Special Treatment ...

[ZZZZZ]

Seems to me that the entire premise and purpose of a "reserve currency" went down the toilet (almost literally) when Trickie Dickie removed the last vestige of the metallic monetary backing of the FRN in 1972.

What is the US "dollar" a reserve pf?

A fiat "dollar" bill isn't worth much beyond wiping your ass with it.
.
.

 

[Zed]

Zed, you posted enough questions to start an economics book.

... and I thought I was making statements and arguments. Hmmmmmm....

But all the questions only circle around and never speak to the point.

I think you need to read them again, you seem to be misunderstanding what I am saying.

Maybe you should read the OP again -

OK, if you insist.

I'm not sure how you think the PEG is a good thing for the average worker in America?

It's a part of a mechanism that has provided Americans with discounted living costs over seven decades. You seem to want to see it as an isolated thing, which it isn't.

For the above...
For #1: It benefits the big corp interests and the wealthy owners of them. It benefits those who take graft and have immense power to take advantage of the very unfair situation. It has some minor short term benefit to consumers to lower their costs temporarily - although job destruction and base manufacturing opportunities disappear over the long term.

Again you only see one part of the equation. Yes the US has lost lower order jobs to other nations BUT it has developed many higher order jobs off the back of cheap manufacturing overseas. Look at Apple as an example, most of the wealth has been created in and has benefited the US. Apple has leveraged cheap manufacturing to do that. It is a two way street. Add at one end and you lose at the other, the US simply moved up the economic scale.

It has some minor short term benefit to consumers to lower their costs temporarily

... if you call seven decades and significantly discount lifestyle short term and minor. Really dude, you should go and live somewhere else for a while and then maybe you'll get the advantages that the US consumer has had.

For #3: "Overplaying?"

Yes, overplaying. You have taken the comment out of context. You are overplaying the amount of difference in value that a PEG makes. If the currencies floated freely they’d average at a price not hugely different to the peg. The advantage is more in stability than price.

No, the loss of top dog manufacturing and industrial base status is not a trivial loss. This loss is likely to eventually lead to the loss of top dog fiat status as well. You are Vastly Underplaying.

It is a part of the Triffin Dilemma and why being the reserve eventually becomes unsustainable.

Vastly underplaying? NO, I am pointing at the economic forces that drive this dynamic. I am also pointing out that those Americans that have been blind to the advantages delivered by it will be shocked by what happens when it falls apart.

For #4: none of those sit at the main table, they can't destroy anyone's select sector of their economy easily. Could a smaller nation use a PEG to help support a particular small sector? Yes, they could. A small nation that sells widgets and has only a few competitors around the world in those widgets could use a PEG to destroy the widget industry in those other nations, as long as they could keep using the PEG over a long period of time without the other trading partners calling them out and doing things about it.

This isn’t making sense. Pegs can only exist where they are economically supportable, nations still have to have a competitive advantage. Did you notice that China is losing out to Vietnam as the low cost producer? How is the peg going in that regard?

Special Treatment ONLY for China and Nobody Else

Firstly 65 odd nations peg to the dollar and secondly most financial people consider China, like Japan, to be a managed float (dirty float) and not a peg.

China is in no way unique or special on this front and the US has no control over this activity from other nations. There is no permission to peg.

The problems you describe are a function of being the reserve, this comes with many advantages and some disadvantages, as you have pointed out. Triffin Dilemma etc…

At some point your national debt level should break this balance, if Armstrong is correct that will be @ around 2032.

 

[Zed]

Hey I got a really really simple idea. Lets peg all currencies to one troy ounce that is 31.1 grams of pure gold. Silver is pegged at a 20:1 ratio to gold. Problems solved. No games. No manipulation. No BS. No cheating. Simple to understand in any language and FAIR to everyone!

But then.................... that would neuter the banksters...... and they would loose control.

Essentially that was Bretton Woods up until the French called the US out over gold reserves.

