China-Russia currency agreement further threatens U.S. dollar

[lem34]

But printing IOU's is not an answer.

 

[VCheng]

But printing IOU's is not an answer.

But it is, as long as someone is willing to accept the IOUs. It is an important thing to keep in mind as to WHY US Treasuries are still bought in the volumes that they are, and will be for the foreseeable future.

 

[lem34]

But it is, as long as someone is willing to accept the IOUs. It is an important thing to keep in mind as to WHY US Treasuries are still bought in the volumes that they are, and will be for the foreseeable future.

Which means that you accept that americans no longer control their own destiny in that certainly the chinese or saudi could easily destroy US dollar as reserve currency overnight

 

[FairAndUnbiased]

This is exactly what is meant by pegging.It is not that a pegged currency cannot rise but a pegged currency has to be raised by fiat.




Correction:India has 22% and China has 38% dependence

U.S. and China Exports as a Percentage of GDP, 1980-2030 | Future of US-China Trade

There is difference between the export basket of Germany and China.Germany deals in high end engineering goods not Toys and steel.German products are dependent upon quality of human resouse while chinese are dependent on quantity.



Cost of setting up a factory has to be seen in prespective of the volume of business that it do.A petrochemical or a semiconductor fabrication line if it do a business of say $10Billion a year then its running cost simply overshadow's cost of setting it up.And you are only giving a straw example.Semiconductor is not the only thing that is manufactured in China and any company running on economy of scale has greater running cost than the cost require to set it up.It concentrates on volume rather than profit percentage to gain profit.

And yes cheap currency means big exports.It is not the only factor but yet a major factor.



Yes certainly US has not put a gun on your central bank Governor to buy it's treasury bill.But as an old saying goes that everything has consequences.If your central bank refuses to buy treasury and your Economy runs a surplus it would increase the supply of dollar in market and since your currency would not be rising officially either it would lead to establishment of a black market and your exports would start fetching less value while your imports would become cheaper by way of sticker prices.



The difference exist only for buyers.For US government,unless it is planning on default both long and short maturity investments are same.It has to pay dollars for both.



I could buy a ferrari and throw it into ocean.The loss is completely mine.The government that buy goods and do an equivalent of throwing them into ocean loses money.It can't do this forever.Even your $2.8 trillion reserve can't sustain this behaviour for more than 6 months.

black market only sets up when the fiat value of currency is LOWER than the currency of the black market. There has never been a case where a black market currency has less value than the fiat currency. who would be stupid enough to deal with a low valued black market currency instead of the high value fiat?

running cost = imports. China has almost no resources of its own, every raw material is imported.

steel is not labor intensive. steel is one of the most capital intensive industries in the world. A german automobile has far greater labor as a portion of cost than 1 million tons of steel.

the beautiful thing about a command economy is that it can print the money needed to buy the goods and people will be forced to accept it, and the end effect on the currency would be identical to bond buying.

The whole point is being different for the buyers. And yes, it is highly likely for the US to either default, or to hyperinflate its currency.

But it is, as long as someone is willing to accept the IOUs. It is an important thing to keep in mind as to WHY US Treasuries are still bought in the volumes that they are, and will be for the foreseeable future.

The beautiful thing here is that no one except the US go vern ment itself has been buying US treasuries, and with printed money at that.

 

[somebozo]

Saudi Arabia will soon come into the mix as local banks have started to setup accounts in RMB and doing transactions in RMB!

 

[VCheng]

Which means that you accept that americans no longer control their own destiny in that certainly the chinese or saudi could easily destroy US dollar as reserve currency overnight

So is it the Chinese and the Saudis buying all those IOUs?

......................
The beautiful thing here is that no one except the US go vern ment itself has been buying US treasuries, and with printed money at that.

Or is it the US government?

======================================



Make up your minds first guys, before I take the discussion further.

China and other countries hold only a minority of US debt, and cannot bring the dollar down.

 

[lem34]

So is it the Chinese and the Saudis buying all those IOUs?



Or is it the US government?

======================================



Make up your minds first guys, before I take the discussion further.

China and other countries hold only a minority of US debt, and cannot bring the dollar down.

So sad that you cant have a normal discussion.

In the case of china they can dump their holdings, in the case of saudis they can stop accepting dollar. Cheng you couldnt take the conversation further because you are irrationally supportive of americans. Did something bad happen to you in pakistan or did some pakistani do something really bad to you that you blame us all. BTW do you hate yourself when you remember that you are pakistani?

Do you come to this site because americans wont accept you as one of their own?

 

[VCheng]

...........
In the case of china they can dump their holdings, in the case of saudis they can stop accepting dollar. ...................

China's own economy will take a dive if its biggest trading partner goes down; Saudi Arabia will always sell its oil in dollars by virtue of an irrevocable sovereign covenant with USA.

Thus, both scenarios are highly unlikely for the foreseeable future.

 

[lem34]

China's own economy will take a dive if its biggest trading partner goes down; Saudi Arabia will always sell its oil in dollars by virtue of an irrevocable sovereign covenant with USA.

Thus, both scenarios are highly unlikely for the foreseeable future.

But just cos you MR opinionator think its unlikely does not mean thats the case. The point I made is valid immaterial of consequence these events could be triggered by non american actors so americans do not ontrol their destiny my point is valid

 

[VCheng]

But just cos you MR opinionator think its unlikely does not mean thats the case. The point I made is valid immaterial of consequence these events could be triggered by non american actors so americans do not ontrol their destiny my point is valid

Your point is just as valid as saying that it will be dark when the Sun will not come out tomorrow. Yes, you are correct, but what is the likelihood of the Sun not coming up tomorrow?

My counterpoint stands. You are welcome to hold your own, and I will respect that.

 

[lem34]

Your point is just as valid as saying that it will be dark when the Sun will not come out tomorrow. Yes, you are correct, but what is the likelihood of the Sun not coming up tomorrow?

My counterpoint stands. You are welcome to hold your own, and I will respect that.

how so the sun coming up is a certainty. Dont tell me you are saying that the sun will never set on the american empire. in your dreams mate

 

[VCheng]

how so the sun coming up is a certainty. Dont tell me you are saying that the sun will never set on the american empire. in your dreams mate

Oh it will set, surely. Just not anytime soon.

 

[FairAndUnbiased]

China's own economy will take a dive if its biggest trading partner goes down; Saudi Arabia will always sell its oil in dollars by virtue of an irrevocable sovereign covenant with USA.

Thus, both scenarios are highly unlikely for the foreseeable future.

If I own a grocery store, I will be hurt if one of my customers goes down, but that customer will starve to death if he doesn't do business with me.

 

[VCheng]

If I own a grocery store, I will be hurt if one of my customers goes down, but that customer will starve to death if he doesn't do business with me.

If you are the only grocery store in the city, then yes. Otherwise no.

 

[FairAndUnbiased]

If you are the only grocery store in the city, then yes. Otherwise no.

Yep I'm the only grocery store with the selection this customer needs, and i've been suppressing the other grocery stores for years. The customer also put his car in my parking lot, so if he doesn't pay, I'll just take his car.