US Economic Policy - Made in China - Page 2

leejo · 08-11-2007, 11:25 PM

I think the USA is full of people who can drive as hard a bargain as their Chinese counterparts, and who don't get hysterical just because someone makes a threat. Of course they have some leverage, but we do too. It'll work out fine.

**El_Gringo_Grande** · 08-12-2007, 12:14 AM

Quote:

Originally Posted by leejo

I think the USA is full of people who can drive as hard a bargain as their Chinese counterparts, and who don't get hysterical just because someone makes a threat. Of course they have some leverage, but we do too. It'll work out fine.

Sure. We didn't get to the top of the economic food chain by being wimps. We know when to call a bluff. But we also know when to recognize our liabilities. To hedge the bet a bit.

Our debt is a liability. It may be offset by other holdings but still... Would be better if our liability was reduced at least a smidge. No?

Lucky Shot · 08-12-2007, 01:13 AM

Our money will continue to flow towards China until they allow their currency to float. The Yuan is undervalued now and as they are holding our dollar in a huge reserve, ours is overvalued. So placing pressure on China to allow their currency to float will help us with our debt.

Lucky Shot

leejo · 08-12-2007, 11:01 AM

Quote:

Originally Posted by El_Gringo_Grande

... Would be better if our liability was reduced at least a smidge. No?

Depends on what you give up to pay for it.

**El_Gringo_Grande** · 08-12-2007, 11:27 AM

Quote:

Originally Posted by Lucky Shot

Our money will continue to flow towards China until they allow their currency to float. The Yuan is undervalued now and as they are holding our dollar in a huge reserve, ours is overvalued. So placing pressure on China to allow their currency to float will help us with our debt.

Lucky Shot

Correct, thus this thread!

Quote:

Originally Posted by leejo

Depends on what you give up to pay for it.

So true.

xTYBALTx · 08-12-2007, 12:11 PM

When you refer to our "debts," you don't by chance mean the trade "deficit", do you? Because that's not a debt.

"Friedman and other economists have also pointed out that a large trade deficit (importation of goods) signals that the country's currency is strong and desirable. To Friedman, a trade deficit simply meant that consumers had opportunity to purchase and enjoy more goods at lower prices; conversely, a trade surplus implied that a country was exporting goods its own citizens did not get to consume or enjoy, while paying high prices for the goods they actually received."

War.mongeR1 · 08-12-2007, 03:00 PM

Milton Friedman is one of my heroes. One of the great intellectuals of our time, and he's realistic. He makes me realize how little most of the general public (myself included) understands the true nature of raw economics.

My view on China is that, economically speaking, they have our nuts in a vice grip, but we have theirs in a vice grip as well. We are both too interdependent for them to really screw us over. They may talk some smack here and there, but I don't predict that they would ever actually do anything to piss us off bad enough to entirely lose our business. It would cripple their economy.

leejo · 08-12-2007, 03:04 PM

China seems to be backpedaling a tad:http://biz.yahoo.com/ap/070812/china...rves.html?.v=5

By the way, while a Chinese sell-off would be bad news for people carrying floating mortgage or credit card debt, or who want to buy a cheap TV in the near future, it would be very good news for laid-off textile workers, for example. A cheap dollar makes imports expensive and exports cheap (to foreign buyers). We may not be done as an industrial society just yet.

That's my rather simple understanding of international currency speculation, anyway.

xTYBALTx · 08-12-2007, 03:55 PM

Nah, not much would happen if they sold off the dollars. Our currency has already fallen 30-50% against the Euro and Pound Sterling in the past few years with little overall effect. If the Chinese did "dump" their dollar holdings, the net effect would be to our gain and their loss.

**El_Gringo_Grande** · 08-12-2007, 08:12 PM

Quote:

Originally Posted by xTYBALTx

When you refer to our "debts," you don't by chance mean the trade "deficit", do you? Because that's not a debt.

"Friedman and other economists have also pointed out that a large trade deficit (importation of goods) signals that the country's currency is strong and desirable. To Friedman, a trade deficit simply meant that consumers had opportunity to purchase and enjoy more goods at lower prices; conversely, a trade surplus implied that a country was exporting goods its own citizens did not get to consume or enjoy, while paying high prices for the goods they actually received."

Nope. I refer to our debt. The money our government owes other governments/institutions.

Kerostasis · 08-12-2007, 09:37 PM

Well, that debt will continue to have a solid value as long as people perceive our government as being able to pay its debt. And since our government has never, ever defaulted on its debt, a major sell-off by China would have only a marginal impact on the credibility of our debt. Mostly it just means they would take a big loss on the sale.

Again, more power to us.

xTYBALTx · 08-12-2007, 09:47 PM

Oh, that debt.

Boot · 08-15-2007, 01:54 AM

Quote:

Originally Posted by xTYBALTx

Oh, that debt.

Yeah, we're good company and the current account deficit *is* sustainable if the US economy keeps growing. But the rampant government spending is driving GDP at this point, and I just can't imagine how we can continue this part.

GDP = C + I + G + NX ... that's consumption, investment, gov't spending and net exports. One theory would say that if G would go down to a respectable level, NX would have to rise to follow suit. Another says that with G so high, I can get crowded out. So all this government spending has an effect, and not necessarily a positive one.

xTYBALTx · 08-15-2007, 02:02 AM

I thought that Bastiat, some hundred and fifty years ago, largely put to rest some of the more common misconceived notions that government spending generally positively effects the economy.