Gold is great for our purposes but for a global growing economy, it is too deflationary. FIAT has the inflationary issue, among other issues... neither are perfect by a long shot and I can't think of a solution that is perfect. The fact is we don't have it yet and governments aren't likely to allow it even if we did.

It really does get complicated when you use a credit system and create growth, without which we'd still be in caves...

JMHO.

There is no easy out.

 

[Zed]

From the OP...

Why does China PEG their currency to whatever value they decide?

False premise, they don't and can't.

See currency chart...

 

[Joe King]

Zed, you posted enough questions to start an economics book

and I thought I was making statements and arguments. Hmmmmmm....

Well to be fair, He did say.......

I'm not sure what you are trying to say.

@Zed , as for him telling you to re-read the OP, keep in mind that it starts with a question.
...and questions imply a lack of understanding.

 

[Zed]

The EURO, Yen, Pound, Franc, USD, and all other major currencies in the world trade on the FOREX in a free floating manner.

The Swiss Franc...

https://www.telegraph.co.uk/finance...ange-rate-in-dramatic-currency-war-twist.html

The Yen is a notorious dirty float.

However, since 1973, the Japanese government has maintained a policy of currency intervention, and the yen is therefore under a “dirty float” regime. This intervention continues until today. The Japanese government focuses on a competitive export market, and tries to ensure a low yen value.

https://currency-history.info/japaneseyen/

ECB...

https://www.reuters.com/article/ecb-intervention-idUSLDE72H0RA20110318

They are all at it, at one time or another!

 

[Zed]

A peg creates an overwhelming advantage for the country managing the peg and this is across all aspects of the global economy.

No it doesn't because everyone has the same choice and they are limited by their economic ability to do so.

This is why we have the term "Currency Wars"..... !?!

 

[Zed]

@Zed , as for him telling you to re-read the OP, keep in mind that it starts with a question.
...and questions imply a lack of understanding.

Yep, well I did it anyway...

Sometimes I learn something new doing this stuff so it is all good!

 

[Joe King]

They are all at it at one time ore another!

Because governments, like people, will do what is in their own best interests.

It's like you said, it's all about finding some kind of competitive advantage.

 

[Zed]

Because governments, like people, will do what is in their own best interests.

It's like you said, it's all about finding some kind of competitive advantage.

Yeah, like they say... governments don't have friends they have interests.

 

[Zed]

Seems to me that the entire premise and purpose of a "reserve currency" went down the toilet (almost literally) when Trickie Dickie removed the last vestige of the metallic monetary backing of the FRN in 1972.

What is the US "dollar" a reserve pf?

A fiat "dollar" bill isn't worth much beyond wiping your ass with it.
.
.

It has morphed in operating details a bit. The Petrodollar setup was a genius move on the part of the US. You still have the deepest, most liquid and safest debt market in the world. While that is true money will always seek cover in USD when and where needed. You are still top dog despite moves to get out of USD trade by the Asians.

An Asian Currency Bloc might be the beginning of something to worry about but for now the Chinese alone are not trusted.

 

[Uglytruth]

Again you only see one part of the equation. Yes the US has lost lower order jobs to other nations BUT it has developed many higher order jobs off the back of cheap manufacturing overseas. Look at Apple as an example, most of the wealth has been created in and has benefited the US. Apple has leveraged cheap manufacturing to do that. It is a two way street. Add at one end and you lose at the other, the US simply moved up the economic scale.

When this happened the US created debt slaves & companies outsourced the manufacturing work to China and are simply using their slave labor force.
Building up a few while tearing down the middle class that was created by Henry Ford & enslaving the Chinese to build widgets is only a good solution for a few. Once the few have enough money to live they then save / invest. That don't "spread the wealth" by any means.

My guess is most people on this site are way ahead of most economically. Most probably run their households on $20,000 - $40,000 yr. Once they have extra $ it's not being spent. The working poor have mortgage or rent, car payments, tattoos, beer, cigs and credit card debt, vehicle debt and more debt. There labor and existence will be feasted upon until they have nothing left to give. Now what group are the banksters going to serve........

