I definitely appreciate the tutorial on the Chinese position in the tariff war. It seems to be still another example of our President playing checkers with an opponent who is a chess master. Not a game that is likely to end well for our country. He will be embarrassed and shown to be a dilatant again but as you so clearly state, many others will have their livelihoods and actual lives destroyed. Significant to note is that we who will be the most impacted by this pissing contest need to be as well informed and somehow well prepared to cope. For this, I personally want to thank you!
Also worth remembering that China is the biggest purchaser of the US Government’s bonds - ie your national debt. It’s been another long-term strategy.
If they stop buying new debt (bonds) , where does the US Government go instead to raise money cost-effectively? If they just wait for their capital to be repaid, they really will be unleashing hell on the US economy. And indirectly, the world’s economies. It’s a Doomsday scenario. But then so was Trump dismantling American democracy in a matter of months.
I enjoyed your thoughts and analysis. A few years back I watched a series about China’s Belt and Road initiatives and then promptly forgot about it. While traveling in Peru last year I recall seeing billboards with Xi Jinping and what I took to be Peruvian politicians. I took a picture because all of sudden there it was. There has been Chinese investment in Africa- where I will be visiting this fall. I wonder if I will see the obvious such as billboards thanking China as I did in Peru. China takes the very long view - something the american regime ignores at its peril IMO.
The administration’s tariff madness smacks of panic at China’s economic and political power. But let’s be honest, America is floundering from decades of unbridled capitalism, frontal attacks on the New Deal and destruction of unions. Corporate investments seeking cheap labor in China hollowed out heavy industry, made worse when Clinton signed NAFTA. George W. and Congress borrowed 4 trillion for the Iraq/Afghanistan wars (why raise taxes?)Their economic malpractice unleashed a worldwide financial crisis that Obama struggled to address. Neoliberalism made economic inequality decidedly worse. Even Biden’s infrastructure initiative failed to boost the fortunes of the working class. Enter Trump 2 blaming China, federal workers and immigrants for the fiscal mess that threatens national solvency. Our brilliant economic leadership let public schools and the environment deteriorate in favor of tax cuts and military spending. Political toadies in Congress toiled for decades to make the rich richer and the poor poorer. Now with erratic and unpredictable Trump at the helm facing an emboldened, angry Chinese leadership can total catastrophe be far behind?
Okay. Trump has finally screwed up bad enough that the Democrats (I am one) finally panicked and are spinning their wheels to make a big move on their problem and begging for emergency dollars to be sent asap! Folks, I gotta tell you that I’m not sending any MORE money until I hear exactly what your plan is, how much money you are planning to spend on rectifying the situation and who is in charge! You’ve wasted enough time and money dithering around! WE’RE ALL EARS!
Yet another consequence of the fact that unlimited and anonymous money is speech and corporations are people. This is the root cause of our challenges with China and all our other grievances. We either redress this overriding grievance or our democracy's backslide into autocracy will be assured. And China will win.
Trump,like his supporters, is in the moment. Like an angry man , upset about his food order, he’d rather get immediate satisfaction by driving his truck into the drive in window than in doing anything rational.
A currency's worth is its acceptance for goods. Ultimately, trade partners will need various goods at a future timepoint. So, the spectrum and quality of available goods for a currency influences its usefulness - you may as well pay in salt or oxen, it's the same principle.
For a reliable currency the main question is, if it's worth to keep the currency for future use, or is it wiser to almost instantly exchange it for goods.
Many countries keep USD as reserve currency because it's stable and accepted even in war environments - like gold. I think, this treasure function is more difficult to challenge / achieve in a "currency trade war" (coined that term just now, feel free to call it another name), than simple usage.
Currencies therefore have statuses. China is still a half-closed economy (investors can give money but the decisions in the company aren't free and also influenced by the Party's people parachuted into positions within the company), and even the national accounts are not transparent, and show inconsistency when analysed. From this it follows, that one may use renminbi, but if the goals with it aren't pure macroeconomic goals, then it's more unpredictable than any simple country's currency, and risk= likelihood of occurrence x severity of consequences. To keep anything as treasure, the keeper must eliminate risk of it being unusable in the future.
(Gold went up to crazy highs, and here is my guess, that as a big market for gold, India can influence gold trade more than western countries, and if there is animosity between India and her neighbours, it shows more in gold prices than other warlike scenarios worldwide. But this is only a guess.)
I definitely appreciate the tutorial on the Chinese position in the tariff war. It seems to be still another example of our President playing checkers with an opponent who is a chess master. Not a game that is likely to end well for our country. He will be embarrassed and shown to be a dilatant again but as you so clearly state, many others will have their livelihoods and actual lives destroyed. Significant to note is that we who will be the most impacted by this pissing contest need to be as well informed and somehow well prepared to cope. For this, I personally want to thank you!
