To: gubamyster; hoosiermama; Lakeside Granny
Ash 🇨🇦 🇺🇸 🇮🇱
🚨Topic China Trade (Thread):
Ok, I am seeing a lot of idiotic disinformation being thrown around about the China trade situation. Here are a few facts to consider. Interested in @sethjlevy and @themarketswork take as well.
1. The US imports ~$540B ($420B Net) from China /yr
2. With US GDP at ~$22T, the Chinese trade deficit slices approximately 2% off US GDP growth. Thus, if there was no trade with China, US GDP would arguably be 2% higher.
3. In fairness, this doesn't take into account Chinese trade conducted by US firms - which results in knock-on additions to GDP growth. This also doesn't take into account the negative impact of stolen IP on US firms – thereby diminishing US growth.
4. China succeeds in dominating the export market by weakening their currency, thereby playing on an uneven field - and making their goods significantly cheaper than those of their trading partners.
5. China is able to manipulate their curr by selling Yuan against other maj curr. The US gets the lion's share of this capital flow - this results in higher Treasury purchases, which drives yields down. We are currently seeing this, and this is why the yield curve has inverted.
6. With the yield curve inverted due to real demand for long dated treasuries, it is incumbent upon the FED to slash short terms rates to normalize the curve - for the health of the financial system.
7. Since USD is at all time highs and the economy is rolling along - the FED has cover to devalue a bit (by cutting short rates) - in order to competitively devalue against others. Why let all US trading partners use these tactics and not fight back??
8. Lower short rates also have a stimulative impact on the US economy, and helps US exports. This essentially allows the US to strengthen it’s trade position with EVERYONE.
9. Note the pending trade deals that are likely to materialize globally over the next couple of years.
10. realDonaldTrump has brilliantly engineered this, knowing precisely how the Chinese would fight the trade war. Despite the media lies that he is unstable, he is 10 steps ahead of everyone on this front!
11. Current Tariffs of ~$120B are extremely helpful to the US, and it actually equals the total of all annual exports to China!
12. These tariffs are being financed via a weaker yuan and more valuable USD (please see above for how capital flows influence currency values), not by US consumers.
13. The bottom line here is that Trump knew exactly how this war was to be fought, he knew exactly how China would react – and they are playing right into his strategy.
14. Some advice to stevenmnuchin1 and realDonaldTrump – while long rates are low – you MUST swap short maturities for long – but via the issuance of 30, 50 & 100 yr treasuries. This is a golden opportunity to secure long term rates before rates ultimately normalize.
15. Having visibility on long term rates will allow the Treasury to better manage a path to a balanced budget over the long term.
16. Keep up this fight and DO NOT capitulate. The US holds all the cards, and every move China makes, only weakens them further. Anyone who is no supporting the US vs. China is doing an injustice to America. It is #Subversion, bordering on #Treason.
17. IMO, the end result of this trade war will be a pickup in structural GDP growth of 0.5-2%. This will be realized by A) Revaluing USD to assist in boosting exports B) Decreasing net imports to the US..
18. C) Protecting intellectual property of American firms, thus reducing China’s ability to export stolen goods back into the US – which also helps reduce net Imports. D) Other things, such as allowing the US to compete better globally.
19. Here is the clincher. The US needs to grow their way out of their debt problem. The tax environment is already highly competitive and stimulative - thanks to Trump. The trade environment needs to be fixed – nothing is ever easy – but in the end it will all pay off.
20. In order to increase exports, the US needs to attract both foreign and domestic manufacturing back to US shores. By making trading partners less competitive, that is more easily accomplished.
21. realDonaldTrump isn’t attempting to inject a short term sugar high into the US economy, he is transforming it for generations to come. The trajectory when he took over was down, and US tax and trade policy was accelerating that downfall.
22. Let’s all be a bit less reactionary, and more supportive & hopeful. It serves nobody's interests (domestically) to push for the destruction of the US Economy. /end.
3,190 posted on
08/25/2019 12:39:35 PM PDT by
STARLIT
(Hope is standing in the dark looking out at thttps://i.postimg.cc/d1J8s43Vhe light in Jesus Christ.)
To: NIKK
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