 

[Krag]

China seems to have mastered the global plantation slave labor system. You wonder why Billy Boy Clinton was the one to accelerate the Most Favored Nation status with China in the 90s; also GATT and NAFTA. He didn't need those accelerations of slave labor systems to have a good US economy. The Soviet breakdown and peace dividend was going to be very good for us regardless. I'm rethinking how I voted in 1992...Instead of voting for someone who was in jail at the time, maybe I should have voted for the spook Bush!

 

[Zed]

Building up a few while tearing down the middle class that was created by Henry Ford

The destruction of the middle class is only the end of the process, for many decades before it meant a better lifestyle for all in the US.

I'm not saying it is good, bad or anything, or anybody's fault... just that it is the way it works.

 

[Zed]

Read the OP again - they were "allowed" to have the advantage. Bush signed the document, I saw it with my own eyes and everyone said that he signed it.

Source it...

Bush didn't have the power to "allow" a currency peg. Trade deals maybe but again they are universal.

 

[Zed]

If Nixon hadn't started the ball rolling, … if Bush hadn't signed off on the dotted line....

IF there had never been a PEG, …. we would be in caves?

No, we would be stronger, much stronger than we are today. We would have a tech base and a manufacturing base. We wouldn't have so many homeless or 3 job families.

Do you deliberately misunderstand things?

With no credit or economic growth, we'd still be in caves (figuratively speaking). Imagine a world where Henry Ford couldn't raise capital to get started! or any other entrepreneur you want to name. We need a mechanism to get capital from savers to doers... or would you rather nothing happens?

 

[Zed]

Nam didn't have the labor force that China had. Nam wasn't given over to the profit seekers, it was given over to blood sacrifice.

... and yet it is taking business away from China. So what is your point?

The currency is not pegged to them and the trade relationship for them is not the same as it is at the main table.

... and yet they compete. Again, your point is?

You made a lot of statements in your post and I read them and I re-read your other posts. I don't agree with your analysis on the majority of your points but these are not new ideas or only my ideas. These are ideas I've gathered from studying both schools of economics and reading the writings of others. Your economics doesn't match up with mine - this isn't GIM1, here you will be able to believe whatever you want to and there's little chance anyone here will sway you. There was a thread just like this one at GIM1 and the majority of the analysis agreed with my points in general and no, they were not exclusive to me. Those other posters probably explained the economics much better than I do. But here it seems everyone defends the status quo. That characteristic is a new one and since I've been away, well I guess I don't mind yet.

... yeah, but you got facts wrong. No theory to speak of really.

Both schools? Are there only two?

... anywho, this is observed fact not economic doctrine.

It's not a big economic leap that I am re-iterating (something rarely found today, but can be still found in books and the narratives of the past).

I am not the first person on the planet to point out the "weirdness" of the PEG and the downstream ramifications of it.

Essentially, all I'm saying is that net-net, the PEG has been a disaster for the American worker and our ability to spring off an industrial base. Those other tech and info leaps and other advantages you post about would have happened anyway without the decades long PEG.

JMHO, DYODD

Yeah but you are wrong, it isn't "the peg"... which isn't a peg anyway, it's a managed float. In a free-floating world, you'd have exactly the same problem because of the reserve system.

Why this peg obsession? It's not a peg, Hong Kong is a peg! Why is it so hard to understand that it is way bigger issue than a 'managed currency' which THEY MUST BE ABLE TO AFFORD TO MANAGE.

This whole thing is a spin off of the way the reserve currency system is operated, peg or no peg, managed float or no managed float

 

[Zed]

How you can look at this chart of the USD/Yuan exchange rate and still believe it's pegged is totally beyond my comprehension!

Managed float/ dirty float... yeah sure... but a peg! 6 to 7 is ~ 17% variation... that is not a fixed ratio!!!!!!!!!!!!!!!!!!!!!!!!!!!!! DAMN IT!

