float.
- it's a floater alright. US Fed prints trillions, US Treasury issues trillions in bonds, US Fed monetizes that debt. That's a floater.
There may be some side effects of financial policies such as QE2 that can affect the strength of the dollar (not as much as people like you claim), but that is not the purpose of them
- purpose does not matter, only the outcome matters.
Outcome: gold over 1450 USD, silver near 40USD, cotton over 220USD/pound, coffee, grains, oil, all commodities at their highs not due to any increased activity but simply as the consequence of money printing.
. Moreover, basically every postindustrial country is doing the same things.
- precisely. And all of them are failing economically. All socialist states are eventually becoming less and less socialist and their social obligations cannot be funded, and while they are funded, who is funding them? Productive nations like China, where people save for their own retirement, rather than robbing incomes of others just to buy votes.
I suppose a totalitarian political system does not come without its share of useful things.
China on the other hand, is deliberately, purposefully manipulating its currency.
- no no no, you CANNOT have it both ways: want to be a reserve currency and then complain that people use your currency that way.
China is keeping an artificial tie to the US currency, so do most other nations in the world, but USA is the real manipulator - printing, so that it doesn't have to return its debt in real money.
The yuan is 20% undervalued because of this manipulation.
- 20% ????:))))
You are at least an order of magnitude off here, AC.
If appreciating the yuan would be so wonderful for China, why are the adamantly opposed to it?
- your sentence is broken.
Who is opposed to it? "the adamantly"?
Anyway, the Chinese consumers HATE inflation their government forces upon them. The government continues printing for whatever reason, after all, they are totalitarian.
the middle of an unsustainable boom brought on in large part because of the weakness of their currency.
- what are you saying here? That Chinese will want to buy more than they produce? This entire NOTION that economy is booming in an unsustainable, manner, so that gov't must do something about it is ridiculous, to the point of being nauseating. There is no reason for a government to be in economy at all, it can't do anything useful for it, and all it ends up doing is destructive to the real economy - production.
Unless you mean that commodity prices only will go down, somehow passing the rest of the economy by
- no. All prices must fall in Chinese currency, when it will appreciate.
Tell Japan how deflation is the natural preferred state of the competing market.
-!!!!
No no no no no no no no no no no no no no no.
Deflation is what Japan SHOULD have. Instead they were (and still are) fighting it with infla
Another economic idiot hiding under AC. Ben, is that you? How is the helicopter doing?
The reason Chinese are not buying as much as they need to is due to their government printing their money into oblivion, and since they are a producing nation, which imports raw materials, they are hit with higher prices immediately, which is not the case for USA, who is not a producer, only imports ready goods and energy, and exports inflation (printed dollars and t-bills) to others, who are willing to import it.
China does not need this hindrance of being joined to a brain dead, lazy sports fanatic.
China accounts for 19.8% of world manufacturing. The US is at 19.4%. We still produce a shit ton of stuff.
- US 'manufacturing' is a fancy way for assembly lines of parts, made elsewhere.
If you produce 10 times more frying pans than people could possibly ever or buy, you're not contributing extra to the economy.
- and that's the manufacturer's problem, who is forcing him to produce 10 times more frying pans than can be sold? Clearly that manufacturer is in the wrong business and will go out of business. Production without use - that's government job. Real production obviously has consumers in mind.
However consumption without production is 0% likely.
but the Chinese culture doesn't have the appetite for consumption that exists in the West (and the US especially). Not to mention, a lot of those billion people can't afford a lot of the things China produces.
- oh boy, what are you saying, that Chinese do not like to buy stuff.
Are we talking about the same Chinese here? You are full of shit on this, don't you understand? People want things. The only reason they don't buy - is if they do not have the purchasing power to buy. This happens in government manipulated economy, not in real economy.
The reason Chinese are not buying is because they are robbed of their purchasing power by their government through inflation of money printing. When they stop this nonsense, they'll be buying plenty.
However, this recession is hitting China just as hard as it's hitting the US. Chinese unemployment is rising, and college grads there can't find jobs either. With China's economy dependent on exporting goods (for the time being), they will suffer until people start buying again.
