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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

#191

Post by AnthonyMouse »

jfim wrote: post #169
AnthonyMouse wrote: post #144

Earlier quoted context omitted.

> It's true that tariffs will make buying goods from China less appealing, but if you look at the outcome, it's not really a win. Consumers are paying more for the same goods, companies are scrambling to move their production to India and Malaysia, and there's not a significant increase in US manufacturing. If you look at the actual outcome, it was that China devalued their currency or otherwise lowered prices to eat…

> Tax cuts and subsidies are equivalent. They're not. One can't cut taxes below zero, for starters. Some industries need more than just having negligible taxes to get started, especially in capital intensive businesses. Furthermore, the idea that the only lever that the government has to induce people to do things is lowering taxes is completely absurd. Tax cuts didn't build the Hoover dam, the interstate highway sys…

> They're not. One can't cut taxes below zero, for starters.

You might want to check with the IRS, since that's exactly what the EITC does. It's also the de facto result when a company takes a tax loss (e.g. from deducting more expenses than it had in revenue, common for startups) and can then sell the tax loss to another company to offset its tax burden.

> Tax cuts didn't build the Hoover dam, the interstate highway system, nor send a man to the Moon.

As opposed to Tesla's plant at Niagara Falls, or the various privately-owned rail networks in the world, or SpaceX?

> The day that the US government announces that they'll buy 100 million masks a month for a strategic reserve or replace all of the mobile devices for all federal employees, as long as they're at at most a 50% premium over the cheapest option and are fully traceable from raw materials to finished product as being fully built in the US and allied countries, is the day that people will start investigating if it's possible to do so, and start trying to do so if it's possible.

But that's actually more expensive, and less productive, than just making it more cost effective to manufacture things domestically than somewhere else, because domestic production has low taxes and efficient regulations and production in countries that engage in currency manipulation or have inadequate environmental protections are subject to tariffs.

> It takes two to tango.

That's the problem. It doesn't matter how willing one side is to negotiate if Democrats are too busy fabricating lies about Russia collusion to come to the table. Compromise requires both sides to be reasonable.

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

#192

Post by omgwtfbyobbq »

AnthonyMouse wrote: post #181
omgwtfbyobbq wrote: post #149

Earlier quoted context omitted.

More aggressive lockdowns initially could have limited the initial spread, and from there reasonable precautions could have been effective. Disparaging mask use is also generally considered to be harmful. Cutting funding to certain CDC programs may also have been detrimental. https://fortune.com/2020/02/26/coronavirus-covid-19-cdc-budg...

> More aggressive lockdowns initially could have limited the initial spread, and from there reasonable precautions could have been effective. This is what Australia did. Except that some of the measures they used may have been unconstitutional in the US, and Australia is an island. The US has 4500 miles of porous borders with other countries. And covid spreads asymptomatically, so the only way to get to where Austral…

40 people coming from Mexico is highly unlikely to lead to 230,000 US cases/day.

It may be inaccurate news, but calling it fake is needlessly hyperbolic. The contention isn't that overall funding was cut, it's that certain groups within the CDC saw significant cuts, and those cuts reduced readiness.

https://mobile.reuters.com/article/amp/idUSKBN21C3N5

Regardless of whether Trump's missteps were politicized, they were still missteps. Doubling down on something after someone calls you out doesn't make them responsible for your actions.

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

#193

Post by hourislate »

namdnay wrote: post #67
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…

Without a very strong (and therefore expensive) social security net, “Letting people work for whatever wage they can achieve” is slavery. See 19th century Britain Germany still has a strong industrial base, without a race to the bottom and with strong unions. So it is possible :)

>Germany still has a strong industrial base

It's because they build the machines to build the product the Chinese manufacture. The Germans have forced themselves to be at the top of the Manufacturing Food Chain (engineering, etc) while letting the Chinese/Rest of the world build the crap we buy.

I don't think we could get there manufacturing the "Trinkets" the Chinese mostly manufacture, that is a a race to the bottom where either automation or cheap labor win.

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

#194

Post by bawolff »

RhodoYolo wrote: post #85
namdnay wrote: post #67

Earlier quoted context omitted.

