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

lynalden.com

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

#201

Post by momokoko »

cloudinshape wrote: post #188
momokoko wrote: post #180

Earlier quoted context omitted.

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 asset…

Banning foreign investment will force them to dump dollars and treasury bonds and will accelerate the development of an alternative to it for international trade. But I guess since what you want is inflation that is one way to get it, tho it will not be 6% but closer to 30%. Yield curve control has not worked for anyone, it is a death spiral that results in zombie economies, at best.

> Banning foreign investment will force them to dump dollars and treasury bonds and will accelerate the development of an alternative to it for international trade.

How does this harm a working class American that derives all of their income from working wages as opposed to assets?

> it will not be 6% but closer to 30

Cite and example where a country did not default/print money for their debt payments and inflation went to 30%

> Yield curve control has not worked for anyone, it is a death spiral that results in zombie economies, at best.

How does this harm a working class American that derives all of their income from working wages as opposed to assets?

Lastly, address how any of the above prevents an increase in manufacturing jobs, which was the intent of the measures originally listed.

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

#202

Post by tachyonbeam »

hourislate wrote: post #193
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 :)

>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 botto…

Tesla is trying to do exactly what you describe. Build "the machine that builds the machine", as Elon Musk would say.

I agree with you that trying to compete on low-cost, low-margin is a race to the bottom. We could conceivably bring manufacturing of iPhones back to America. I would also imagine that manufacturing of silicon is largely automated, so the US could try to build the best fabs.

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

#203

Post by hanuman »

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…

This monetary policy, and the consequent industrial policy ("free trade"), is, more than any other factor, the cause of the so-called "Great Stagnation." Its persistence is why the Great Stagnation is not over, despite some recent noises to the contrary. US growth will not resume until energy production does. With shale seemingly spent, nuclear too scary for most, and fusion perpetually 10 years off, growth is unlikely. The US will continue to "print" oil by printing dollars (h/t to Luke Gromen), care of Saudi Arabia, until it can't. The US will do anything and everything to ensure this continues, history is proof of that. When the US finally fails there will be a war. Not like Vietnam or Iraq or Afghanistan. A very, very bad war. And the winner will determine monetary policy for the next century or so.

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

#204

Post by [deleted] »

cloudinshape wrote: post #138
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 :)

You have to square the circle. Wages in the US are artificially high because of the dollar's position, but the US needs to either a) match the wages of the countries producing similar stuff or b) increase productivity and value to the levels of countries like Germany. Since b) requires decades in factories, supply chains, trade agreements and most importantly training in actually producing things which means science…

[deleted]

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

#205

Post by 8note »

cloudinshape wrote: post #138
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 :)

You have to square the circle. Wages in the US are artificially high because of the dollar's position, but the US needs to either a) match the wages of the countries producing similar stuff or b) increase productivity and value to the levels of countries like Germany. Since b) requires decades in factories, supply chains, trade agreements and most importantly training in actually producing things which means science…

There is also d) the owners take smaller profits

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

#206

Post by te_chris »

tachyonbeam wrote: post #202
hourislate wrote: post #193

Earlier quoted context omitted.

>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 botto…

Tesla is trying to do exactly what you describe. Build "the machine that builds the machine", as Elon Musk would say. I agree with you that trying to compete on low-cost, low-margin is a race to the bottom. We could conceivably bring manufacturing of iPhones back to America. I would also imagine that manufacturing of silicon is largely automated, so the US could try to build the best fabs.

Tesla has done some reverse Chinese equity investment swap thing and is now at least somewhat a Chinese company building manufacturing capacity and innovation in EVs. Musk is a lot of things, and one thing is clear: he’s an opportunist more than a US economic nationalist. He will not be the saviour of American industry.

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

#207

Post by FpUser »

birdsbirdsbirds wrote: post #103
FpUser wrote: post #45

Earlier quoted context omitted.

Everything we produce can be measured in / has energy cost. So maybe some kind of energy units should be the universal currency.

Energy will become much cheaper in the future. Every time a new solar cell improvement happens, your money would be worth less. Having those disruptions baked into your currency would make it almost useless.

Nope it will not be rendered useless.

1) Price of the energy when you pay for it only grows over time. Short disruptions are possible but overall trend persists.

2) More energy also correlates to more goods produced so unless artificially manipulated the ratio should stay more or less the same.

3) All major currencies undergo inflation so even if energy becomes more plentiful there is nothing really new here

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

#208

Post by specialist »

I'm just a simple bear, so I don't understand any of this stuff. (I comfort myself knowing I'm in good company.)

Skim reading this, I provisionally label Lyn Adlen as an advocate of monetary policy.

As every one knows, abandoning the gold standard, adopting fiscal policy, makes monitarians anxious.

Over time, I'm leaning towards a refreshed Keynesian view: empire means huge military means deficits. Both trade and federal.

I'm not a classical Liberal or a Neo-Liberal. I'm just saying Keynesian and MMT notions seems like useful metaphors for understanding the current world.

--

Lyn Adlen does mention petrodollars. But doesn't provide a clue to what comes next.

Rare earth dollars? Gigawatt hours dollars? Some kind of PoW (and therefore measure of energy) crypto coin?

Does it even matter? Are petrodollars just a shibboleth for monetarians that can't accept there's "no there there" when money became fiat?

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

#209

Post by jcriddle4 »

nine_zeros wrote: post #178
jcriddle4 wrote: post #148

Earlier quoted context omitted.

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…

A 10% drop in currency would in your example, assuming no cost of shipping oil, US would go from 3.00 to 3.30 at 20% drop would mean 3.60 and even a US currency drop of 40% only gets you to $4.20. The data on trade indicates that countries that cheat on trade have epic growth rates and countries that do the "free trade" have close to zero growth or even declines. The data indicates local manufacturing has synergistic effects that massively outweigh the additional costs to consumers. See economist Ha-Joon Chang.
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