- in China they are experiencing immediate affects of the monetary inflation - price hikes. Their food even went up by 15-25% last year. Obviously they are cutting down on other spending. The reason I already explained - government printing money to match US Fed printing.
In terms of the trade gap?
- that's the only real measurement. What would I care if you printed a bunch of green papers to pay back some debt, if they went down in value by another 99%?
Of course, it also doesn't help that the biggest Chinese companies are state owned and heavily subsidized.
- if that's their reason to prop up US dollar, then they'll have riots and revolutions on their hands, just like Middle East had.
Eh, maybe, but once China actually lets it's currency float, it's good are no longer cheap, and who wants to buy their low quality goods if they're not cheap?
- Fucking jesus. They have over 1.2 billion people, sitting there, waiting for their currency to start buying something. Give me a break, it all comes out of your idiotic: "Chinese do not want to buy stuff like Americans do" nonsense.
We've got a large, relatively educated workforce and a decent chunk of world production. If people would stop putting everything on credit cards and taking loans for shit they don't need, we'd be a'ok.
- and how are you going to do that exactly, if your government doesn't let the investment to actually stay valuable and instead prints the dollar like trees are going to disappear and has near the highest taxes in the world and has the most regulations in the world?
Good luck competing with the world while you are promoting this anti-business agenda via government regulations, money printing, taxes, subsidies, monopolies, competition destruction, socialist programs and wars.
replying to an AC seems wasteful, but hey, somebody is modding you up, so.
China does not manipulate its currency any more than US manipulates its currency, and US does real currency manipulation.
US prints its fiat to pay interest on its debt and to fund its gov't, while China only prints its fiat to buy those worthless US dollars, that are brought to the banks by companies that operate in China. However, what would actually happen if the banks allowed the Chinese currency to appreciate? Thanks for asking, here is the answer:
Chinese based companies would benefit from the stronger currency while buying raw materials from abroad, while they also would have a huge market appearing internally, because Chinese would gain so much purchasing power.
The competition on the internal market would cause prices for the Chinese (in Chinese currency) to decrease (deflation, which is the natural preferred state of the competing market).
Chinese workers/consumers would see a huge rise in their standard of living, they also would be able to buy foreign goods cheaper due to the exchange rate.
Without the US dollar, China's economy EXPLODES, it grows faster and faster, as Chinese will have more purchasing power and more companies would appear inside China to cater to the growing internal market, and again, it's 1.2 or more billion people.
As to QE2 - this is killing the US dollar, China holds too many of them and they know that more dollars will be chasing the same amount of raw materials, and China needs raw materials (especially metals and energy).
What China REALLY needs to do is let yuan appreciate, let the market set the interest rate and the exchange rate, and China will see incredible rise in standard of living for its people and the prices for commodities will go down in yuan.
Almost all of our debt is from the economic recession and the wars. These are all temporary.
- 1. US debt is affected by wars, surely, but this is not the main reason for it. The main reason is inflation and investment capital flight.
2. US wars are really not that temporary. What is temporary, if US can't leave Afghanistan for a decade and Iraq for near a decade as well?
3. There is nothing US can pay the debts with - it has no manufacturing capacity left to be able to pay the debts.
And finally, we do have the lowest taxes in more than a half-century.
- and USA has the lowest manufacturing capacity since the 18 century.
If millionaires have to return to a 90% tax rate, cry me a river.
- you assume anybody is insane enough to pay that money (they never paid those rates even when the rates actually existed, that's what deductions and dividends are for), and they wouldn't pay now. It's much cheaper to buy your politicians than to pay those, and it is still cheaper to leave USA and to go to places that actually appreciate people with capital and businesses.
Slashdot Mirror
Food prices will go up and there will be more incentive to produce more, there will be a spike in cost of food that will be due to lowering of the supply, but following that there will be a glut of supply coming to the market, as the futures markets would allow new capital to float into the food production.
That's how it should be done and not with subsidies of any kind.
Ask the factory workers if they would like to go back to subsistence farming. The printed paper that they get buys food and shelter, albeit at a lower exchange rate than they should be getting if their currency could float.
- I think I'd rather ask them if they are interested in having inflation at 15-25% annually, as they just had last year, or would they rather prefer to be able to buy more of the products they actually build with their own yuan?
