06-08-2016, 08:08 AM
(06-08-2016, 05:35 AM)Mikebert Wrote:(06-07-2016, 08:12 AM)pbrower2a Wrote: The Chinese can decide at a moment's notice, and at their convenience, that all dealings with business in China will be made in the yuan.
Yes they can. This would be similar to deciding to exchange all those dollars and dollar-denominated securities for yuan (reminibi). And that would have a similar impact as a US tariff on China, which I point is something Trump (and I) want. My earlier point is the very things Classic brought up as scary things we should avoid and as reasons to support Trump are things Trump (and I) WANT to do, and which are not scary at all, IMO (Playwrite would disagree).
Actually, I'm less scared about this that either of you. Basically, your "tariff" of their dumping the dollar is that Chinese goods would become more dollar expensive and drive down their exports. Even if they decide to do that (they won't), it would just add some inflationary pressure back here - something that we actually need right now.
And it really won't make a dent in US employment, for not only is China trade a very small part of our overall economy, those jobs are exactly the ones being most automated. We might get a lot of robots working but maintaining them doesn't really require a lot of humans - robots are starting to maintain other robots. Foxconn, the big manufacture of components for nearly everything electronic, is on track of it's 2015 plan of having 80% of its manufacturing completely automated in less than 2 years (and their remaining workforce is locating to cheaper labor markets like Vietnam).
Bottom line - If you and Trump want jobs, you're looking in the wrong place.
Quote:Here is my take on this from an article in 2005. (parts it bold have been added here)[/quote]
Consider the situation the United States found itself in during the last Kondratiev winter (4T). The US had too little domestic demand to fully utilize the productive capacity built up during the Kondratiev Fall (3T) boom. The resulting sustained unemployment had persisted for years and showed no sign of ending despite the New Deal programs. The US only began to lift out of the Depression with the start of the Lend Lease program, which involved the US making and giving away goods to the British during WW II. Later, the US joined the war and started producing much larger quantities of goods and expending them in the war effort. US workers turned out prodigious amounts of goods, all of it financed by massive low-interest debt (courtesy of the US central bank which bought US treasuries as necessary to keep rates low). These goods were then given away (to the war effort). In other words, the American worker and American central bank during WW II played a role much like the one the Chinese worker and central bank is playing today.
The entire operation was financed by vast amounts of debt raised largely from American investors, which produced an enormous amount of economic stimulation (Figure 3), a substantial amount of price inflation, and flat interest rates (thanks to Federal Reserve interventions). This debt was eventually monetized, meaning that American bond investors took major losses as bonds came to be called "certificates of confiscation". Yet the outcome for the nation as a whole was favorable: three decades of post war prosperity. In the present Kondratiev Winter season, the Chinese are playing the same economic role as the Americans did in the last Winter season and can expect that the outcome will be as salutary for them as it was for postwar America.
It wasn't really "financed." Federal taxes serve only to remove wealth from the economy to slow inflation; the monetary soverign can print (i.e., spend) as much money as it wants without taxing (some level of taxing is needed to keep people using the currency). Also the central government is not dependent on borrowing; it pays interest on bonds as a service the government provides to savers to entice them from the risks of putting their money under the mattress (part of the safety net) and to a lesser extent provide some control over inflation.
The constraint on government and ALL other spending is inflation. But, some inflation is needed for a healthy growing economy. When the economy is structurally booming, like in post-WW2, more inflation will result, likely necessary, knee-knocking is not really necessary. What inflationisties (e.g., Austrians) conveniently forget to mention is the enormous wealth creation and standard of living increases during these inflationary periods that far exceed any pain from inflation. They also kind of skip over that bouts of particularly bad inflation has much more to do with the supply of oil than any government spending.
But putting all that aside, your excerpted material is about actual government spending (i.e., money printing) for the public good, and yes, we once did that with some abandoned... and we boomed on the economic, technologic and even geopolitical fronts. China now does that, and we don't - as a result, they will likely continue on their path to surpass us on the economic, technological and geopolitical fronts.
I'm not sure Libertarians, Austrians, spending hawks, the GOP, and all other inflationisties should all be rounded up and shot as traitors but, yes, to be clear, they are doing great harm to our country.