American Economics Thread

[sinophilia]

LOL ok, continue with your fairytale, it's amusing. Next chapter is that USA managed covid better than anyone. Most people here are well educated and deep thinking, so just quit the psy-ops and set a proper discussion. As i learnt yesterday by legit source, a chicken thigh costs about 35 bucks in DC. Here in Europe it's about 5 euros . Good luck with the "soaring economy" of money printing. I don't wish US economy to collapse because many people across USA and the whole world will suffer...but this joke must end, and USA must get serious and put its deep know-how and productive powers in use. Α bum nation is a condemned nation

It isn't psyops, he's just a dumb Indian who is resentful about how garbage his real country is so he hides behind super-duper supahpowah America.

It's funny because the fall of America will probably be brought on by his extended family continuously immigrating there and over the longer term making it like supahpowah India.

Let him be and when he realizes he's not getting the validation of a single response he'll slimily move on to some other forum where he can pretend to be a real American and use that as some sort of argument from authority.

 

[PUFF_DRAGON]

Those days are numbered, especially now that it is China, not the anglo US, which is the world's largest trading nation in the world.

That's not actually true.

In order for the RMB to be a global reserve currency, China needs to deliver a supply of RMB out of China and into the rest of the world. The only way to really do this is to run a massive trade deficit. This is literally basic arithmetic and accounting identities.

The idea of Beijing allowing for a trillion RMB trade deficit any time in the short or medium term is laughable.

There is also the core issue that in order for a national currency to be a global reserve currency, said nation needs to allow foreigners to buy hard assets with that currency.

Do you foresee the CPC allowing Russians or Frenchmen to buy land in downtown Beijing like America allows Arab oil princes to buy mansions next door to the CIA HQ in Langley? How about allowing the Norwegian pension fund to buy large stakes in AVIC or China Unicom? (Hint: No is the answer)

 

[Deleted member 15949]

That's not actually true.

In order for the RMB to be a global reserve currency, China needs to deliver a supply of RMB out of China and into the rest of the world. The only way to really do this is to run a massive trade deficit. This is literally basic arithmetic and accounting identities.

The idea of Beijing allowing for a trillion RMB trade deficit any time in the short or medium term is laughable.

Chinese savings rates are way to high for any large CA deficits, though that will probably change into the future

 

[FairAndUnbiased]

That's not actually true.

In order for the RMB to be a global reserve currency, China needs to deliver a supply of RMB out of China and into the rest of the world. The only way to really do this is to run a massive trade deficit. This is literally basic arithmetic and accounting identities.

The idea of Beijing allowing for a trillion RMB trade deficit any time in the short or medium term is laughable.

There is also the core issue that in order for a national currency to be a global reserve currency, said nation needs to allow foreigners to buy hard assets with that currency.

Do you foresee the CPC allowing Russians or Frenchmen to buy land in downtown Beijing like America allows Arab oil princes to buy mansions next door to the CIA HQ in Langley? How about allowing the Norwegian pension fund to buy large stakes in AVIC or China Unicom? (Hint: No is the answer)

The other mechanism is currency swap where China and a foreign country accept each other's payments in their respective currencies. Basically China imports foreign currency and exports RMB. Foreign countries pay for Chinese exports using RMB which they buy with their own currency.

With Chinese industrial dominance of global markets, other countries will find it in their best interest to buy RMB and use it to buy Chinese products. As a hedge against volatility they may decide to buy more RMB than necessary for immediate trading. To avoid inflation they may decide to buy shares or bonds in RMB.

The end result is a globalized RMB backed by Chinese industrial strength.

 

[DarkStar]

The other mechanism is currency swap where China and a foreign country accept each other's payments in their respective currencies. Basically China imports foreign currency and exports RMB. Foreign countries pay for Chinese exports using RMB which they buy with their own currency.

With Chinese industrial dominance of global markets, other countries will find it in their best interest to buy RMB and use it to buy Chinese products. As a hedge against volatility they may decide to buy more RMB than necessary for immediate trading. To avoid inflation they may decide to buy shares or bonds in RMB.