 

[Zed]

You are looking at the last few years, I'm looking at the early part of the last 4 decades. It was in the early part where most of the damage was done and where the direction and paths were set into place.

Not really and surely the last number of years proves the point that a peg that is too unrealistic cannot be held artifically.

The two schools (K vs A) are the primary ones, but I do know there are others. Both schools are not as far apart as people think. They involve different strategies applied to mostly the same economic theory and modeling.

Well I'd agree that John Maynard Keynes would not endorse most of what has had his name pinned on it.

The strategies is where the costs and the benefits are distributed. My OP is about those costs and those benefits.

Those strategies are pretty uniform across the world and they are what drove the reshaping of the US economy. Triffin Dilemma etc..

You can fight alongside the mainstream descriptions of these events all you want to but it's not going to change the facts from decades ago.

We had the #1 manufacturing base and a broad and deep industrial base to spring off of. Those have been lost and JMHO, I believe that is directly due to the "managed float" as you called it or "managed PEG" as I called it as well as a few other slightly less important factors.

You fight hard to promote the status quo, MSM, ideas and talking points when it comes to the China economic and monetary relationships with the rest of their trading partners. You fight hard against my less well known talking points - or at least recently less well known because a few decades ago they were talked about more during the days of Perot and others.

I admire you ability to keep the MSM talking points about this issue at the forefront and your attempts to squash and remove any of the Austrian school interpretations of the last several decades regarding the destruction of the American manufacturing worker.

In NO WAY is the dynamic that Triffin points out an MSM talking point, very few people do the work to understand what is really happening here and those that do certainly aren't working for MSM. Tagging me as a promoter and supporter of MSM is a Strawman attack that, at least around here, is designed to discredit me. I don't really appreciate that and it's not helpful in getting to the REAL reason this is going on. Funny, if there where no China this would still be happening. For better or worse it is a vestige of the way the system works.

But just because I admire your ability to distract from the OP (American Manufacturing Worker destroyed because of special treatment given away to China), doesn't mean I won't continue to make my point.

This is again demonising China, the American worker would be better off understanding the real dynamic at play. Only then might a solution be found, ignorance is no way to improve the lot of the displaced workers.

You believe whatever you want to and if you are so convinced then you should start your own thread about it.

I believe what I can support with reason and evidence. Little else really matters to me, I am not married to these ideas and if you had presented a compelling case I would switch tracks immediately.

Admiration is not the same as agreement, I continue to believe: the American Manufacturing Worker was destroyed because of special treatment given away to China through the actions of paid off traitors.

You keep saying that but what of the rest of the world that is doing very similar things? You feed the kids red cordial and they all behave about the same. Wake up and smell the coffee, this is a systemic issue and what is more, they all know it and they will stay with the system while it suits. Game Theory, Stable Disequilibrium etc etc... We are seeing signs of stress here and it is possible that we are about to see a shift in the balance here. During the transition there will be a lot of pain all around, fighting with China because of it will just compound the misery and stop you blaming the real culprits.

If you are to change my mind you need to bring an argument to the table, so far you have asserted a "truth" and given little to support the idea.

 

[Zed]

So the "real culprits" ? Who are they?

I'm going to take a little time and think that one out. I will post a theory later that I'd welcome constructive comment on. It is an interesting question.

 

[Thecrensh]

Interesting chart - the supply chain in Asia is shifting to other countries.

 

[Joe King]

NO WAY is the dynamic that Triffin points out an MSM talking point, very few people do the work to understand what is really happening here and those that do certainly aren't working for MSM. Tagging me as a promoter and supporter of MSM is a Strawman attack that, at least around here, is designed to discredit me. I don't really appreciate that and it's not helpful in getting to the REAL reason this is going on.

Yea, he thinks anything that counters his position is MSM sourced. He even accused the guy from the China Uncensored YouTube channel of being MSM. lol

If you are to change my mind you need to bring an argument to the table, so far you have asserted a "truth" and given little to support the idea.

