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The fraying of the U.S. global currency reserve system

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Re: The fraying of the U.S. global currency reserve system

#171

Post by southeastern »

mbesto wrote: post #39
CoffeeDregs wrote: post #12

"Instead of drawing down our gold reserves, however, we gradually draw down our domestic manufacturing base and it gets replaced piece-by-piece in foreign countries." To me, this is the money shot. I hadn't seen this expressed before and it makes perfect sense. I'm baffled that we (the US) caused this to happen to the US. I'm (unhappily) registered Republican but I argued vociferously to a Dem friend in 2000 that our…

> the last LCD panel manufacturer in the US closed around then and we could no longer manufacture LCD for our military vehicles And funny enough our gov't (I'll let you guess which political party) struck a deal with Foxconn to produce LCDs in Wisconsin. It has failed miserably: https://www.theverge.com/2020/4/12/21217060/foxconn-wisconsi...

Basically amounted to corporate handouts, with the way the money was mispent. I don't think the issue is that the labor class is getting too big a share, cases like this should make it clear that inequality that's at the root of these problems

Re: The fraying of the U.S. global currency reserve system

#172

Post by notahacker »

biggermike wrote: post #133
passerby1 wrote: post #89

Earlier quoted context omitted.

Correct me if I'm wrong, but it seems like the US does not need any factories, as it can print any amount of money and buy whatever it wants from any country has factories. Money talks. Or not? It has enough military for safely making this again and again for tens of years at least.

What happens when the other country isn't willing to sell? Consider a war or other disaster e.g. in the months before the pandemic, China stopped the export of face masks and other PPE, resulting in shortages in hospitals around the world.

Countries are virtually never 'unwilling to sell', and there are quite a few different countries out there.

PPE shortages in hospitals were because of unprecedented demand levels, not because China didn't continue to export it. A country is actually a lot more likely to have problems handling that kind of short term demand shock if it relies entirely on domestic manufacturing

Re: The fraying of the U.S. global currency reserve system

#173

Post by pbourke »

PKop wrote: post #72
vinniejames wrote: post #30

Earlier quoted context omitted.

This is 100%, the fact the US can barely manufacturer face masks during a global pandemic is embarrassing. On the other end, how do you compete with slave labor in the Chinese factories?

>compete Have as your "goal" less the desire to "win" the global competition for corporate profits & corporate headquartering of multinationals in your nation simply on grounds of labor/profit competitiveness, and take a more nationalist view of, where necessary, having state run enterprises or "free market" competition within your borders but not complete free trade in a global sense. In other words, do no necessari…

This is an insightful comment that clarifies and distills some of my own thinking on the subject.

The blind pursuit of efficiency optimizes for the macro numbers at the expense of gutting the structure of the labor market and lived experience of people.

It’s far better to have a lower per capita GDP with a more equitable distribution of resources (such as a higher household income across quantiles)

It seems clear that some level of tariffs, caps on FDI, etc are “good inefficiencies” if done correctly.

Re: The fraying of the U.S. global currency reserve system

#174

Post by cloudinshape »

momokoko wrote: post #170
lettergram wrote: post #49

Earlier quoted context omitted.

My father was one of the last tool makers in the US working for Molex. They spent years teaching the Chinese, the Chinese would disassemble all molds sent over to China and often break them, so my fathers team would have to fix / rebuild them. They spent years training the Chinese side-by-side in the US. In the end they still haven’t exactly caught up to the quality we had in the US. However, they now have 5x the too…

Banning or taxing out of existence foreign investment on real estate and pegging the fed rate to zero will accomplish the same thing without needing to care about minimum wage. Shenzhen minimum wage currently provides workers in China with a higher standard of living than US minimum wage does in the US. Only difference is that the wealthy in the US will carry more of the burden instead of the working class. And that’…

The reason foreign real estate investment is so high is because the dollar is the reserve currency of the world, and since those countries produce so much they have a huge excess of dollars but the US produces so little they have nothing to buy with those dollars. The only thing the US can realistically offer is land, if you ban it it will only accelerate the collapse.

Re: The fraying of the U.S. global currency reserve system

#175

Post by southeastern »

biggermike wrote: post #133
passerby1 wrote: post #89

Earlier quoted context omitted.

Correct me if I'm wrong, but it seems like the US does not need any factories, as it can print any amount of money and buy whatever it wants from any country has factories. Money talks. Or not? It has enough military for safely making this again and again for tens of years at least.

What happens when the other country isn't willing to sell? Consider a war or other disaster e.g. in the months before the pandemic, China stopped the export of face masks and other PPE, resulting in shortages in hospitals around the world.

There at other manufacturing centers than China. I don't know why people keep it repeating this line. Where do you think China gets their things made? It SE Asian countries. And they're making in roads to Africa. That's what we should be doing. We have a president talking about shhole countries-- destroying international relations is gonna do a lot more damage in a war. We should be building diverse business relationships with competing economies.

Re: The fraying of the U.S. global currency reserve system

#176

Post by [deleted] »

namdnay wrote: post #118
pbourke wrote: post #104

Earlier quoted context omitted.

I am surprised that no one has mentioned punitive taxation of companies that engage in offshoring/higher taxes on foreign direct investment as an alternative to tariffs.

Taxing companies that offshore favours foreign competition even more, because they won’t be taxed.