Without a very strong (and therefore expensive) social security net, “Letting people work for whatever wage they can achieve” is slavery. See 19th century Britain Germany still has a strong industrial base, without a race to the bottom and with strong unions. So it is possible :)

Do you think the 19th century is a good anecdote for what would happen nowadays? Setting minimum wage seems to create this standard that may do more harm than good. Increasing the 'standard' harms the 'middle-class' and this 'standard' may set the wages lower than entitled per job.

As a general rule, yes, i think all things being equal, history tends to repeat itself.

Of course, all things aren't always equal, but if you're going to argue its going to be different this time around, i think there is some onus to argue why the present would be different from the past.

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

#195

Post by CuriouslyC »

tw8f969ae5b6f4 wrote: post #128
CuriouslyC wrote: post #87

Earlier quoted context omitted.

The beauty of inflation is that it hurts you in direct proportion to how well off you are, and it can't be dodged (i.e. it's like a wealth tax, only actually achievable). We could drive inflation while also ameliorating a lot of the pain it would cause by implementing UBI (in fact, I'm pretty sure big deficit spending is the only way UBI will ever happen). Defaulting would screw a lot of institutional pension investo…

The effects of inflation are neither instantaneous nor uniformly distributed. Those who obtain the new money first are able to spend it before prices have had time to adjust. As that new money propagates, the prices of the relevant goods and services are bid up. As such, inflation gives an economic advantage to those who receive the new money sooner, and the consequent higher prices harm those further down the flow.…

The rich (particularly banks) are always going to game any system, so saying anything is unworkable because the rich can partially game it is defeatism. If we use UBI to inflate the currency, everyone gets the same chance to use uninflated funds, which ends up benefitting those with less.

If we inflate via UBI, those on fixed incomes wouldn't be hurt unless it was a fat fixed income, in which case it's disingenuous to refer to them that way since they're basically just independently wealthy, and most people think of fixed income means pension/disability.

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

#196

Post by SubiculumCode »

tastyfreeze wrote: post #150
sidlls wrote: post #130

Earlier quoted context omitted.

I have not read one single serious justification (as in, empirical) for using gold as the backing of a currency. There are many indications that, historically, the boom and bust cycles that exist naturally are exacerbated when tying the value of currency to (often easily manipulated to be artificially) scarce things like gold. The world has moved beyond tying the value of our currencies to material goods. Digital "co…

It doesnt have to be gold. But sound money is a necessity for a thriving economy. Gold standard prevented bad monetary policy that leads to runnaway inflation. Its not a perfect system but it stops power and greed from destroying the economy. Addition: Every historical case of a government switching to fiat currency has resulted in runnaway inflation. The reason that gold and silver are the only constitutional money…

Inflation inflation inflation, gold proponents always want to talk about inflation, never about the steering wheel that fiat currencies provide: Steering that allows us to right the course of our economic ships. When you link to gold, you go where the wind blows you. No control. No steering.

Moreover your historical argument is weak. By analogy, we should also not have government, because every society that has formed a government has failed to keep it: Every government falls, eventually, be it Rome or the Aztecs.

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

#197

Post by rsync »

CuriouslyC wrote: post #87
tastyfreeze wrote: post #71

Earlier quoted context omitted.

Default is another option. Inflation hurts everybody. Cutting spending is the only way to start repairing the economy for the long term. Government consumes 31% of the fruit of our labor. Money that could be left in the hands of people to drive the economy.

The beauty of inflation is that it hurts you in direct proportion to how well off you are, and it can't be dodged (i.e. it's like a wealth tax, only actually achievable). We could drive inflation while also ameliorating a lot of the pain it would cause by implementing UBI (in fact, I'm pretty sure big deficit spending is the only way UBI will ever happen). Defaulting would screw a lot of institutional pension investo…

"The beauty of inflation is that it hurts you in direct proportion to how well off you are, and it can't be dodged (i.e. it's like a wealth tax, only actually achievable). We could drive inflation while also ameliorating a lot of the pain it would cause by implementing UBI (in fact, I'm pretty sure big deficit spending is the only way UBI will ever happen)."

I think you misunderstand ...

