U.S. Designates China as Currency Manipulator • Hacker News Board

Re: U.S. Designates China as Currency Manipulator

#121

Post by adventured » Mon, Aug 05, 2019, 11:55 PM UTC

addicted wrote: post #103

landryraccoon wrote: post #93

Earlier quoted context omitted.

Why would Europe or the rest of the world go along with this? SWIFT becomes irrelevant if this happens, not China.

The EU is looking to build alternative currency mechanisms for Iran. If China is cut off from any global trade structures, I can’t imagine any non US countries would go along with it. The other reason for this is that all the US allies that could possibly have worked with the US on this are all under threats of tariffs from the US themselves.

It's true that Trump is strategically blundering by being overly aggressive with the Europeans, however their economic system is under greater threat from China than the US is. The EU and Eurozone countries openly support what the US is doing in confronting China, even if they have their own disputes with the US on trade.

Most of Europe plainly has even more at stake in dealing with China than the US does. The greater European region is far weaker than the US as a whole (half the GDP per capita, far less wealth, less economic growth, greater economic stagnation the past 10-20 years), both economically and militarily. China has in recent years demonstrated its ability to directly purchase votes and influence among weaker European nations. China is an advancing superpower that is pursuing both tech and industrial dominance. Europe has no tech dominance for China to plunder or compete with, however it does have a large amount of high-skill, advanced manufacturing in Western Europe. China wants to own that. What's left of Western Europe's economy if they do?

Most of Germany's economy is built on advanced manufacturing and an extreme level of exports (~32% of its economy is exports), resulting in the world's largest national trade surplus. China's goal is to move up the development ladder and to own advanced manufacturing. If China has its way, Germany will be gutted. Most of Europe's interests on China are aligned with the US. The two can likely manage to keep US-Europe trade issues separate from the need to also deal with China.

Re: U.S. Designates China as Currency Manipulator

#122

Post by wallace_f » Mon, Aug 05, 2019, 11:55 PM UTC

bilbo0s wrote: post #91

rolltiide wrote: post #43

Earlier quoted context omitted.

Okay, no, Germany can't manipulate its currency as they don't have their own, they use the Euro. Germany does have large influence over Brussels being the economic powerhouse of the Eurozone currency union, and the European Central Bank is in Frankfurt but really accountable to no-one, being led by an Italian man from Goldman Sachs. And yes, these 'currency manipulator' designations are a point of political convenien…

Well, I guess that's true. Nearly everyone is a currency manipulator. But also, as you yourself said, it's more of a point of political convenience right? If it serves our purposes to designate china as a manipulator, then who cares if everyone else manipulates too? Serious question. I mean, would it matter?

It helps certain export business interests and generally hurts domestic consumers. It is in US consumer's interest to not devalue our currency. If china does it, it means we buy their stuff cheaper, but our stuff is more expensive to them and also in relatigve terms. Just more government, corporatist cheating and cronyism which has come to define modern politics but not modern political awareness. Also, think about this long enough and you realize how abusive the Federal Reserve is to the average US consumer. I mean, the Fed in the last 10 years ran up a 4 trillion balance sheet of fresh free money, at least go buy healthcare or something good with it and not this circle jerk of lending it to Wall St and buying US debt with it.

Re: U.S. Designates China as Currency Manipulator

#123

Post by AnthonyMouse » Mon, Aug 05, 2019, 11:56 PM UTC

rdtsc wrote: post #32

I have no idea what all this means so tried to read https://en.wikipedia.org/wiki/Currency_manipulator . Found it interesting that "Switzerland have been manipulating their currency more than China since 2009 and Germany and South Korea since 2014" Still it is not clear what that means in terms next steps. Will there be more tariff increases or sanctions? And then China will devalue their currency even more. So where…

> Will there be more tariff increases or sanctions? And then China will devalue their currency even more. So where does it end?

Currency devaluation is, among other things, effectively a subsidy for exports, a little bit like the opposite of a tariff.

But it's not exactly the opposite, which makes doing it in response to tariffs a bit desperate. If you're selling something for $100 and someone sticks a $10 tariff on it, and that makes you uncompetitive, you can devalue your currency so that it gets back to $100, because now the same amount of yuan is US$90 instead of US$100. But there is still a $10 tariff, so then you only get $90 instead of $100. If the cycle repeats you have to take $80, then $70, with the balance of the total $100 going to the US treasury. And it makes it easier for the US to maintain or raise the tariffs because China is de facto paying them through currency devaluation rather than the cost falling on US consumers.

It doesn't really work as a long-term strategy. It could be more of a short-term political play to try to damage Trump's reelection prospects. But that's a dangerous game in a lot of ways. It may actually help him if he takes advantage of it well (and even if he does nothing it takes the bite out of the tariffs for US voters). And even if it hurts him he could still be reelected if the Democrats choose a bad candidate, and then China has put itself in a weaker long-term position. Then even if Trump loses, it's basically assuming that a Democrat wouldn't be smart enough to take advantage of the dynamic, which some of them could be.

Re: U.S. Designates China as Currency Manipulator

#124

Post by opportune » Mon, Aug 05, 2019, 11:56 PM UTC

tunesmith wrote: post #101

internet_user wrote: post #87

Earlier quoted context omitted.

The fed has unlimited control over the rates. They could literally just buy out every bond in existence.

I don't see how that works. If the US Government has to sell bonds to borrow money to finance the deficit, and buyers start disappearing, they have to raise interest rates to make the bonds more attractive to the remaining buyers, don't they?