The end result is a globalized RMB backed by Chinese industrial strength.

This.

It's a western cope that believes that China needs to open capital markets so as to internationalise the RMB; basically, white merchant class are saying 'if you want to internationalise the RMB, you gotta go through us".
China just says Nup, and does their own thing, as previous empires and states have done in the past.

Western nations and leaders have a hard on for acting like mafiosi. They fancy themselves marlon brando from The Godfather when they're more like Fredo.

 

[Deleted member 15949]

The other mechanism is currency swap where China and a foreign country accept each other's payments in their respective currencies. Basically China imports foreign currency and exports RMB. Foreign countries pay for Chinese exports using RMB which they buy with their own currency.

With Chinese industrial dominance of global markets, other countries will find it in their best interest to buy RMB and use it to buy Chinese products. As a hedge against volatility they may decide to buy more RMB than necessary for immediate trading. To avoid inflation they may decide to buy shares or bonds in RMB.

The end result is a globalized RMB backed by Chinese industrial strength.

That would just end up with the RMB appreciating to the moon since China would keep getting FX and not spending any of it though if/when China truly reaches that level of industrial strength, the consumer market will be large enough to drive CA deficits

 

[Topazchen]

No, the US economy is very stable, has one of the highest income/wage levels in the developed world and the fastest wage growth. This above is just cope

Where wages haven't increased since the 70s but economy has grown tremendously .Lulz

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[LesAdieux]

US headline CPI in July up 5.4% over year, with core CPI up 4.3%. if hold the base at same level as June, then CPI up 5.9%, that's why they stopped talking about the "base effect".

used car, the main culprit in previous months, now is a drag, it rises only 0.2% vs the 0.5% of the index. this has confirmed that the inflation is broad based.

 

[siegecrossbow]

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[PUFF_DRAGON]

The other mechanism is currency swap where China and a foreign country accept each other's payments in their respective currencies. Basically China imports foreign currency and exports RMB. Foreign countries pay for Chinese exports using RMB which they buy with their own currency.

With Chinese industrial dominance of global markets, other countries will find it in their best interest to buy RMB and use it to buy Chinese products. As a hedge against volatility they may decide to buy more RMB than necessary for immediate trading. To avoid inflation they may decide to buy shares or bonds in RMB.

The end result is a globalized RMB backed by Chinese industrial strength.

This is not in the interests of foreign elites. Why would they accept Chinese dominance of trade like this without freebies like being able to own real estate in Beijing or reserved slots for their fail children in Tsinghua? It is also not what we would call fair since Chinese firms often push for increased investment access to other countries yet under your paradigm they cannot reciprocally use Chinese RMB to buy Chinese domestic assets.

This arrangement is actually pretty bad for the other countries and they will resist to the end unless they have no choice (i.e. western sanctions).

You do realize that barring World War III that even if China becomes a high income country that the usual suspects will still be highly technologically advanced polities with ample financial and real assets and well developed financial systems? Why on earth would anyone accept this dogshit bilateral swap deal when they can just deal in Euros or dollars which are freely convertible.

This.

It's a western cope that believes that China needs to open capital markets so as to internationalise the RMB; basically, white merchant class are saying 'if you want to internationalise the RMB, you gotta go through us".
China just says Nup, and does their own thing, as previous empires and states have done in the past.

Western nations and leaders have a hard on for acting like mafiosi. They fancy themselves marlon brando from The Godfather when they're more like Fredo.

It is not cope. This is historical precedent and basic logic.

The idea that China can force nations that aren't under massive sanctions like Iran or wholly dependent on China like Laos to accept bilateral currency swaps without the ability to exchange their Chinese funny paper for real assets in China proper is nonsense.

Why on earth would per say Brazilian elites take Chinese paper they can't even use to buy real estate in Shanghai or shares in China Unicom when they can just take their money to London, Singapore, Frankfurt, or New York? Do you think China will stop accepting Euros or USD anytime soon?