Chinese finally to leave us alone

[Karmashock]

http://biz.yahoo.com/ap/050126/world_forum_china_5.html


They've been saying for a while that htey're going to shift off the dollar... frankely, I think we've been trying to get them to do that for a long time....


Europeans now get to have fun with the chinese exchange rate... f'ing annoying is what the practice is...


we should have never allowed China into the WTO.... they're by no means a free and open market.

[shutupandshave]

It looked to me like they were suggesting something based on the dollar, euro and yen - all three.

That seems very sensible to me, but you're the economist?

[Karmashock]

Do you know what they're doing?

They're trying to control international exchange rates. They've been messing with the US currency for more then a decade. Our manufactures have been complaining about it ever since they started.

If they start doing it to a 'basket' of currencies instead of just the Dollar... well... you'll see...

I should think you'll be able to sympathize with our position ere long.

[shutupandshave]

Yeah I know about that... but I dont think they're going to be messing with our economies, I think they're just going to base the exchange rate of their currency on a mixture of all our currencies.

Smells a bit like a crafty plan to me.

I got the impression however, that the Chinese were interested in buying any more currency, hence the move... as the dollar value is still dropping.

[Karmashock]

you do 'know' that we're intentionally dropping the dollar right?

The chinese FORCE their currency to be about 1/8th that of the US dollar. If the US dollar goes up, then their currency goes up... if it goes down then theirs goes down too.

Why do they do that? Think about it. To ease that situation they buy up a great deal of our demand to stabilize the US currency and therefore their own. We've tolerated it this long because it allowed us to go into debt at a cheaper rate.

We're shaking them off.


Again, you'll soon see the result of their shift as they start to toy with other currencies.

[shutupandshave]

Wait...
You said a while ago that the US dollar wasn't going to drop, now you're saying that it is dropping on purpose? What do you mean by "intentionally" as in - we're doing this on purpose to minimise our economic fuckup or we're doing this on purpose just to piss the Chinese off?

The Chinese are tagging the US dollar, that's something that was common practice in the EU for a while when we all had different currencies. I think I understand how it works.

There could be a number of reasons why they did it - if you want to go with the conspiracy theory side, it's because they have a master plan of destroying the US economy from the inside... if you want to go with the slightly less extreme version, it's because they figured the US dollar was a good indication of the worth of any nations money.

You say they've been doing this for a long time - how long - since before the US dollar was falling?

[Karmashock]

Wait...
You said a while ago that the US dollar wasn't going to drop, now you're saying that it is dropping on purpose? What do you mean by "intentionally" as in - we're doing this on purpose to minimise our economic fuckup or we're doing this on purpose just to piss the Chinese off?
We're dropping our currency because we can't raise tarriffs.

The Chinese are tagging the US dollar, that's something that was common practice in the EU for a while when we all had different currencies. I think I understand how it works.
The EU never did what china has been doing... they're not only changing their own currency, they're changing ours.

They're manipulating both.

it's because they figured the US dollar was a good indication of the worth of any nations money.
Nope, they were using it to store wealth at first. This is fine and we don't have a problem with that... if anything, we like it. However, have used that to then control US bond/debt value on the international market.


You say they've been doing this for a long time - how long - since before the US dollar was falling?
at least 15 years.

[shutupandshave]

I am assuming 15 yrs = how long they've been investing, not how long they've been manipulating.

How long have they been manipulating for?


"Nope, they were using it to store wealth at first." which is another good reason, one which you're happy with. No secret Chinese conspiracies.

I think that China is trying to do itself a favour, rather than screw the US over... Sure, doing itself a favour may screw the US over, but that's not why they're doing what they are doing.

Actually I think that's exactly what the EU did - poured money into each other to stabilise our economies together. The big difference was, we agreed to do it first :)

[Karmashock]

I am assuming 15 yrs = how long they've been investing, not how long they've been manipulating.

How long have they been manipulating for?
It's hard to say... perhaps 10 years.

Sure, doing itself a favour may screw the US over, but that's not why they're doing what they are doing.
China knows it must drive the US out of Asia if it is to dominate the region. We will not allow them to take tiawan back by force or rule the other weak nations of the area.

So they're playing the long game. The chinese like to think that they're long term thinkers... but we have ears. You can't boil us slowly without us noticing - like frogs. For china to take the region, it must be sure that the US won't defend the area... either because we lack the will or we lack the resources.