Isn't any increase in G not only coming out of I and C, but also introducing previously non-existent inefficiencies, thereby making what would appear to be a break even scenario into a $.X loss? Then if you add the lost opportunities on each dollar spent by government, add the inefficiencies, you're looking at some amount $.X+Y lost per dollar, right? And that's assuming that the money is put to "good" use. It may very well be frittered away on subsidies or circuses or whatever useless program of the day, all of which create further losses beyond lost opportunities and inefficiencies.

My point being that, practically speaking, any decrease in G should be a very very good thing for an economy, no matter how you slice it.

leejo · 08-15-2007, 01:02 PM

Quote:

Originally Posted by Tybalt

government spending generally positively effects the economy.

Wow, we really do been bigger government controlling our spelling and vocabularies. I believe you mean "affect" not "effect". You could try to make a case that you did mean "effect" but I wouldn't believe you.

08-11-2007, 11:25 PM	#16 (permalink)
leejo Join Date: Sep 2003 Age: 39 Posts: 7,411	Re: US Economic Policy - Made in China I think the USA is full of people who can drive as hard a bargain as their Chinese counterparts, and who don't get hysterical just because someone makes a threat. Of course they have some leverage, but we do too. It'll work out fine.

08-12-2007, 01:13 AM	#18 (permalink)
Lucky Shot Join Date: Aug 2005 Posts: 4,636	Re: US Economic Policy - Made in China Our money will continue to flow towards China until they allow their currency to float. The Yuan is undervalued now and as they are holding our dollar in a huge reserve, ours is overvalued. So placing pressure on China to allow their currency to float will help us with our debt. Lucky Shot Last edited by Lucky Shot; 08-12-2007 at 11:20 AM.

08-12-2007, 12:11 PM	#21 (permalink)
xTYBALTx Join Date: Aug 2005 Posts: 3,650	Re: US Economic Policy - Made in China When you refer to our "debts," you don't by chance mean the trade "deficit", do you? Because that's not a debt. "Friedman and other economists have also pointed out that a large trade deficit (importation of goods) signals that the country's currency is strong and desirable. To Friedman, a trade deficit simply meant that consumers had opportunity to purchase and enjoy more goods at lower prices; conversely, a trade surplus implied that a country was exporting goods its own citizens did not get to consume or enjoy, while paying high prices for the goods they actually received." __________________ Current Tybalt theme song: Mason v. Princess - Perfect "$250,000 a year won't get me to Central Park West."

08-12-2007, 03:00 PM	#22 (permalink)
War.mongeR1 Join Date: Nov 2006 Location: San Antonio, TX Posts: 1,060	Re: US Economic Policy - Made in China Milton Friedman is one of my heroes. One of the great intellectuals of our time, and he's realistic. He makes me realize how little most of the general public (myself included) understands the true nature of raw economics. My view on China is that, economically speaking, they have our nuts in a vice grip, but we have theirs in a vice grip as well. We are both too interdependent for them to really screw us over. They may talk some smack here and there, but I don't predict that they would ever actually do anything to piss us off bad enough to entirely lose our business. It would cripple their economy. __________________ "Common sense is not so common." -Voltaire

08-12-2007, 03:04 PM	#23 (permalink)
leejo Join Date: Sep 2003 Age: 39 Posts: 7,411	Re: US Economic Policy - Made in China China seems to be backpedaling a tad:http://biz.yahoo.com/ap/070812/china...rves.html?.v=5 By the way, while a Chinese sell-off would be bad news for people carrying floating mortgage or credit card debt, or who want to buy a cheap TV in the near future, it would be very good news for laid-off textile workers, for example. A cheap dollar makes imports expensive and exports cheap (to foreign buyers). We may not be done as an industrial society just yet. That's my rather simple understanding of international currency speculation, anyway.

08-12-2007, 03:55 PM	#24 (permalink)
xTYBALTx Join Date: Aug 2005 Posts: 3,650	Re: US Economic Policy - Made in China Nah, not much would happen if they sold off the dollars. Our currency has already fallen 30-50% against the Euro and Pound Sterling in the past few years with little overall effect. If the Chinese did "dump" their dollar holdings, the net effect would be to our gain and their loss. __________________ Current Tybalt theme song: Mason v. Princess - Perfect "$250,000 a year won't get me to Central Park West."

08-12-2007, 09:47 PM	#27 (permalink)
xTYBALTx Join Date: Aug 2005 Posts: 3,650	Re: US Economic Policy - Made in China Oh, that debt. __________________ Current Tybalt theme song: Mason v. Princess - Perfect "$250,000 a year won't get me to Central Park West."

08-15-2007, 02:02 AM	#29 (permalink)
xTYBALTx Join Date: Aug 2005 Posts: 3,650	Re: US Economic Policy - Made in China I thought that Bastiat, some hundred and fifty years ago, largely put to rest some of the more common misconceived notions that government spending generally positively effects the economy. Isn't any increase in G not only coming out of I and C, but also introducing previously non-existent inefficiencies, thereby making what would appear to be a break even scenario into a $.X loss? Then if you add the lost opportunities on each dollar spent by government, add the inefficiencies, you're looking at some amount $.X+Y lost per dollar, right? And that's assuming that the money is put to "good" use. It may very well be frittered away on subsidies or circuses or whatever useless program of the day, all of which create further losses beyond lost opportunities and inefficiencies. My point being that, practically speaking, any decrease in G should be a very very good thing for an economy, no matter how you slice it. __________________ Current Tybalt theme song: Mason v. Princess - Perfect "$250,000 a year won't get me to Central Park West." Last edited by xTYBALTx; 08-15-2007 at 02:21 AM.

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