WILL CHINA LEAD A STAMPEDE OUT OF THE US DOLLAR? (Very informative charts!)

Communist labor costs less because it is slave labor.

Chinese workers don't get paid?

Communist labor costs less because it is slave labor. ...it is, for all intents and purposes, worthless

So we're together on the fact that slave labor is worthless and socialist slaves can not compete..

You might want to get up to speed on the fact that there's a pretty big new crop of Chinese millionaires these days as wages there are increasing. Some people are worried about competing with these new guys, but most Americans have never had much difficulty competing.

.

I have plenty of relatives who do business over there, and your average worker gets paid squat. Nor is there a rapidly growing middle class that is commensurate with the pace of their growing economy. That's because the Communists keep them down (and controlled).

I have plenty of relatives who do business over there, and your average worker gets paid

So I guess you were wrong when you called them slaves.

That's because the Communists keep them down (and controlled).

Yup, that's what Commies do.

Nor is there a rapidly growing middle class that is commensurate with the pace of their growing economy.

Chinese wages have been climbing for decades.

Also, check out

How Rising Wages Are Changing The Game In China (Labor pains in China...?!)

The charts are merely pictures....

Posting THIS:

Will get you THIS:

Buy LOW - sell HIGH

Not the other way around!

Precisely.

http://www.exile.ru/2006-November-17/china_bow_to_uncle_sam.html --- YOU are an exile reader !!!

LOL....We are talking about the Moscow weekly that published maps to the US Embassy during anti-American riots?

Well stated, and you mention two of my very favorite presidents, Coolidge and Reagan. I agree that GWB is not well advised on economics, particularly monetary policy. I was happy to see his first chief economic advisor, Larry Lindsey, writing a week or so ago and taking a clear stance against tax increases. But if GWB had good monetary advice, I believe he would take it; he just has no one around him that is not compromised to the academic Keynsian/monetarists.

I, too, admired Milton Friedman for his small government, individual freedom approach to political/economic issues. Unfortunately, he did great harm to classical economics by assisting the Keynesians in blaming the Great Depression on the gold standard as managed by the Federal Reserve. In that regard, I did not find his arguments persuasive, as he essentially contended that the Fed monetary policy in the Twenties was so loose as to cause inflation, but so tight has not to allow real economic growth. He contended the Fed caused a deflation, when the gold standard merely contracted the money supply to accommodate the great commercial contraction caused by Smoot-Hawley tariffs. Worse, he was probably the central economic figure who persuaded President Nixon to close the gold window in 1971 and to cut the dollar completely away from gold in 1973, so his money quantities could be tested by the Fed. When finally tried by Volcker in 1979-1982, targeting money quantities was an international catastrophe, and monetarism was abandoned. In 2003, MF conceded he would not have contended so strongly for his views if he had it to do over again.

Thanks for you response.

