Posted on 03/15/2009 7:39:49 PM PDT by 4rcane
Has there been any support for it's proposals yet?
See, then the dollar quadruples against oil in six months, that isn't an inflation. Especially when the same thing happens against every other commodity on earth. And twofold against real estate. And 30% against Euros. And buys 3 times as much future interest payments. And...
But enough, those who only understand inflation as an allegation are not interested in reality, only in their doom mongering smears of the world they live in and what made it work.
China heavily subsidizes its manufacturing sector.
With the current drop in demand for Chinese goods, the Chinese government is probably no longer collecting enough revenue to keep the subsidies going.
Which means Chinese manufacturing is going to crash, hard.
However, the Chinese hold a trillion dollars they may very well need to use to stay afloat.
What happens when the Chinese start spending all those dollars?
I would expect the dollar to depreciate in value rapidly, Yuan or no Yuan.
Sorry, I forgot to mention the intermediary step where the govt provides tax incentives to keep manufacturing jobs here. I can dream, can’t I?
Theirs or ours?
I'm not sure...that could be construed as a hate dream! We can't be taking money out of the hands of THE CHILDREN to subsidize evil big business... :)
I’ve asked before-and never gotten an answer: How in hell did China wind up holding large amounts of US debt ?
It’s not something that happened yesterday.
China has run a huge trade surplus for years. The additional funds collected were used to buy US bonds. We sell them to anybody, and China liked them because they have traditionally been the safest investment on earth.
It also helped buoy the US economy, which increased China's trade surplus, which helped them buy more bonds. Now they are sitting on about 800 billion dollars worth of them.
Well, inflation will happen in China at whatever rate, and oil will eventually get away from being managed at a little over $40. So yes, the dollar will go down, and attempts to stop that will only lead to world war.
Meanwhile, back home, we’re not buying, but we are doing a few other things to make sure that we’ll have better leaders in business and politics in the future.
Be interested if you have a source for the $800 Billion number. I thought it was quite a bit...50% more - around 1.2 Trillion.
Maybe it's just me, but these days anything less than a Trillion seems almost....well, trivial. It's the Obama effect.
And BTW, I don’t necessarily see a “dollar collapse.” It’s more of an eventual and inevitable balance in globalism. Granted, though, the more merchants and bankers implement schemes to put that balancing trend off, the more it’s going to hurt.
I hope that it brings them down. I hope that oil, and consequently, freight fuel, go sky high. We need new leadership in business, which will bring us better favored (moneyed) constituents, and thereby, better politicians.
These dollars are ultimately only good here in the good old USA. They buy US Treasury bonds to "use" those extra dollars rather than buying more from us.
Why wouldn't they just buy more of our stuff? The same reason you and I don't expect Kroger or Walmart to turn around and buy something from us using money we just spent in their store. That is their profit. They will use that cash at some point but until then they are content to let it sit and draw interest (while hoping like hell we don't crash it and make their bonds worth a whole lot less). Maybe they'll use it buy a few of our airplanes or really good Oregon beer. Or maybe a Senator or two.
Also, as east Asians sell their investments in American-owned manufacturing businesses in east Asia, that will also cheapen the dollar.
“It is a deflation. The entire world bet on a large scale inflation that refused to happen, that is what the financial crisis *is*. Now they all have to repay all of their short dollar positions in more valuable terms instead of less.”
Yes, exactly. The big question is...Why this is so hard to understand?
This is interesting, thanks.
China has a problem, and it’s not that they hold too much US debt.
They have too many rural farmers who have left their homes and moved to the cities looking for work. Millions upon millions every year. They go to work in factories to make a better living than farming. Picture Mexican laborers moving to the US to work and you have a good analogy.
As the US import flow slows down, Chinese factories are going out of business by the tens of thousands. China has responded by passing laws that make it harder to fire workers, which in turn has made the problem worse. There are now tens of millions of workers floating around without jobs.
In the short term, China can use their US dollars to spend on infrastructure building projects to keep some of those people busy. But they will use up their dollars pretty quickly. Their reserves seem large, but they can run through them within a year or two under many possible scenarios.
So the worry should not be what can China do to us, it’s what China needs to do to keep its shaky system afloat. China has huge problems brewing, and it’s not the shakiness of US debt.
The global warming central prediction of ice-age level warming hasn't changed in 110 years, from the infancy of the science behind the notion, made without any data to speak of. The Malthusian prediction of the relationship between population and properity was false on the evidence when it was first proposed over 200 years ago, but continues to be maintained in the face of the most dramatic possible contrary evidence over that interval. Marx's predictions of the inevitable collapse of capitalism have been wrong for 160 years, but men in the street call every decline in stock prices a vindication of it. Its basis was discredited ages ago, its empirical prediction of declining wages was wrong instantly and falsified on an epic scale over the intervening period.
Ideologies are not thoughts. They are intellectual diseases.
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