21–30 of 79 posts
The Chinese are doing everything they can to make sure US tariffs don't affect US consumers. And discourage factory work to leave for other countries (Vietnam, Mexico, Taiwan, Thailand, etc).
The Chinese are doing everything they can to make sure US tariffs don't affect US consumers. And discourage factory work to leave for other countries (Vietnam, Mexico, Taiwan, Thailand, etc).
Is it easy for blue collar Chinese to leave and work in other countries?
Real Vision has some great commentary on the Yuan and its implications. Most recently: https://www.youtube.com/watch?v=1ssFICVFH40 The big risk from my point of view is that currency weakness tends to spook international investment capital who is exposed to the local currency, triggering selloffs as capital flees, exacerbating the problem.
It's worth noting that China's capital controls provide some insulation against this problem-- though they obviously cannot work to compel ongoing outside investment.
The Chinese are doing everything they can to make sure US tariffs don't affect US consumers. And discourage factory work to leave for other countries (Vietnam, Mexico, Taiwan, Thailand, etc).
Is it easy for blue collar Chinese to leave and work in other countries?
Earlier quoted context omitted.
When people refer to US government they mean Federal. And the concern is that the Federal government has structurally degraded its budget such that it is running larger and larger deficits. And unfortunately when you give away money as tax cuts it's often politically impossible to reverse it.
It's the balance of payments that's the problem, not government deficits. All lowering the deficit does when there's a negative balance of payments is increase private debt. And if there are recession fears, the last thing you want to do is raise taxes. The problem is where the tax cuts are, not that they are tax cuts; you want to cut taxes on people who spend a high proportion of their income on consumption, not wea…
Earlier quoted context omitted.
With near record low interest rates, after a decade long economic growth cycle, we are back to running $ trillion and growing deficits each year, at the peak of the cycle. In a few years, assuming current rates and no recession, interest on the debt will exceed military spending [0]. Imagine what happens when we do have a recession and much bigger deficits. Mandatory spending items will at some point soon crowd out a…
MMT disagrees with the entire premise of your comment. The “why is this happening” podcast has an excellent explanation.
Consists of:
1: Regulate the bond market to be very illiquid
2: Touch off deflation scare to herd the masses into USTs & sovereigns while CBs buy gold
3: Implement aggressive version of MMT
4: Watch bond bulls burn in real terms after you've lit their "Hotel California" on fire (MMT, monetize debt, devalue $)
MMT depends on recognizing when inflation runs hot and adjusting their methods. I doubt this will be as easy as they seem to assume. And moreover, they underestimate the effect on the currency. They do reference the carrying capacity of debt within the economy, but once that cat is out of the bag, faith in the $ will decline, and the political will to adjust spending and debt will not be there. But on balance, some form of this is probably inevitable. I just think $ and US Treasury holders won't be happy with the outcome.
These aren't my own ideas, I'll give a reference to financial analyst Luke Gromen (one of many) articulating this thesis [1] that I've come to agree with.
I think the only question is what is an actionable investment thesis. I say $ down, gold, Bitcoin up in 2, 5, 10 years. The rise in MMT as serious policy proposal is not an accident. It will give legitimacy to what would have been necessary anyways, and which was likely impossible politically to avoid given sluggish labor and wage growth after decades of equity bull run and growing inequality. Dollar is too strong, preventing domestic manufacturing from being viable and boosting capital surplus / trade deficit. Politically I think this has to change.
The US is running up a huge deficit and lowering rates yet the dollar is getting stronger. It is kind of strange.
The ECB is negative and preparing to cut lower. BoJ is buying 90%+ of their own bond market. Emerging markets are blowing up routinely, most recently Argentina. Australia and Canada have their own issues. The U.S. isn't perfect but it's comparatively safe with a large military and reserve currency status with positive interest rates giving them room to react short term. (Edit: To be crystal clear, this relative safet…
In other words, the US could pay much less for debt if it wanted to.
https://tradingeconomics.com/bonds
No other developed country is paying anything near that amount. That is drawing a large inflow of capital into long-term treasuries, which in my view, is the true cause for the recent inversion.
Real Vision has some great commentary on the Yuan and its implications. Most recently: https://www.youtube.com/watch?v=1ssFICVFH40 The big risk from my point of view is that currency weakness tends to spook international investment capital who is exposed to the local currency, triggering selloffs as capital flees, exacerbating the problem.
It's worth noting that China's capital controls provide some insulation against this problem-- though they obviously cannot work to compel ongoing outside investment.
https://www.youandyourcash.com/
https://yayc.mykajabi.com/blog/the-finance-curse-professor-c...