Milton Friedman proved, conclusively, that the Phillips Model is not the way to run an economy -- into chaos through reactionary "fixes", such, as it appears you may be suggesting SHOULD be done. I have said the Fed IS using Phillips Curve theory as a basis for its use of the funds rate target, but I strongly contend that is erroneous and irrational. As to MF's role, as recently as 2004, Fed intellectuals credited MF with modifying the Phillips Curve in 1968 so that it is still the model in use at the Fed. MF is credited also with convincing the Keynesian establishment that there is no "long run" tradeoff of unemployment vs. inflation, but as Keynes said "in the long run we are all dead." In practice, the Fed still treats unemployment as the price to be paid for lower inflation, as that is the only mechanism the funds rate target can provide. Fed Chairman Bernanke made clear months back that this move FOR US exports would be occurring. For this to "occur", the dollar must drop, making our produced goods more attractive to the buyer. This is precisely the type of intrusion into the market that intellectuals insist upon trying, while doing so much damage in the process. Their contention is that Americans will be much better off if they pay greater value for what they buy, and receive less value for what they sell. Experience since 2004 shows the fallacy; we pay more and we get less, making the current account deficit much worse than it would have been otherwise. The Fed should be prohibited from changing the values of private assets based on its theories of what will be best for Americans. The Fed should be required to provide currency with stable value - period. I've been reading, regularly, Mr. Bernanke's speeches and clips regarding the economy since he's been in office, and has made clear to me that the Feds have a very clear plan about the economy -- including temp "inflationary" measures, which of course, is in contrast to your: "There is no assurance that the Fed would respond as it should." You are saying that the Fed in intentionally weakening the dollar as a "temporary inflationary measure." If you can cite particular statements of BB to that effect, I will be very appreciative. By all its public statements I have seen, the Fed contends it is trying to strengthen the dollar and is raising the funds rate target for that purpose. In what you have read or in what I have read, the Fed is misleading. My contention is that the higher funds rate targets, coupled with regular purchases of T-securities in the open market, have produced a weaker dollar and greater inflation. Are you of the view that the funds rate hikes are intended to weaken the dollar, as well as the economy? With the fed budget drastically reduced, with this amazing economy with low unemployment, increased incentives for improving human resources, investment in resources -- suggests to me, strongly, that while the value of the dollar will dip, the real value of the dollar remains strong based upon the points in first part of my sentence. This then readies the stage for the next run. The reduced budget deficit produced by higher tax revenues, the low unemployment rate, increased incentives for investment - all these result from the well-advised fiscal policies of the Bush administration, specifically the 2003 cuts in marginal tax rates. Based on those 2003 tax cuts, the dollar was holding its value very well and interest rates were lower than today. But the Fed then insisted on raising the short-term rates, effectively increasing the costs of capital to consumers and small/medium businesses by at least 4.25%, a total effective drain of capital of at least $180 billion/year. That Fed mismanagement countermands the supply side tax cuts, will eventually cause small/medium businesses to stop hiring, especially if the Fed decides to raise the short rate higher. If the rate goes higher, recession will follow and the dollar will weaken further. Then the Fed-induced cycle will start all over, but after great capital losses. The Democrats are strung out on mandating minimum wage increases, thereby attempting to ensure that whatever anti-inflationary measures are in place will be more difficult to implement. Which means, those parts of the country implementing higher minimum wages will assuredly be the sooner at experiencing businesses leaving those districts. We can then expect those districts to scream about the deleterious effects of the Bush economy; but these effects will not be observable to the average consumer until a year or so after the 2008 Presidential elections. In this regard, nonetheless, minimum wage mandatory "sentencing" can be a help or a hindrence. Democrat economic policy is hopeless, almost, on both the fiscal and monetary side of the equation. That is why lost opportunities with a good Republican president are so distressing.

Administrator, this is a re-formatting of my previous post. My apology.

Milton Friedman proved, conclusively, that the Phillips Model is not the way to run an economy -- into chaos through reactionary "fixes", such, as it appears you may be suggesting SHOULD be done.

I have said the Fed IS using Phillips Curve theory as a basis for its use of the funds rate target, but I strongly contend that is erroneous and irrational. As to MF's role, as recently as 2004, Fed intellectuals credited MF with modifying the Phillips Curve in 1968 so that it is still the model in use at the Fed. MF is credited also with convincing the Keynesian establishment that there is no "long run" tradeoff of unemployment vs. inflation, but as Keynes said "in the long run we are all dead." In practice, the Fed still treats unemployment as the price to be paid for lower inflation, as that is the only mechanism the funds rate target can provide.

Fed Chairman Bernanke made clear months back that this move FOR US exports would be occurring. For this to "occur", the dollar must drop, making our produced goods more attractive to the buyer.

This is precisely the type of intrusion into the market that intellectuals insist upon trying, while doing so much damage in the process. Their contention is that Americans will be much better off if they pay greater value for what they buy, and receive less value for what they sell. Experience since 2004 shows the fallacy; we pay more and we get less, making the current account deficit much worse than it would have been otherwise. The Fed should be prohibited from changing the values of private assets based on its theories of what will be best for Americans. The Fed should be required to provide currency with stable value - period.

I've been reading, regularly, Mr. Bernanke's speeches and clips regarding the economy since he's been in office, and has made clear to me that the Feds have a very clear plan about the economy -- including temp "inflationary" measures, which of course, is in contrast to your: "There is no assurance that the Fed would respond as it should."