Also worth remembering that China is the biggest purchaser of the US Government’s bonds - ie your national debt. It’s been another long-term strategy.
If they stop buying new debt (bonds) , where does the US Government go instead to raise money cost-effectively? If they just wait for their capital to be repaid, they really will be unleashing hell on the US economy. And indirectly, the world’s economies. It’s a Doomsday scenario. But then so was Trump dismantling American democracy in a matter of months.
Well then, it’s not “China is rising” anymore. Looks more like China has risen.
Thank you for clarifying and educating us about the cryptocurrency.
I enjoyed your thoughts and analysis. A few years back I watched a series about China’s Belt and Road initiatives and then promptly forgot about it. While traveling in Peru last year I recall seeing billboards with Xi Jinping and what I took to be Peruvian politicians. I took a picture because all of sudden there it was. There has been Chinese investment in Africa- where I will be visiting this fall. I wonder if I will see the obvious such as billboards thanking China as I did in Peru. China takes the very long view - something the american regime ignores at its peril IMO.
The administration’s tariff madness smacks of panic at China’s economic and political power. But let’s be honest, America is floundering from decades of unbridled capitalism, frontal attacks on the New Deal and destruction of unions. Corporate investments seeking cheap labor in China hollowed out heavy industry, made worse when Clinton signed NAFTA. George W. and Congress borrowed 4 trillion for the Iraq/Afghanistan wars (why raise taxes?)Their economic malpractice unleashed a worldwide financial crisis that Obama struggled to address. Neoliberalism made economic inequality decidedly worse. Even Biden’s infrastructure initiative failed to boost the fortunes of the working class. Enter Trump 2 blaming China, federal workers and immigrants for the fiscal mess that threatens national solvency. Our brilliant economic leadership let public schools and the environment deteriorate in favor of tax cuts and military spending. Political toadies in Congress toiled for decades to make the rich richer and the poor poorer. Now with erratic and unpredictable Trump at the helm facing an emboldened, angry Chinese leadership can total catastrophe be far behind?
Okay. Trump has finally screwed up bad enough that the Democrats (I am one) finally panicked and are spinning their wheels to make a big move on their problem and begging for emergency dollars to be sent asap! Folks, I gotta tell you that I’m not sending any MORE money until I hear exactly what your plan is, how much money you are planning to spend on rectifying the situation and who is in charge! You’ve wasted enough time and money dithering around! WE’RE ALL EARS!
Yet another consequence of the fact that unlimited and anonymous money is speech and corporations are people. This is the root cause of our challenges with China and all our other grievances. We either redress this overriding grievance or our democracy's backslide into autocracy will be assured. And China will win.
Trump,like his supporters, is in the moment. Like an angry man , upset about his food order, he’d rather get immediate satisfaction by driving his truck into the drive in window than in doing anything rational.
✊✊✊
So, at this point, we seem to be down to ‘luck’ for our deus ex machina recovery. 🍀
Because I’m not seeing anything at all related to a plan on our part.
TRUMP DOES NOT HAVE A REAL PLAN AT ALL! He just wings it as he goes!
He keeps messing with China, He’s going to Wing The Wong Number!!!
Always appreciating your thoughtful posts. This one on five fronts. Thank you for your care-filled sentences.
A currency's worth is its acceptance for goods. Ultimately, trade partners will need various goods at a future timepoint. So, the spectrum and quality of available goods for a currency influences its usefulness - you may as well pay in salt or oxen, it's the same principle.
For a reliable currency the main question is, if it's worth to keep the currency for future use, or is it wiser to almost instantly exchange it for goods.
Many countries keep USD as reserve currency because it's stable and accepted even in war environments - like gold. I think, this treasure function is more difficult to challenge / achieve in a "currency trade war" (coined that term just now, feel free to call it another name), than simple usage.
Currencies therefore have statuses. China is still a half-closed economy (investors can give money but the decisions in the company aren't free and also influenced by the Party's people parachuted into positions within the company), and even the national accounts are not transparent, and show inconsistency when analysed. From this it follows, that one may use renminbi, but if the goals with it aren't pure macroeconomic goals, then it's more unpredictable than any simple country's currency, and risk= likelihood of occurrence x severity of consequences. To keep anything as treasure, the keeper must eliminate risk of it being unusable in the future.
(Gold went up to crazy highs, and here is my guess, that as a big market for gold, India can influence gold trade more than western countries, and if there is animosity between India and her neighbours, it shows more in gold prices than other warlike scenarios worldwide. But this is only a guess.)