Once the American public begins to learn about how the Chinese (among others) are artificially propping up the Dollar in order to sell cheaper goods, this whole political issue will snowball.
Posted on 09/26/2003 7:53:32 PM PDT by maui_hawaii
Especially in the Senate, they openly pander to those specific special interests who just luuuv China...
Getting the ducks in a row is hard.
Hopefully some Senators get their political heads knocked.
Once the American public begins to learn about how the Chinese (among others) are artificially propping up the Dollar in order to sell cheaper goods, this whole political issue will snowball.
No, it's only now that the currency manipulation can be seen so clearly. With a $500 Billion federal budget deficit, inflation should have jumped up to as much as 4%. With a 5% GDP trade imbalance between what we import versus export, we should have seen another 2.5% bump to inflation this year.
But instead of seeing 6.5% inflation (which is really just a devaluation of the Dollar), we've seen 2% inflation and a Dollar that is trading at the exact same level versus the peg-controlled Yuan (among other currencies).
That's huge. It's also undeniable. The only thing that would currently explain all of the above is that China and other countries are buying and hoarding Dollars, keeping them out of circulation in order to increase their demand.
So now it's pretty tough for any politician to miss what has been happening all along (i.e. that foreign nations have been manipulating the Dollar in order to sell more of their goods and services here in the U.S.).
Heck, show me one poster (besides you or me) who's pointed this currency manipulation out to the public prior to this month!
If the same goods in Wal Mart were made elsewhere they wouldn't cost that much more, if any more at all.
The current model of 'cheaper cheaper' merely sustains Americans in their increasing poorness.
Its kind of like a junkie's bad habit... start with a little and end up needing more and more...
You have no money or job, so cheap is obviously good, the poorer you get the more cheap you want.
How about we focus on making us richer for once?
We've been talking about this same old stuff for 2 years here on FR....
Then reality sets in.
There is a MUCH larger structural issue on the global economy though.
No one is going to be making new investments like building new manufacturing facilities in China if the Yuan moves up to its free market level. So forget deals. Whatever shenanigans are going on now only exist because the propped up Dollar (e.g. against the yuan) makes foreign investment look better than it really is.
Where's a good ol' Buddhist monestary when ya need one?!?!
Right now if a product in China costs 100 rmb straight off the factory floor...
In dollars that equates to about $12.
A US manufacturer could make the same product at $14.50 each.
Under those circumstances the Chinese version is 17% cheaper, not in China, but in the US.
If the rmb is revalued to a proper level...but for the sake of this discussion lets just say instead of 8.3 to 1, it will go to 7 to 1...(about a 15% correction)
(please note that the average claim is that the RMB is about 30% undervalued)
The Chinese version then costs about $14.30...that is only 1.5% cheaper...thus allowing the US companies to compete. Also you have to realize that you would still have to get the product from China to the US...
If the 30% undervalue number is correct (and its close) then the exchange rate then goes to about 5.8 to 1.
In those circumstances the 100rmb product then becomes $17.25 in US dollars... In those circumstances the US product (@ $14.50) then becomes 16% cheaper...
This is the root cause of the lost 2 million jobs in the US.
It also threatens our economy.
The US exports over $50 billion per month in manufactured goods, but they are being undercut by China's monetary manipulations.
I have read one report regarding corn.
One of the US' largest export markets is to the Asia Pacific. They are being undermined though in the international arena.
Here's how. The Yen is a supposed floating currency...but the Yuan is not...in a strange and complex dynamic, by pegging the Yuan to the dollar Chinese goods not only become cheaper in the US but also in Asia. When the dollar declines, do does the RMB.
The net result is that US corn is more expensive than the alternatives. Its because of the peg.
Our tarriffs have little to do with it. Our % subsidies are dwarfed by China's % of the same. (IE one bushel of corn might have 5% subsidies in the US...the same from China might have 40%...)
The previous poster who mentioned the buying up of dollars as being the problem is correct.
It can actually work in more than one way. They can sell their own currencies too, not just buy ours. They can either drive ours up, or drive theirs down... similar results either way.
I also find the continuing arguement of there go American jobs to be mostly ridiculous. Sure there they go but if not to China they will go somewhere else. Right now the majority of jobs that are being taken by China are not American jobs rather they are Mexican jobs, which were taken from South Korea, which were taken from Taiwan, which were taken from some other location with cheap labor.
In a way you are right, but in a way not. Asia and Mexico are getting screwed too. That by very nature hurts America. 1/3 of all of our exports go to Asia alone, not including China. When they get nailed, we get nailed. For every dollar we have traditionally imported from Mexico we have traditionally exported 75 cents. Thats a tad better than the dollar to ten cents deal with China.
In a complex arrangement, the case and point is that China's peg leads to disruptive price differentials based on artificial means.
In Mexico and Asia they compete, yeah, but its not a solely price competition as in the case of China. Without the disruptive practices of China American manufacturers will often become relatively and absolutely more competitive. Hence investment dollars come here to hire people here.
America can beat China and Mexico and Asian countries like a drum...on a level feild that is.
When the feild gets leveled though, investors realize that, and they hire more people here.
US manufacturers export over $50 billion a month. Just as in the same case with the corn above, Chinese manufacturing (often set up visa via US companies) undercuts our exporting power.
It kills jobs faster than salt on a slug.
The ball game will be changed significantly if things level out in regards to the playing feild.
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