What do you think they would tell you?
Of-course people buy because they have trade surplus. But you still don't get it at all, do you?
If China sells its bonds, the interest rate on those bonds would HAVE to skyrocket, or everybody will sell them, because the price will crash.
Do you understand the consequences of paying interest on, what is it, 13-14 trillion just now of those outstanding bonds, interest that's in double digits for example?
The US Fed would likely buy all those bonds from China, instead of allowing them onto the market, but that would crash the US dollar. US will find itself with a dollar, that can't buy anything from anybody.
It is as easy as: you let those who fail, fail, and never, under any circumstances 'bail them out' for any reason at all. Only then people would make sure that their investments are not going down the drain.
As to your assumption that 'first there is demand' - I did show that it is wrong. First there is an IDEA for some product or service, then there is search for capital, then there is development and then, once there is a product it may sell.
All of this is taking a HUGE risk, and if the product succeeds, then there will be enough demand to recoup the costs and make plenty of money on top.
That's how they do stuff in real world - not this gov't BS., where presidents says: we will ensure you have a market for this technology that the market actually is not interested in itself.
First there is production.
Then there will be demand (money).
Whether the demand is big enough to offset the costs and make money on top is called risk.
here is a tip for you: don't let her anywhere near your penis with a glass jar full of needles......
Well, the important thing is to find a place that is not bankrupt already, that has a booming economy, rather than a dying one, so this excludes USA, UK, most of Europe.
The rest of the world may have some forms of so called 'social security', but there are places where it's really spectacularly sane, like Hong Kong, you pay just a bit over 1500 dollars a year, regardless of your earnings.
But again, the important thing is not to be in the system that has all the insane taxes and destroys business at the same time, like US does now.
Oh, so you mean Chinese manufacturers of heavy machines and equipment like Liugong and Sany are NOT selling to the Chinese market?
Riiiiight.
It's very simple: the Chinese products are cheap compared to any products that could be manufactured in USA.
If the trade deficit is 50 billion, that's 50 billion of USD worth of goods, that are not manufactured in US.
That 10% drop in bond purchases would be annoying, but not fatal.
- except that the consequence would be an appreciating yuan, this, coupled with the fact that US Fed buys 30% of all US Treasury issued debt now, would force interest rates up for US bond holdings.
Also IF China off its bonds, do you for a second believe that other countries would KEEP theirs? :)))))))))))))
God. This would mean 2 things:
1. US Fed and Treasury default.
2. Insane interest rates.
Start taxing imports from China at the rates we're taxed back
- China gets what back from US?
China imports raw materials mostly, so whatever their import taxes are, they are already part of the export cost of their finished products.
USA does not export to China, not because US made products are too expensive for Chinese market but because US does not produce much of anything that can be imported into China (safe for weapons and airplanes. Well there is also GE, but I don't think they are now competitive on Chinese market either.)
But US has 50 Billion/month trade deficit with China. That means that those products are imported from China because they are much lower cost than any domestic products, and likely there is nobody in US manufacturing the same stuff that is being imported.
The only thing you'll get out of tariffs is higher prices.
Of-course it's OK to do that, if you decided to fund the government that way and abolish income taxes. If USA does that (and abolishes business regulations and closes down government departments and gets rid of the main spending items: SS, Medicare/Medicaid/Wars), then USA may just gain enough advantage to invite the investment capital back into the conutry.
Banning US banks and institutions from deepening the debt of US toward China would actually be a good idea IMHO.
- ???? That's not how US dollars make it to China.
Chinese exports their shit, US buys the shit and pays in US dollars, which were just printed and lent out by US government to the population in form of SS checks or other type of debt.
Now Chinese exporter has all these dollars, he takes them to Chinese bank. The bank takes the dollars to the national bank and it gets back yuan. The national bank prints yuan to buy the dollars from the other banks, who got the dollars from the exporters, and then China uses these dollars to buy more US Treasury bills.
That's how the debt to China grows and grows and how Chinese destroy their own currency, because they print the yuan and they keep a exchange rate.
Paul Krugman? Same Krugman who said on radio that having government coming up with projects, even if that's just digging ditches / filling ditches up is useful, because it puts people to work?