Generally speaking inflation can be managed and avoided by asset holders and business owners. They can adjust their rents and prices to match the inflation in a way that wage earners and renters cannot.

Generally speaking it is deflation that hurts asset holders and business owners. We have made desperate attempts since the financial crisis to stave off deflation and even then we're barely treading water. Financial assets and real property (and also silly things like paintings) have benefited but look at the price of oil ... look at the price of other basic commodities and services like shipping.

Our 21st century landscape is deflationary and elites are frantically doing everything possible to avoid it.

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

#198

Post by tw8f969ae5b6f4 »

jcriddle4 wrote: post #18
est31 wrote: post #7

Which country would benefit from a weaker dollar? Germany wants to sell their cars. China their phones. If Americans can't afford them any more, then a big market would disappear.

The US would benefit from a weaker dollar as it would protect what remains of our manufacturing base and also act as an export subsidy. Currency valuation, and in particular currency manipulation, is equivalent to a tariff or an export subsidy depending on which side of it you are on. Yes people like to pretend that if something goes up in cost 20 percent because of currency change that is somehow normal but slap a 1…

> The US would benefit from a weaker dollar as it would protect what remains of our manufacturing base

At equilibrium, a weaker or stronger dollar doesn't affect exports, it's just an exchange rate. What can affect exports is a weakening dollar.

In an inflationary disequilibrium, exports increase only insofar as foreign consumers are able to purchase domestic goods before those goods' prices have adjusted to inflation. In other words, exporters are unwittingly selling their goods for a lower price.

Absent inflation, exporters could have chosen to increase exports by intentionally lowering their prices. That they didn't suggests something about their marginal costs.

With inflation, the exporter has a similar benefit over its suppliers as the foreign consumer has over the exporter, namely buying goods with new money before prices have adjusted. As such, the exporter's suppliers are also unwittingly selling their goods for a lower price.

Whether this is beneficial depends on where one is positioned as new money propagates through the economy. Banks get it first, then to their borrowers, other financial institutions, and so on. The losers are those at the tail-end, who face higher costs but have not yet had their own prices bid up with new money: wage workers, those on a fixed income, etc.

The net effect of all this price manipulation is a wealth transfer from those who receive the new money later to those who receive it earlier.

> currency manipulation, is equivalent to a tariff or an export subsidy

While an export subsidy can also increase the quantity of exports, the larger economic impact of intentionally weakening the currency through inflation is very different.

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

#199

Post by tastyfreeze »

SubiculumCode wrote: post #196
tastyfreeze wrote: post #150

Earlier quoted context omitted.

It doesnt have to be gold. But sound money is a necessity for a thriving economy. Gold standard prevented bad monetary policy that leads to runnaway inflation. Its not a perfect system but it stops power and greed from destroying the economy. Addition: Every historical case of a government switching to fiat currency has resulted in runnaway inflation. The reason that gold and silver are the only constitutional money…

Inflation inflation inflation, gold proponents always want to talk about inflation, never about the steering wheel that fiat currencies provide: Steering that allows us to right the course of our economic ships. When you link to gold, you go where the wind blows you. No control. No steering. Moreover your historical argument is weak. By analogy, we should also not have government, because every society that has forme…

That steering wheel is driving us off a cliff. If the result of having a steering wheel is a loss of trust in the currency and ultimately the collapse of that currency I would rather be blown by the wind.

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

#200

Post by specialist »

AnthonyMouse wrote: post #76
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…

> To compete, you really do have to cut minimum wage. You have to loosen regulations, and importantly, you have to do massive tariffs / sanctions on China for the next decade. Part of the problem here is that the existence of some kind of universal "more regulations / less regulations" slider is an illusion. It allows the problem to be cast in partisan terms when that isn't the problem at all, because the problem isn…

I'm adopting Michael Lewis' "market referee" rhetoric.

https://atrpodcast.com

Fused with Graeber and @dredmorbius phrasing where "deregulation" means "pro-monopoly" and "anti-competitive".

I'd like to learn more about "regulatory efficiency".

--

Law (et al) is much like source code. Technical debt, path dependencies, tooling stack, managing complexity and risk. You get the idea.

So of course there's evergreen debates about refactoring, rewrites, paradigms.

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