For us to win, they must go through a massive political transition before/if we weaken. We're both playing long long term games here. The US MUST keep china boxed in, until it changes. When it changes there will be no danger.

Actually I think that's exactly what the EU did - poured money into each other to stabilise our economies together. The big difference was, we agreed to do it first :)
The EU's currency is more a political tool then an economic one. Most countries that join the EU remark at how much more expensive things become. The EU artifically pumps its numbers up... they offer much higher interest rates on their debt for one then the US does... They want to establish credibility... which I guess makes sense... but at some point they're going to have to devalue it or become unprofitable as an exporter.

[Karmashock]

I'd like to take this opportunity to apologize for this thread... I was wrong about the general theory here.

My analysis was based upon mercantile thinking... which is retarded... I am sorry... I'm totally embarrassed. :newbie:

I came to this after going through a long theory course… and it wasn’t later until I realized that the whole section was a discarded throw back to an outmoded system that was reinstated largely due to some very sloppy thinking by the people at the time.


I am therefore an ass. However, I wasn’t entirely wrong about everything… just wrong about the exchange rates being important or even worth considering at their current speed of appreciation as compared to economic growth and total capital.


I again apologize, and won’t be so stupid with my figures again.

It’s more complex then you’d think… there are a lot of subtle forces and half the theory is outmoded and the other half has shades of increased or decreased relevance. It’s an evolving system… and we’re always sort of amphibians with wings… one flipper in the last system and an array of other modes that we’re all sort of pursuing at once… to varying success.


Anyway… I’m a dork.

If things become more expensive when your currency goes up, then the solution is to import until you can lower your prices. If your currency goes down, then the solution is to export until you can go up.

... I'm looking over a lot of the posts I've made here... and I'm just annoyed at the closed and static nature of my thinking... again... most of it right... it's just that the fundemental context changes to a degree where you can't really give me credit for it.

L&P, KS.

[laserflip]

half the threads in the political/social forums could take place on MSN between karmashock and suas :-P

[Karmashock]

no... only the flames.

[MightyDWC]

gota love it when other countries float their money on the market, big money if lucky, dead broke if not.

[Karmashock]

hmm... by 'float', what do you mean?


Because there are two things that makes me think of... one of them totally normal, safe, and actually the modern way of doing things. The second thing that makes me think of is guaranteed currency suicide... and it fails every time… Half of south America has learned that the hard way… sometimes two to three times in a row.


so clarify... I could be thinking of something totally different from you...

and patrons (sp)(That's 'o' as in 'ocean', not 'o' as in 'on') are always the worst people to have running anything.

[Tank0]

in the old days money was based on the system of gold reserves . if you a had a bill worth 20$ it meant that the US was holding some gold somewhere to cover your bill if you wanted to trade it in .


that system was destroyed by the high spendings on the vietnamconflict .
the value of a currency has now more to do with the feeling of the value then the actual goldreserves a country holds .

When belgium began producing euro's to replace its Franks they sold of their goldreserves and based the worth of our currency on the worth of a basket of other currencies from nations all over the world .

the whole system is floating around a marketvalue of a currency , meaning if we ever have another crash like in the early 20th century there isn t enough gold to pay out every euro or dollar .

it looks to me that china did this move to stabilise its own currency . if you buy only one currency and it drops you lose a shitload of money . But if you base it on several currencies the value is almost constant . if the dollar drops the yen rises or the euro rises ( demand and supply )

[Karmashock]

in the old days money was based on the system of gold reserves . if you a had a bill worth 20$ it meant that the US was holding some gold somewhere to cover your bill if you wanted to trade it in .


that system was destroyed by the high spendings on the vietnamconflict .
the value of a currency has now more to do with the feeling of the value then the actual goldreserves a country holds .
... This is just the modern way of doing things... basing your currency off of gold or any other commedity, is mercantil in nature... A currency backed by the solvency of a given government or economy makes more sense in the modern world.

it looks to me that china did this move to stabilise its own currency . if you buy only one currency and it drops you lose a shitload of money . But if you base it on several currencies the value is almost constant . if the dollar drops the yen rises or the euro rises ( demand and supply )
China could easily just run their currency like we do...

It just takes work.


In the US we joke that the chinese outsourced their central bank to the US. :P