He said he was alive in 1981, does that count?

 

[Zed]

• The US had the biggest and best manufacturing base among nations in 1980 and China's was barely starting up.
• Today, our manufacturing base plays about 5th fiddle in the global manufacturing marketplace.

That flip-flop didn't happen without a lot of global help and treason.

No, it is exactly what Triffin described and it is the downside to being the reserve currency of the world. There are many advantages but there is always a cost, losing your manufacturing base has been the cost. I urge you to read and understand the reason this works that way. It is no conspiracy and perhaps it could have been partially avoided but given our political systems that is not the most probable outcome.

Funny, I am not really sure the US could have changed the outcome even if your political system was full of highly disciplined types, maybe the best would have been a delay in the inevitable. I'm trying to think it through and gain some clarity, it would be interesting to hear other viewpoints on that. i.e. Could it have been different? and no, a floating currency for China wouldn't be a game changer.

 

[DodgebyDave]

Alive in 81? So, where was his mom in 1980?

 

[Joe King]

Why do you and JK try to make all my posts about my own personal or family traits?

All I did was repeat that you had said you were alive in 1981, which was your response to someone asking for proof of your"known facts".

Amazed at how the status quo posters deflected whenever possible (and even when not possible)

you're the only one doing that. Someone asks you to vote your "known facts" and all you do is go into a speel about how your pc just ain't fast enough.

Patriot Pretenders" - this is who they are

I'd say that more accurately describes yourself.

 

[Joe King]

your tactics on this thread sure make it seem that way.

my tactics are merely trying to get you to back up your "known facts".
...but your response is to say, "I would, but darn, my pc is just too slow so you'll just have to look it up yourself."
Ie: the true mark of one who shoots from the hip.


Btw, I never got an answer of whether mags should take a long time, or just 30 days. At various times you've proclaimed both to be true. Which is it?

 

[Zed]

Removal of currency manipulations are a precursor to fair and free trade negotiations. There's no point in using tariffs or negotiating trade until the currency manipulations come to a halt.... but wait...….

Don't forget domestic subsidies... something our farmers are up against when they export to you and others.

 

[Zed]

The defense of foreigners taking advantage of the American worker is at least very un-patriotic - JMHO.

OK, it seems this is dogma with you and you really don't want to understand why it is happening.

Funny I have tried to think about how it could have been different and so far it seems to me that it would resolve the same way no matter how much was altered in terms of floating currencies, petrodollar agreements, currency accords etc. The fact is that the US had the strongest economy the planet and that sealed the reserve role all other things aside. Every country on the planet is then incentivized to keep its currency and industry competitive to export into your market. In keeping the currencies competitive and low excess reserves had to be funneled back to the US which creates a virtuous cycle of vendor financing. This is great until it breaks and it does have the side effect of shifting the US workers up the scale into the higher economic functions and away from the grunt work (industry). While that is painful for those in industry those that upskilled and changed had a good ride.

The fact is that Britain went through a similar cycle as the US took over as the dominant force in the world. You simply did it better and bigger. Now you are in the position that Britian was with China, save for some demographic twists. In about a century China will also end up gutted by the same process... assuming China doesn't stumble too badly over its demographics.

You see it as a black and white patriotic issue, it isn't. It is a nuanced global dynamic with wins and losses all around. If it were not somewhat balanced there would be war, and it may well come to that in the transition. Learn from Britain, the US will never be what it was, you are shifting into a mature economy status and you have to work with that new reality. No doubt this process will see you lose the reserve status as Britain did, in the long run that will reduce the pressure on you and give the space to redefine things BUT it will lower your living standards back down toward the average.

Over and out.

 

[Zed]

Why was this "allowed" and who allowed it.

This isn't high school, there are no rule makers. International trade is war with money and there are no rules, just costs, and benefits. You are whining that the game didn't go 100% your way and it was never going to. Get over it, grow up and stop complaining... it is going to get rougher before it gets better. Study Britians history, man up and skill up to navigate the new terrain.

