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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

#311

Post by CryptoPunk »

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 uncompetitiveness in manufacturing is due to two factors:

1. Regulations. Both the OSHA and EPA had a measurable negative impact on manufacturing productivity growth. [1] I suspect the most harmful regulations are those that constrain contract freedom by requiring employers to give unions a negotiating monopoly, aka collective bargaining, over any work unit where they emerge. This would devastate any of the bright spots in American industry today, whether it's Tesla, or Amazon, or Google. The threat of unionization also discourages these firms from expanding into areas that require employing high concentrations of less-skilled workers in immobile capital intensive projects, as these are the most susceptible to unionization.

2. The massive rise in social welfare spending [2], diverting capital from productive uses to unproductive ones.

[1] https://www.jstor.org/stable/1810223?seq=1

[2] https://fivethirtyeight.com/features/what-is-driving-growth-...

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

#312

Post by 2Gkashmiri »

Meh. India similarly trues hard to manufacture stuff on its own buys weaponry from USA and Israel and France and other countires? Why ? Cant they produce gunmetal ? Yes they can but the ministers who take the decision get kickbacks from countries. Essentially for a minister, it is a financial incentive to buy from USA because he/she will get a share of the deal. If India starts making their own, this revenue stream will dry up and they cant let that happen.

https://i.redd.it/wjxa2s4dbr461.jpg

2 billion usd I presume. This money could build many megafactories but again, kickbacks

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

#313

Post by inglor_cz »

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, without a race to the bottom and with strong unions. So it is possible :)"

A lot, and I mean a LOT, of German industrial base is now located abroad, in Poland, Czechia, Slovakia, Hungary, Romania. These countries are rather close, but because they belonged to the Soviet Bloc, their economic development was retarded so much that local wages are 20-30 % of wages in Bavaria, but the workforce is qualified and the infrastructure adequate. This is a historic anomaly you do not have in the U.S.

Come here (I am in Czechia) and look around, the countryside around cities is absolutely dotted with German-owned factories that mostly produce parts. Those parts are then moved by trucks to Germany where the final product is assembled - and so the miracle of higher "work productivity" in BRD is created. Of course you have nominally higher productivity if you finalize products.

This is, by the way, how Viktor Orbán gets his political way. Hungary is absolutely vital part of German industrial base and German industry gets premium conditions on the ground. So for all the shouting about values and rule of law, German CDU/CSU and Orbán always find a way to coexist.

And as for race to the bottom, look to former East Germany. There, people want German wages from German bosses. They do not get them, most of the industry moved abroad where cheaper workforce is. Former GDR is an economic periphery where anti-system parties command majority of the vote.

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

#314

Post by m-ee »

ketamine__ wrote: post #250

Peter Thiel bet against the US dollar and lost big. > Subsequent down years have reduced the fund's assets under management to $681 million as of December 2010.[4] Clarium Capital Management was reported to have had big losses in 2010.[14] The firm has continued to struggle with bets that it made on inflation and the US dollar. https://en.wikipedia.org/wiki/Clarium_Capital

I interviewed there years ago, at the time it solely managed Peter Thiels personal money because all the other investors had pulled out. Strange and funny dynamic, I’ve never heard of someone running and staffing an entire hedge fund just for themselves. Traders said that you had to be on call at all times in case Thiel called you from some other time zone to execute a particular trade he wanted.

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

#315

Post by imtringued »

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’…

It would be more sensible to just build more housing. That way Chinese dollars will end up employing Americans instead of just changing the title on a home. It's quite funny how backwards America is in this regard. They are unwilling to produce more of their primary "export" even though there is no way for production of it to be moved to any other country. Instead every property owner wants a larger slice at the expense of everyone else.

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

#316

Post by imtringued »

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.

Only if they don't find a better alternative than real estate.

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

#317

Post by jaredklewis »

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…

I agree with some part of what you are saying, but tariffs are a miserably blunt instrument.

Think of the supply chain of something immensely complex like the Boeing 787, which has, quite literally, millions of parts (including LCD screens). Many if not most of those parts are imported. If there are tariffs on imports, either:

1. Boeing will pay tariffs, increasing the cost of each plane. Great for Airbus, bad for Boeing.

2. The parts are sourced locally instead. These parts will invariably be more expensive, as if there were cheaper local options, they would have been sourced locally before. Again, Boeing planes get more expensive, great for airbus, bad for Boeing.

3. Boeing, to avoid raising prices and giving market share to airbus, decides to move manufacturing outside the US.

What applies here for Boeing, is also going to apply to Tesla, Caterpillar, and hundreds of other companies. Tariffs create incentives to source locally, but they simultaneously create incentives to manufacture abroad. It is a very thin tightrope to walk and I haven't seen any evidence that Washington can.

On the topic of national security: “When goods don’t cross borders, soldiers will.”

I'm far less concerned about a war breaking out between two countries with healthy trade relations and cultural exchange. Do we want China to be our enemy? Why?

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

#318

Post by imtringued »

cloudinshape wrote: post #217
momokoko wrote: post #201

Earlier quoted context omitted.

> 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 w…

> How does this harm a working class American that derives all of their income from working wages as opposed to assets? Their wage-dollars will now buy less stuff. > Cite and example where a country did not default/print money for their debt payments and inflation went to 30% The US has the world reserve fiat currency, so there are no examples because a fiat reserve currency has never existed before, but we know hype…

>Their wage-dollars will now buy less stuff.

Well, you don't seem to understand the fundamental problem. Whatever labor force exists in America should see rapidly growing wages because the unemployment rate is relatively low. The reality is that not only do we not see inflation the fed has set the interest rates to almost zero and injected an insane amount of money into the stock market with no change in sight. There is slack in the system, a lot of slack. This causes wage growth to stagnate while rich people in the USA still make loads money off Chinese labor. They don't have to care about Americans because there are work forces abroad waiting for them.

>The US has the world reserve fiat currency, so there are no examples because a fiat reserve currency has never existed before, but we know

This is completely irrelevant. The primary benefit of a world reserve fiat currency is running a trade surplus without financing but if you don't produce anything, not even housing that advantage is meaningless.

>hyperinflation is a likely outcome.

Banning investments into real estate might not be optimal but hyperinflation is not going to happen because the economy isn't even close to it's production capacity.

>Now, from the experience we do have, ~30% inflation like in the 70s is the best we can hope for.

There is a response to your commend that disputes that we even had this "experience".

>A zombie economy like japan's would frankly be fantastic given the conditions.

The USA is already partially a zombie. You have public companies with record stock growth despite no changes in fundamentals. It's easier to make money off the stock market because that's where the rich are using the watering can of the fed even though there are lots of withering plants surrounding the almond farm. The stock market looks significantly brighter than it should.

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

#319

Post by te_chris »

tachyonbeam wrote: post #280
te_chris wrote: post #206

Earlier quoted context omitted.

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.

Please clarify what you mean by "Chinese equity investment swap thing".

https://seekingalpha.com/article/4339781-teslas-transformati...

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

#320

Post by imtringued »

paulpauper wrote: post #100
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…

Had you shorted the US stock market in 2000 on that prediction/hunch, you would be down a lot. The economy has moved beyond manufacturing. Data, payment, and information processing and intellectual ropery have taken over manufacturing in importance.

Shorting the stock market makes no sense because central banks prop up stocks. All that newly created money goes into your pocket if you go long.
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