You are saying that the Fed is intentionally weakening the dollar as a "temporary inflationary measure." If you can cite particular statements of BB to that effect, I will be very appreciative. By all its public statements I have seen, the Fed contends it is trying to strengthen the dollar and is raising the funds rate target for that purpose. Either in what you have read or in what I have read, the Fed is misleading. My contention is that the higher funds rate targets, coupled with regular purchases of T-securities in the open market, have produced a weaker dollar and greater inflation. Are you of the view that the funds rate hikes are intended to weaken the dollar, as well as the economy?

With the fed budget drastically reduced, with this amazing economy with low unemployment, increased incentives for improving human resources, investment in resources -- suggests to me, strongly, that while the value of the dollar will dip, the real value of the dollar remains strong based upon the points in first part of my sentence. This then readies the stage for the next run.

The reduced budget deficit produced by higher tax revenues, the low unemployment rate, increased incentives for investment - all these result from the well-advised fiscal policies of the Bush administration, specifically the 2003 cuts in marginal tax rates. Based on those 2003 tax cuts, the dollar was holding its value very well and interest rates were lower than today. But the Fed then insisted on raising the short-term rates, effectively increasing the costs of capital to consumers and small/medium businesses by at least 4.25%, a total effective drain of capital of at least $180 billion/year. That Fed mismanagement countermands the supply side tax cuts, will eventually cause small/medium businesses to stop hiring, especially if the Fed decides to raise the short rate higher. If the rate goes higher, recession will follow and the dollar will weaken further. Then the Fed-induced cycle will start all over, but after great capital losses.

The Democrats are strung out on mandating minimum wage increases, thereby attempting to ensure that whatever anti-inflationary measures are in place will be more difficult to implement. Which means, those parts of the country implementing higher minimum wages will assuredly be the sooner at experiencing businesses leaving those districts. We can then expect those districts to scream about the deleterious effects of the Bush economy; but these effects will not be observable to the average consumer until a year or so after the 2008 Presidential elections. In this regard, nonetheless, minimum wage mandatory "sentencing" can be a help or a hindrence.

Democrat economic policy is hopeless, almost, on both the fiscal and monetary side of the equation. That is why lost opportunities with a good Republican president are so distressing, due to inadequate economic advice.

Excellent summary. You might be interested in the following--GGG

http://www.gold-eagle.com/gold_digest_05/fekete101106pv.html

http://www.financialsense.com/editorials/fekete/2006/1007.html

Democrat economic policy is hopeless, almost, on both the fiscal and monetary side of the equation. That is why lost opportunities with a good Republican president are so distressing. Even thinking of it as fiscal and monetary problems is hopeless. Tinkering with any part of the economy with the goal of effecting changes in direction or holding a line is always self defeating because it misdirects and wastes resources. The government cannot successfully control anything economic except the flow of power to the government which necessarily reduces economic efficiency and increases classic corruption.

China is just sucking the excess dollars into their banks.

China isn't sucking up excess money and saving it up. They're doing deficit spending just like we are. They are growing quickly and spending even faster to both stimulate further growth and to continue building up their military.

When they finally have to release it into the markets we will have general price rises. Price rises are NOT inflation.

Inflation - A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services. - American Heritage Dictionary

The price rises caused by the surplus of US currency is inflation. Price increases by themselves are not inflation. A surplus of currency that does not cause prices to rise or purchasing power to decrease is not inflation.

That is not an economic definition of inflation. That is a qualified term there- "(Price) Inflation" and describes an effect of rea- money- inflation i.e "Inflation" which is and only is an increase in the money supply such as to cause a rise in the price level. That is because a price rise is directly caused by an increase in cost, real or nominal. It is not so discretionary where money quantity inflation, Inflation unmodified, is entirely discretionary and is not a response to market forces. It is a deliberate action and always damaging to the economy. It It grants only temporary and relative benefits vis-a-vis other countries' economies in certain circumstances, i.e. it damages our economy while, at first, it damages the other economies more. You do not accomplish anything economically by using degraded definitions or making up new ones. You only make excuses for dangerous economic meddling. What happens, happens, whatever you call it and to talk about it rationally and clearly you must use the classical definitions, not the politically correct ones, even if they are written down in a book.

So HUI is not a good representation of gold That serves me right for taking a fellow freeper's word for such a simple fact that I could have checked out.

So what is the YTD return for gold?

As of November of this year - that's 11/12 of a year - China's rate of return is double that of gold - 51% vs 23%. You're betting on a 25% rise in 1.5 months? The key word is your statement was "imagine".