 

[FunnyMoney]

essay removed

 

[Zed]

American freedom and liberty has been and still is being sold down the river by traitors - I'm not backing away from that and I don't believe it to be normal evolution.

That is another topic.

Don't go down that road - you know that's not happening.

No I don't and yes I think it is happening eventually.

I don't back down and give acceptance to the devil's army. I will point out the traitors and the crimes and I will pursue it for it's own benefit, regardless whatever happens to me personally. Pointing out the sell outs and the traitors and going into the details isn't the same as whining - it is writing down the truth, nothing more and nothing less.

You are up against half of the country that is in the government's employment one way or another. Good luck.

 

[Zed]

The global dynamics could have evolved without the special advantage for a tyrannical regime.

I don't think that there has been any special advantage. In fact, I think that they have probably restricted themselves and that they would be much further ahead if they were a free nation. I think the fact that they are still basically communist has held them back and enable you guys to reign for longer. As they run into trouble it may even give you more breathing space as you are in better shape in some regards.

 

[Zed]

You see this as normal evolution and I see this as abnormal evolution - that's my take away after reading your post.

NO, I see that the competitive dynamic would have resolved this way regardless GIVEN what the players are. If they where all my ideal of a free market then I think you'd be in deeper trouble. I think that the backward centralized approach has hobbled them somewhat.

 

[Joe King]

He was shot, his agenda changed. It was nearly 40 years ago. You want me to be your secretary or something?

no, but acknowledging that you were wrong might be a good start.

That is correct, this is also a factor. China has used gov't programs to help their domestic economy more than anyone.

China is nothing but one giant domestic gov program.

All anyone is trying to tell you is that anyone can peg something to the dollar if they have the means and feel it is in their best interests to do so.
Every nation is looking to do what is in their best interest, but you expect them not to do so?

Yes, China manipulates it's currency. Them doing so also results in all of us here in America getting cheaper prices on imports. How is it not advantageous to you to get more for your money than you otherwise would have been able to?
...and have gotten those cheaper prices for virtually your entire life.

In a nutshell, China making their exports cheaper is sort of like a subsidy for American shoppers.

I have tried to think about how it could have been different

how I think it could have been different is if Nixon hadn't closed the gold window and there had been no petrodollar, a. hyperinflation would have wiped us out long before Reagan's time in office. Jmho

You see it as a black and white patriotic issue, it isn't. It is a nuanced global dynamic with wins and losses all around. If it were not somewhat balanced there would be war,

exactly. FM doesn't think other nations should do what's on their own best interest. Only what's in our best interest.

I don't back down and give acceptance to the devil's army.

so now you think that anyone who questions your "known facts" is an agent of the devil?

Don't go down that road - you know that's not happening.

No I don't and yes I think it is happening eventually.

of course it is. Just a matter of time. Nothing man-made is forever.

 

[Zed]

how I think it could have been different is if Nixon hadn't closed the gold window and there had been no petrodollar, a. hyperinflation would have wiped us out long before Reagan's time in office. Jmho

Yeah, thought about no petrodollar but really given you had the dominant economy and where the biggest customer for all commodities I don't see how we wouldn't have ended up in the USD to trade these things anyway.

The gold window was always doomed to close IMO, but I'm not sure how that would have really been significant other than for the price of gold if you bought all you really needed to back the USD. I guess there would have been more in the global money go round if you had. I'm a bit hungover today, maybe not thinking straight!

Even if the USD gov had restricted debt issuance I think that the recycled funds would have just driven rates lower sooner and ended up in the private sector faster. I think it would have just been a bigger boom with less .gov friction but essentially the same end result. Maybe more higher-end employment but nothing addressing Funny's issues.

I'm still pondering it but I can't see any substantial game changers. I guess that also means that there is little China can do over the long run to prevent the same cycle playing out again.