Yes, that Krugman is an idiot.
As to China building empty towns and malls and stuff - so? There will be loss of money in some of those projects, certainly. As long as the government does not bail out the companies who did that, it's all fine, it's just somebody didn't pull their investment out of that thing quick enough.
--
Production IS economy. Without production there is no consumption - 0 consumption. Consumption is consequence of production.
iPads did not exist and there was no consumption of them. Suddenly Apple built them and now everybody must have one.
Production comes first.
Oh, do you just expect the young to stay and continue paying into the bankrupt SS scam, which will keep them poor for the rest of their natural lives?
Maybe they will someday be able to consume the stuff the produce, but today that is not realistic. They need the US and Europe as markets for their goods right now.
- no, they do not. There is not a single reason for the Chinese people in China to want to build products so that those products then could be exported to other countries, who give them back..... printed paper.
That's crazy, that's not a fair exchange on the market from point of view of those, who produce. But it's great for those, who get subsidized with all that production, while themselves not having to produce anything to exchange back with that's of any actual real worth.
So let's stop with all of the nationalistic bravado and just admit that any economic war between the US and China would bring everyone pain and misery.
- I am not Chinese, if that's your question. However I see this as currency war and whoever wins that type of a war, wins misery for their people, who won't be able to buy anything with their worthless currency.
If they keep up this backlog thing, they'll be losing their accounts. However yes, the US government is making their bids. Presidents personally go to visits to other countries to sell Boeing's products.
However Boeing DOES manufacturing in USA, and that's very good for USA.
But aerospace does not employ the entire nation of US of A, does it?
Oh, good, so when was the last time you bought those 12.99-29.95/pair socks?
Also, Vincere Sports, one of the companies I clicked on in that list - they say they 'design' the socks.
You want to make a bet on whether the socks are actually manufactured in US?
There will be a standard of living collapse in US and many other Western nations before it will get any better, do not mistaken. The debts will not allow an easy way out of this. Of-course the debts will cause the US to print its way out, but the interest rates for the US bonds will go through the roof (I expect 30-50% long term interest rates), because the bond vigilantes will not let US to get away with this murder, of completely writing down the debts with devalued currency.
I actually believe there is a high probability, that USA will spiral into hyper-inflationary depression, but the boundary between what's 'hyper-inflationary' vs what is just inflation that is very high is not very clear to me. If inflation runs 'only' 20% annually (as it can be calculated today), than is it not bad enough already? Does it have to go to 200% or 2000% or 2000000% / year (or a month) to be really bad? Because what' the difference between having to pay 200% vs 2000000%? At that point it could be 200000000000%, doesn't matter, nobody cold pay it.
you are not following my logic. This massive foreign subsidy will stop. Now do you follow it?
Are you seriously using iPad mobs to claim that the Chinese has an economy just waiting to boom
- of-course.
I am saying that Chinese are PEOPLE, like everybody else, and they want to spend and consume, no less than Americans are. Besides, this is crazy, there is a huge Chinese population in America. Aren't they consuming just as much as any other average Joe over there? Saying that a country is unwilling to consume for some moral reasons, all while relying on legal theft of income taxes and on panhandling from China (of both, money and goods) is preposterous.
The reason China has poverty is specifically because it subsidizes the rest of the world.
They really need to stop doing that and concentrate on their own market. They will have more companies catering to the internal market than they have companies today at the moment the government lets go of currency controls.
China will have higher currency value and higher interest, and money will be flowing into it even more, as foreigners would want a piece of that interest pie. All this would allow enormous internal capitals to form, that would allow many startup companies, as well as allow current companies to increase production.
They are on a verge of huge economic growth, and all it takes is to have the government removed from making the decision about the worth of their money.
Switzerland is doing OK. It's attracting people with capital and with real business sense, not your average Marxists, you can check the exchange rate, it's doing better than ever.
As to my opinions and people agreeing with them - why, do you want everybody to be as brain dead as the rest of the Keynesian Marxists? Do you really want to live in your beehive utopia of group think? Do you enjoy being impoverished by your government? Do you really prefer to live in society that destroys wealth and punishes success?