Nope because the Federal Reserve can issue new Federal Reserve notes (aka money) to the US Government to buy their bonds at any price point. As the other commenter pointed out this would cause inflation (as it increases the money supply)

Re: U.S. Designates China as Currency Manipulator

#125

Post by busymom0 » Mon, Aug 05, 2019, 11:56 PM UTC

simonh wrote: post #82

aianus wrote: post #61

Earlier quoted context omitted.

There are plenty of good reasons why China deserves tariffs, why not start there as the root cause? Protectionism, IP theft, banning or heavily restricting US tech firms from operating in (aka exporting to) China, the list goes on.

And if that was the real reason, you’d expect the US to be coordinating with other countries that have the same beef with China. Instead, the US is antagonising them as well. Trump has been very clear the tariffs are mainly about boosting US manufacturing. It’s not going to work, but that’s what he keeps saying. If it really was about the issues you list, there are plenty of ways to address them in a much more coordi…

> It’s not going to work, but that’s what he keeps saying.

So far it has worked very well for the US and China has been suffering. US has been able to create 6 million jobs with 2 million manufacturing jobs alone created since his election. China has lost a lot of manufacturing jobs and a lot of manufacturers are moving away from China and either coming back to US or moving to places like India where IP theft isn't a huge problem.

US economy is also doing very well, GDP growth has beaten all expectations and what not.

Re: U.S. Designates China as Currency Manipulator

#126

Post by tunesmith » Mon, Aug 05, 2019, 11:57 PM UTC

codingslave wrote: post #113

tunesmith wrote: post #108

Earlier quoted context omitted.

From that perspective, what is arguably good about this trade war continuing?

Its a battle for who is the world economic power in 20 or 30 years. The american public doesn't understand what is at stake here. Unfortunately the media is calling Trump a buffoon, when the trade war, and possible subsequent economic hit to the USA, is vital to our long term economic future.

Well, that's what I'm asking - game this out. How is the trade war and economic hit vital (I take your meaning to be a "long term benefit") to our economic future? What's the hoped-for sequence of events?

I can infer a couple of predictions - maybe the thought is that since China has already been very active in monetary policy (printing money), that they will eventually hit upper limits in doing so and will start experiencing massive inflation and will have to slow down their growth considerably. And that this hit will hurt China far more than it will hurt the US, thereby serving as a net benefit to the US overall. Is that on the right track?

(To make it really confusing you could point out how slower growth from both countries means less carbon emissions.)

Re: U.S. Designates China as Currency Manipulator

#127

Post by dang » Mon, Aug 05, 2019, 11:57 PM UTC

internet_user wrote: post #74

simonh wrote: post #66

Earlier quoted context omitted.

That would also do crippling damage to US and other foreign companies doing business with China. Even the current tariffs and counter-tariffs have cost US companies many billions. Qualcomm alone is estimated to have lost about a billion dollars in sales.

Boohoo, poor corps. Should we sell ourselves out entirely to China to satisfy the corporate profit motive? Personally, I rather Qualcomm goes bankrupt entirely than see Chinese global hegemony.

Please don't use HN for nationalistic battle.

Would you mind reviewing the site guidelines? They include: "Comments should get more thoughtful and substantive, not less, as a topic gets more divisive."

https://news.ycombinator.com/newsguidelines.html

Re: U.S. Designates China as Currency Manipulator

#128

Post by CobrastanJorji » Mon, Aug 05, 2019, 11:58 PM UTC

eanzenberg wrote: post #44

xwdv wrote: post #36

Earlier quoted context omitted.

Not even days. I lost $24k today, and $60k since last week. The thing that keeps you calm though is that sometimes it’s amazing how much money you can actually make in a matter of days, or a single day.

This means you have about a million dollars in stock investments alone, which you put you in a different class.

Assuming the majority of their assets are in stocks, and they have around $1 million in stocks, they are around the 95th percentile of American households or slightly lower. Getting to the top 1% would require around $10 million.

Re: U.S. Designates China as Currency Manipulator

#129

Post by tunesmith » Mon, Aug 05, 2019, 11:59 PM UTC

opportune wrote: post #124

tunesmith wrote: post #101

Earlier quoted context omitted.

I don't see how that works. If the US Government has to sell bonds to borrow money to finance the deficit, and buyers start disappearing, they have to raise interest rates to make the bonds more attractive to the remaining buyers, don't they?

Nope because the Federal Reserve can issue new Federal Reserve notes (aka money) to the US Government to buy their bonds at any price point. As the other commenter pointed out this would cause inflation (as it increases the money supply)

I see. Printing money to buy new financial assets would also cause greater wealth inequality and populism, although maybe those are seen as benefits to the current administration.

Re: U.S. Designates China as Currency Manipulator

#130

Post by tcbawo » Tue, Aug 06, 2019, 12:01 AM UTC

AnthonyMouse wrote: post #123

rdtsc wrote: post #32

I have no idea what all this means so tried to read https://en.wikipedia.org/wiki/Currency_manipulator . Found it interesting that "Switzerland have been manipulating their currency more than China since 2009 and Germany and South Korea since 2014" Still it is not clear what that means in terms next steps. Will there be more tariff increases or sanctions? And then China will devalue their currency even more. So where…

> Will there be more tariff increases or sanctions? And then China will devalue their currency even more. So where does it end? Currency devaluation is, among other things, effectively a subsidy for exports, a little bit like the opposite of a tariff. But it's not exactly the opposite, which makes doing it in response to tariffs a bit desperate. If you're selling something for $100 and someone sticks a $10 tariff on…

Or it could be an act of desperation to keep their factories running at full capacity. They have a large segment of the population that is only tolerant of the authoritarian regime while their economic prospects are improving.