Chinese Economics Thread

[voyager1]

the current system fails to address: decentralised finance and quality control

Quality Control doesn't need cryptocurrencies or Fiat money or any kind of currency.

What it needs and it is already been adopted by the industry is Blockchain.

Blockchain != Bitcoin (financially)

 

[Quickie]

Fixed it for you

I don't get it. What's that all about. lol.

 

[voyager1]

I don't get it. What's that all about. lol.

Supposed to be cryptocurrency created by the CIA instead of Chia. Just a joke...

 

[Strangelove]

bitcoin and cryptocurrencies are a threat to the national sovereignty of a nation's ability to mint currency;
there's a popular theory in the cryptospace that BTC is a CIA plot

The BTC hash function is derived from the SHA-256 hash function, a NSA-designed encryption program. So draw your own conclusions.

@AndrewS BTC is definitely not technically better than other cryptos, yet it gets the most media time and acts sort of like the reserve currency of cryptos.

China takes a dim view of BTC and others as they're highly volatile and not based in instrinic value.

 

[phenelzine]

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[weig2000]

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Thanks. I was about to post it myself.

The theme of the article is different from the western conventional wisdom. But it's from a reputable economic analysis firm focusing on China for many years. Interestingly enough, the FT readers' comments below overall also deviate from the typical China-demonizing types that have become common these days even at FT. The highest rated comment:

Whilst I’m generally speaking a believer in markets, I would argue that China’s tradition of central government (which is more deeply entrenched in Chinese culture than communism) may be decisive in maintaining the momentum of recovery post Covid.
The US needs to balance its federal money printing recovery plan’s effectiveness against a deeply divided political environment, the inertia of special interests in Washington, a fully used monetary policy toolkit, the weaponisation of the dollar and the greenback’s increasingly challenged role as reserve currency. Giscard d’Estaing’s criticism of this ‘exorbitant privilege’ is regaining popularity in a world that is decreasingly willing to co-finance the US recovery while struggling to recover themselves.
Based on this article, I see a continued erosion of the dollar vs the renminbi through the printing machine, a structural return of inflation or both. I just hope that the US will not resolve this cornered position by inciting proxy wars against China in various designated playgrounds (eg Taiwan, the Arctic, Africa etc) to deflect the attention from their tragic failed domestic economic policies and persistent gridlock. This is not a partisan statement as both republicans and democrats own this in equal measures.
I wish I could agree with Buffet’s assessment that betting against the US is a bad one, but I just don’t see it....

 

[caudaceus]

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GaveKal Dragonomics really provides excellent insight.

 

[voyager1]

GaveKal Dragonomics really provides excellent insight.

Lets just say this. If in the past decades(?) You believed in their analysis and invested accordingly, you would be a multi-millionaire by now....

 

[krautmeister]

Because the nature of BTC or most crypto is finite, which is similar to gold, there is now an alternative to dilute the importance of gold. and very easily. There are millions of ways to create another crypto, but there is never a way to create gold from magic.

I consider the idea of the intrinsic value of gold as a totally Human driven idea. It is only rare and finite because the supply-demand curve makes it rare. There are many other things that are way rarer but cost way less. In the same sense, Bitcoin is only now so valuable because Human Beings make it valuable with the skewed supply-demand curve that wasn't so dramatic only 6-7 years ago. Price discovery is the same with gold as with everything else, whether it is for food, commodities, stocks, or anything else. I think the idea of gold reserves is fundamentally driven by financial ideology. Bitcoin works on the same premise as this financial ideology except it is a modern incarnation of it. What isn't the same imo, is China's new digital currency, which on the surface looks like a sovereign Bitcoin. In reality, it is a sovereign digital fiat currency that is backed up by the comprehensive strength of the Chinese nation and its value is decided by price discovery relative to the comprehensive strength of China. This is basically the same as how the US dollar fiat currency works except in digital form and without the "indirect" control mechanisms like the petrodollar system, SWIFT, and various other currency related regimes by the G7, etc. Given that China's digital RMB can circumvent these control mechanisms, it has the potential to literally replace the US dollar in trade transactions involving China, a very dangerous scenario for the US reserve currency.

 

[AndrewS]

I consider the idea of the intrinsic value of gold as a totally Human driven idea. It is only rare and finite because the supply-demand curve makes it rare. There are many other things that are way rarer but cost way less. In the same sense, Bitcoin is only now so valuable because Human Beings make it valuable with the skewed supply-demand curve that wasn't so dramatic only 6-7 years ago. Price discovery is the same with gold as with everything else, whether it is for food, commodities, stocks, or anything else. I think the idea of gold reserves is fundamentally driven by financial ideology. Bitcoin works on the same premise as this financial ideology except it is a modern incarnation of it. What isn't the same imo, is China's new digital currency, which on the surface looks like a sovereign Bitcoin. In reality, it is a sovereign digital fiat currency that is backed up by the comprehensive strength of the Chinese nation and its value is decided by price discovery relative to the comprehensive strength of China. This is basically the same as how the US dollar fiat currency works except in digital form and without the "indirect" control mechanisms like the petrodollar system, SWIFT, and various other currency related regimes by the G7, etc. Given that China's digital RMB can circumvent these control mechanisms, it has the potential to literally replace the US dollar in trade transactions involving China, a very dangerous scenario for the US reserve currency.

Agreed

But gold does have some intrinsic value because of its industrial applications, particularly in electronics.

If Gold wasn't seen as a financial asset store, and merely as a commodity like Iron, then yes, the price should be a lot lower.
And with a lower price, there should be more industrial usage of Gold.

As for Bitcoin, it has NO intrinsic value which makes it essential.

Fiat currencies issued by the Chinese or US government will always be accepted, whether in paper or digital form.
And governments can compel the use of these currencies in their territories through the law and also by accepting them as payment for taxes.