I have an account with Excellent karma to garner a karma bonus. I just don't like posting under it
- so which account is it? Why aren't you comfortable posting from it? See, I post my opinions consistently, at least my stand is clear. As to /. moderation and other problems, I actually said something about it just a bit earlier. - I think it's wrong to have a moderation system that allows group think to down-mode certain unpopular opinions (just like my comment, that was a response to yours is now down-moderated with a 'flamebait', which it is not.
China is manipulating its currency, while the US allows the dollar to float.
- it's a floater alright. US Fed prints trillions, US Treasury issues trillions in bonds, US Fed monetizes that debt. That's a floater.
There may be some side effects of financial policies such as QE2 that can affect the strength of the dollar (not as much as people like you claim), but that is not the purpose of them
- purpose does not matter, only the outcome matters.
Outcome: gold over 1450 USD, silver near 40USD, cotton over 220USD/pound, coffee, grains, oil, all commodities at their highs not due to any increased activity but simply as the consequence of money printing.
. Moreover, basically every postindustrial country is doing the same things.
- precisely. And all of them are failing economically. All socialist states are eventually becoming less and less socialist and their social obligations cannot be funded, and while they are funded, who is funding them? Productive nations like China, where people save for their own retirement, rather than robbing incomes of others just to buy votes.
I suppose a totalitarian political system does not come without its share of useful things.
China on the other hand, is deliberately, purposefully manipulating its currency.
- no no no, you CANNOT have it both ways: want to be a reserve currency and then complain that people use your currency that way.
China is keeping an artificial tie to the US currency, so do most other nations in the world, but USA is the real manipulator - printing, so that it doesn't have to return its debt in real money.
The yuan is 20% undervalued because of this manipulation.
- 20% ???? :))))
You are at least an order of magnitude off here, AC.
If appreciating the yuan would be so wonderful for China, why are the adamantly opposed to it?
- your sentence is broken.
Who is opposed to it? "the adamantly"?
Anyway, the Chinese consumers HATE inflation their government forces upon them. The government continues printing for whatever reason, after all, they are totalitarian.
the middle of an unsustainable boom brought on in large part because of the weakness of their currency.
- what are you saying here? That Chinese will want to buy more than they produce? This entire NOTION that economy is booming in an unsustainable, manner, so that gov't must do something about it is ridiculous, to the point of being nauseating. There is no reason for a government to be in economy at all, it can't do anything useful for it, and all it ends up doing is destructive to the real economy - production.
Unless you mean that commodity prices only will go down, somehow passing the rest of the economy by
- no. All prices must fall in Chinese currency, when it will appreciate.
Tell Japan how deflation is the natural preferred state of the competing market.
-!!!!
No no no no no no no no no no no no no no no.
Deflation is what Japan SHOULD have. Instead they were (and still are) fighting it with infla
Didn't I explain that points would be added for code with better maintainability and more documentation?
Anyway, as to being an island - for the past 2 years I've been an island. Doing all my projects all alone, just me, a store chain and 50 suppliers.
Another economic idiot hiding under AC. Ben, is that you? How is the helicopter doing?
The reason Chinese are not buying as much as they need to is due to their government printing their money into oblivion, and since they are a producing nation, which imports raw materials, they are hit with higher prices immediately, which is not the case for USA, who is not a producer, only imports ready goods and energy, and exports inflation (printed dollars and t-bills) to others, who are willing to import it.
China does not need this hindrance of being joined to a brain dead, lazy sports fanatic.
China accounts for 19.8% of world manufacturing. The US is at 19.4%. We still produce a shit ton of stuff.
- US 'manufacturing' is a fancy way for assembly lines of parts, made elsewhere.
If you produce 10 times more frying pans than people could possibly ever or buy, you're not contributing extra to the economy.
- and that's the manufacturer's problem, who is forcing him to produce 10 times more frying pans than can be sold? Clearly that manufacturer is in the wrong business and will go out of business. Production without use - that's government job. Real production obviously has consumers in mind.
However consumption without production is 0% likely.
but the Chinese culture doesn't have the appetite for consumption that exists in the West (and the US especially). Not to mention, a lot of those billion people can't afford a lot of the things China produces.
- oh boy, what are you saying, that Chinese do not like to buy stuff.
