you are right, like i said, ppl prefer the US dollar because its strong, and the US dollar is strong because ppl prefer it. now if you suddenly weakens obviously ppl are gonna link that with the financial crisis with great justification. so weak US dollar means the US will lose its dollar hegemony. the model of exporting to US is dead because the model of US consumerism is dead. depreciating RMB is definitely gonna piss off other exporters and promote protectionism but so will depreciating US dollars and hindering the largest consumer market in the world. building up domestic demand takes time but it doesnt take long to depreciate the dollar lol. so what the americans prefer is not in harmony with the interest of wall street bankers and the Fed, who have a much bigger say in where the US economy should go, so like i said the strong dollar currency cannot be averted unless things get really ugly for the US.
Chinese Economics Thread
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RedMercury
Junior Member
That's an interesting perspective, I've not heard it that way before. Thanks for sharing your ideas, pla101prc.
bladerunner
Banned Idiot
Terribly confused on what is correctand how much importance is there on how you do the calculations ( I don’t understand economic theory) I have as much aptitude for economics as a blowfly.
In Jan 2008 The economist publishes an article on the importance of exports is to China. Suggesting that it was only a modest amount when accepting Andersons Premise on determining the true value of exports
“MOST people suppose that China's economic success depends on exporting cheap goods to the rich world. If so, its growth would be seriously dented by a stuttering American economy. Headline figures show that China's exports surged from 20% of GDP in 2001 to almost 40% in 2007, which seems to suggest not only that exports are the main driver of growth, but also that China's economy would be hit much harder by an American downturn than it was during the previous recession in 2001. If exports are measured correctly, however, they account for a surprisingly modest share of China's economic growth.
The headline ratio of exports to GDP is very misleading. It compares apples and oranges: exports are measured as gross revenue while GDP is measured in value-added terms. Jonathan Anderson, an economist at UBS, a bank, has tried to estimate exports in value-added terms by stripping out imported components, and then converting the remaining domestic content into value-added terms by subtracting inputs purchased from other domestic sectors. At first glance, that second step seems odd: surely the materials which exporters buy from the rest of the economy should be included in any assessment of the importance of exports? But if purchases of domestic inputs were left in for exporters, the same thing would need to be done for all other sectors.”
You can read the whole thing here
But by Dec11th 2008 it publishes an article on how China the “worlds factory” trade is falling apart
Malcom Moore writing in his blog for the Telegraph Suggests
“Like many others, my view on China's prospects for 2009 have flip-flopped a bit recently. I was panicked by the collapse in exports in November, until I read this research on how important exports really are to China (answer: 7pc-ish of GDP only, rather than the widely-trumpeted 40pc figure).”
My problem is working out the “Economists” position on this matter. And what if it is 7% or 40% of GDP, its still mega billions and the country is hurting
(As a byline I once had some Ostmarks East german currency: the only bank that took them was in American samoa)
In Jan 2008 The economist publishes an article on the importance of exports is to China. Suggesting that it was only a modest amount when accepting Andersons Premise on determining the true value of exports
“MOST people suppose that China's economic success depends on exporting cheap goods to the rich world. If so, its growth would be seriously dented by a stuttering American economy. Headline figures show that China's exports surged from 20% of GDP in 2001 to almost 40% in 2007, which seems to suggest not only that exports are the main driver of growth, but also that China's economy would be hit much harder by an American downturn than it was during the previous recession in 2001. If exports are measured correctly, however, they account for a surprisingly modest share of China's economic growth.
The headline ratio of exports to GDP is very misleading. It compares apples and oranges: exports are measured as gross revenue while GDP is measured in value-added terms. Jonathan Anderson, an economist at UBS, a bank, has tried to estimate exports in value-added terms by stripping out imported components, and then converting the remaining domestic content into value-added terms by subtracting inputs purchased from other domestic sectors. At first glance, that second step seems odd: surely the materials which exporters buy from the rest of the economy should be included in any assessment of the importance of exports? But if purchases of domestic inputs were left in for exporters, the same thing would need to be done for all other sectors.”
You can read the whole thing here
But by Dec11th 2008 it publishes an article on how China the “worlds factory” trade is falling apart
Malcom Moore writing in his blog for the Telegraph Suggests
“Like many others, my view on China's prospects for 2009 have flip-flopped a bit recently. I was panicked by the collapse in exports in November, until I read this research on how important exports really are to China (answer: 7pc-ish of GDP only, rather than the widely-trumpeted 40pc figure).”
My problem is working out the “Economists” position on this matter. And what if it is 7% or 40% of GDP, its still mega billions and the country is hurting
(As a byline I once had some Ostmarks East german currency: the only bank that took them was in American samoa)
The Dollar Hegenomy is not primarily about the value of the dollar and as long as the dollar is a relatively stable currency in respect of its exchange rates, it will prove an attractive currency. If the dollar becomes volatile, its would become useless as an International Trade/Reserve currency as long term contracts and Investments would become impossible to plan/price within an acceptable bandwidth of risk.
The weakness of the Dollar hegenomy is not intrisic to the use of the dollar, but that using it means using the US Banking, Financial and Regulatory Systems and it is these that have been discredited by the current crisis. All the prescriptive measures so far have been to treat the symptoms rather than the cause. The cause is of course the very same Senior Executives that remain in position rather than custody.
Nobody risks Billions to the hands of Institutions in which they have no confidence and confidence in Wall Street is currently zero. This is why other nations will look for alternative trade and reserve currencies.
The weakness of the Dollar hegenomy is not intrisic to the use of the dollar, but that using it means using the US Banking, Financial and Regulatory Systems and it is these that have been discredited by the current crisis. All the prescriptive measures so far have been to treat the symptoms rather than the cause. The cause is of course the very same Senior Executives that remain in position rather than custody.
Nobody risks Billions to the hands of Institutions in which they have no confidence and confidence in Wall Street is currently zero. This is why other nations will look for alternative trade and reserve currencies.
sampan you are right, stability is big for US dollars. but after Euro became a possible candidate to match American dollar, a strong Euro trend and a steadily declining (though still within acceptable range) american trend is still gonna undermine dollar hegemony. especially now we are talkin about over $700bn being printed...and invested into the housing market. what happens when you have all this money flooding the market? inflation. maybe the US market is big enough to digest this money i dont know. but in the long term US dollar is bound to fall...there is just no reason for it not to fall. once the East Asian dragons and tigers feel that the opportunity cost of supporting american dollar is greater than that of discarding it, they will discard it.
bladerunner
Banned Idiot
I can,t see any other country being prepared to take on the political responsibility of having their currency become the worlds reserve currency in the foreseeable future.
bladerunner
Banned Idiot
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bladerunner
Banned Idiot
Does anybody remember the political/economic reasons why we went of the gold standard. Was it Nixon who took us off the gold standard?
war in vietnam. same situation as now. the US issued so much bond to fund the war that theoretically if the bond holders were to sell at the same time, there would not be enough gold in reserve to pay them. which means the US would go bankrupt.