[deleted]

Re: The fraying of the U.S. global currency reserve system

#177

Post by AlgorithmicTime »

lettergram wrote: post #49
CoffeeDregs wrote: post #12

"Instead of drawing down our gold reserves, however, we gradually draw down our domestic manufacturing base and it gets replaced piece-by-piece in foreign countries." To me, this is the money shot. I hadn't seen this expressed before and it makes perfect sense. I'm baffled that we (the US) caused this to happen to the US. I'm (unhappily) registered Republican but I argued vociferously to a Dem friend in 2000 that our…

My father was one of the last tool makers in the US working for Molex. They spent years teaching the Chinese, the Chinese would disassemble all molds sent over to China and often break them, so my fathers team would have to fix / rebuild them. They spent years training the Chinese side-by-side in the US. In the end they still haven’t exactly caught up to the quality we had in the US. However, they now have 5x the too…

Unfortunately, we've just discovered that the incoming administration is in the pocket of the Chinese... so we're basically fucked.

Re: The fraying of the U.S. global currency reserve system

#178

Post by nine_zeros »

jcriddle4 wrote: post #148
nine_zeros wrote: post #101

Earlier quoted context omitted.

US self sufficient manufacturers who don't rely on commodities would benefit with a weaker dollar. US consumers will get fucked with a weaker dollar. Imagine having to pay $7 a gallon for oil instead of $3. There is another consequence. A lot of other countries will become "rich" all of a sudden. Which means they won't use US dollar as a medium of exchange and America would have to "earn" by exporting. Which means pe…

Point taken but the oil example isn't the best example on imports as we have since about 2010 really dropped imports with Obama's "All of the above" energy strategy which included opening the Arctic to drilling twice. Here is an example article on the subject: ...U.S. Exports More Petroleum Than It Imports In September and October https://www.forbes.com/sites/arielcohen/2019/11/26/making-hi...

Oil is a great example because oil is truly a global commodity. The demand for oil exists from all 196 countries of the world.

If USD devalues too much (but is still reserve currency), other countries will become richer aka, they can buy more dollars for fewer of their own fiats. Which means they can import more oil by converting more and more of their fiat to dollars. Which means demand for oil internationally will go up while supply remains about the same, causing price of oil to go up, regardless of where it is produced.

If USD devalues and other countries decide to abandon the dollar for trade in favor of say Oil-coin, US will lose access to international oil until it "earns" oil-coin somehow. How does America earn oil-coin? By exporting something. Since America can produce so much oil, the producers will try to export oil for oil-coin. Which means increased global demand and thus rising prices again.

US could shut down all exports of oil and only use it domestically and shun oil-coin entirely. But this means that

a. US can't import other things because of lack of oil-coin. So we will suddenly have severe shortages. Oh a bad disease in one year caused all potatoes in America to die? Tough luck sustaining all the food processing and chips companies. They can't do a stop gap import potatoes since we don't have any oil-coin. You can expand this experiment to all kinds of things such as stent-valves, rubber for tires, coffee. Our rich lives are truly there because other countries are working for it.

b. US energy supplies will be limited by domestic production and domestic supply and demand characteristics. Oh, we have such a great economic boom that increased oil demand but a few oil wells are down for repairs a few quarters? Boom, spike in oil prices again despite being self-sufficient. Another recession beckons since industries can't function with such high oil prices.

This globalization thing is not very simple. It may have caused a lot of grief, but it's also a very good distributed system that's preventing us from going back to shortages like medieval times. We're not dying just because there's a 2-3 year span of famine any longer because there's always somewhere else to get it from.

Re: The fraying of the U.S. global currency reserve system

#179

Post by klipt »

appleflaxen wrote: post #142
AnthonyMouse wrote: post #111

Earlier quoted context omitted.

The argument against his covid response was in not using more aggressive lockdowns. Which is the thing that increases unemployment. You seem to be arguing that more lockdowns, which increase unemployment in the short term, would have reduced unemployment in the short term (i.e. the period measured in that data).

uniform lockdowns that were widely enforced for 2 weeks and then followed by masks, social distancing, and hand washing would have been more effective, and harmed the economy less.

But that will never work if your population thinks even wearing masks is "oppressive"

Re: The fraying of the U.S. global currency reserve system

#180

Post by momokoko »

cloudinshape wrote: post #174
momokoko wrote: post #170

Earlier quoted context omitted.

Banning or taxing out of existence foreign investment on real estate and pegging the fed rate to zero will accomplish the same thing without needing to care about minimum wage. Shenzhen minimum wage currently provides workers in China with a higher standard of living than US minimum wage does in the US. Only difference is that the wealthy in the US will carry more of the burden instead of the working class. And that’…

The reason foreign real estate investment is so high is because the dollar is the reserve currency of the world, and since those countries produce so much they have a huge excess of dollars but the US produces so little they have nothing to buy with those dollars. The only thing the US can realistically offer is land, if you ban it it will only accelerate the collapse.

Banning foreign investment in real estate forces foreign investors into more productive investments while simultaneously lowering the cost of living for workers and cost of business for companies.

Moving inflation to 6% will create millions of working class jobs in the US due to both a weaker dollar and cheaper money supply for value creation.

The losers in all of this are wealthy Americans. They will see their assets depreciate and buying power diminish. And that’s why we don’t do it.

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