Are we talking about the same Chinese here? You are full of shit on this, don't you understand? People want things. The only reason they don't buy - is if they do not have the purchasing power to buy. This happens in government manipulated economy, not in real economy.
The reason Chinese are not buying is because they are robbed of their purchasing power by their government through inflation of money printing. When they stop this nonsense, they'll be buying plenty.
However, this recession is hitting China just as hard as it's hitting the US. Chinese unemployment is rising, and college grads there can't find jobs either. With China's economy dependent on exporting goods (for the time being), they will suffer until people start buying again.
- in China they are experiencing immediate affects of the monetary inflation - price hikes. Their food even went up by 15-25% last year. Obviously they are cutting down on other spending. The reason I already explained - government printing money to match US Fed printing.
In terms of the trade gap?
- that's the only real measurement. What would I care if you printed a bunch of green papers to pay back some debt, if they went down in value by another 99%?
Of course, it also doesn't help that the biggest Chinese companies are state owned and heavily subsidized.
- if that's their reason to prop up US dollar, then they'll have riots and revolutions on their hands, just like Middle East had.
Eh, maybe, but once China actually lets it's currency float, it's good are no longer cheap, and who wants to buy their low quality goods if they're not cheap?
- Fucking jesus. They have over 1.2 billion people, sitting there, waiting for their currency to start buying something. Give me a break, it all comes out of your idiotic: "Chinese do not want to buy stuff like Americans do" nonsense.
We've got a large, relatively educated workforce and a decent chunk of world production. If people would stop putting everything on credit cards and taking loans for shit they don't need, we'd be a'ok.
- and how are you going to do that exactly, if your government doesn't let the investment to actually stay valuable and instead prints the dollar like trees are going to disappear and has near the highest taxes in the world and has the most regulations in the world?
Good luck competing with the world while you are promoting this anti-business agenda via government regulations, money printing, taxes, subsidies, monopolies, competition destruction, socialist programs and wars.
replying to an AC seems wasteful, but hey, somebody is modding you up, so.
China does not manipulate its currency any more than US manipulates its currency, and US does real currency manipulation.
US prints its fiat to pay interest on its debt and to fund its gov't, while China only prints its fiat to buy those worthless US dollars, that are brought to the banks by companies that operate in China. However, what would actually happen if the banks allowed the Chinese currency to appreciate? Thanks for asking, here is the answer:
Chinese based companies would benefit from the stronger currency while buying raw materials from abroad, while they also would have a huge market appearing internally, because Chinese would gain so much purchasing power.
The competition on the internal market would cause prices for the Chinese (in Chinese currency) to decrease (deflation, which is the natural preferred state of the competing market).
Chinese workers/consumers would see a huge rise in their standard of living, they also would be able to buy foreign goods cheaper due to the exchange rate.
Without the US dollar, China's economy EXPLODES, it grows faster and faster, as Chinese will have more purchasing power and more companies would appear inside China to cater to the growing internal market, and again, it's 1.2 or more billion people.
As to QE2 - this is killing the US dollar, China holds too many of them and they know that more dollars will be chasing the same amount of raw materials, and China needs raw materials (especially metals and energy).
What China REALLY needs to do is let yuan appreciate, let the market set the interest rate and the exchange rate, and China will see incredible rise in standard of living for its people and the prices for commodities will go down in yuan.
Almost all of our debt is from the economic recession and the wars. These are all temporary.
- 1. US debt is affected by wars, surely, but this is not the main reason for it. The main reason is inflation and investment capital flight.
2. US wars are really not that temporary. What is temporary, if US can't leave Afghanistan for a decade and Iraq for near a decade as well?
3. There is nothing US can pay the debts with - it has no manufacturing capacity left to be able to pay the debts.
And finally, we do have the lowest taxes in more than a half-century.
- and USA has the lowest manufacturing capacity since the 18 century.
If millionaires have to return to a 90% tax rate, cry me a river.
- you assume anybody is insane enough to pay that money (they never paid those rates even when the rates actually existed, that's what deductions and dividends are for), and they wouldn't pay now. It's much cheaper to buy your politicians than to pay those, and it is still cheaper to leave USA and to go to places that actually appreciate people with capital and businesses.