What are the pros and cons of a trade currency war with China?

[DesiPower]

Timothy Geithner and Charles Schumer are playing good cop bad cop with China. As we all know in the end China will not budge, they don't give a flying fvck about US anymore. So we declare China as "Currency Manipulator" and maybe slap some tariff on imports. In that scenario, what do we gain or loose. Will it really change anything? ppl are used to cheap ass good now, no one will be happy paying twice as much at the supermarket even though it brings jobs to US. We have way too many poor ppl that were imported by the dems over the last two decades who couldn't care less about the greater good of the country and then eventually the Chinese in liaison with our politicians with find another way in.
But doing nothing is not an option either and perhaps other nations and EU might pitch in and eventually level the playing fields a little bit for good.

Discuss...

Here's what Forbes says

 

[cubeless]

there are no pros... the law of unintended consequences will bloom like peonies if our gov't does something, because they have no real clue what china will do...

and if you raise prices at walmart and the dollar store and dell 20% the recession comes back in full bloom... it won't bring jobs to the us, it will first cause shortages and then cause imports from vietnam or some other cheap labor place...

 

[her209]

China has nothing to gain from allowing the yuan to float. They invested 8 yuan for every dollar in US treasuries. If they're going to going to let float the yuan, they're going to dump all their US treasury securities first.

 

[Turin39789]

China has nothing to gain from allowing the yuan to float. They invested 8 yuan for every dollar in US treasuries. If they're going to going to let float the yuan, they're going to dump all their US treasury securities first.

to who?

 

[nonlnear]

For all the fuming in DC abotu China's "manipulations", it's a lot of hot air about nothing. China found a way to subsidize exports and not officially breach WTO rules. So what? They are depressign their export prices by failing to charge their customers the true environmental cost of their aggressive industrialization. That's the long and the short of it. The Chinese people are slowly waking up to this, but it really is up to them to demand that their government stop selling their air and water quality to the rest of the world to line a few billionaire's pockets.

In the mean time we enjoy cheap exports (sure they're of dubious quality sometimes, but we don't seem to mind enough to quit buying them), and the net beneficiaries are the buyers. Yup, for all the rantings of the labor and manufacturing lobbyists, the benefit to the buyers of subsidized exports is almost always much larger than the cost imposed on the unsubsidized manufacturers who are put out of business by said subsidies.

So let's enjoy the ride while it lasts, because there's not much to be done in the mean time. After all, the only "solution" to this imagined problem is to create an international body which effectively ends monetary sovereignty for everyone. Now who would want to do a thing like that?... :hmm:

 

[her209]

to who?

To whomever wants to buy it. They'll discount if they have to, but at least they'll get back more than if they had held onto it. Of course, we will have to raise our interest rates on our future offerings of US treasuries, which the Chinese will probably snatch up post-float, further indebting us to them at a faster rate.

And if I were a foreign exchange trader, I'd be dumping all my dollars to buy yuans in the short term. That way, when it is floated, I can buy back more dollars.

 

[Anarchist420]

Geithner has made no serious effort to quit relying on China. Personally, I would rather have a protective tarriff against Chinese goods than stimulus money to create jobs, but like nonlnear said, it would make the recession worse because people couldn't buy cheap goods anymore.

The root of these trade problems are central banking and government currency, but Obama and his Admin don't care about making this the best country in the world, so it's a fucking pipe dream.

It just pisses me off how people complain about China yet they're not willing to wipe out the root of the problem.

My solution: Get rid of the Fed and go to non-governmental currency. We would have the strongest currency in the world and trade deficit wouldn't be an issue.

 

[soccerballtux]

well they _are_ manipulating the currency, preventing it from trading freely; they fix the cost.

 

[piasabird]

Well what people are saying is that China is somehow manipulating our currency. If our debt is tied to a communist country, then that country which is ruled by a fascist dictator can make sudden changes that could affect currency. If you believe they practice free trade in China you may be kidding yourself.

 

[soccerballtux]

Well what people are saying is that China is somehow manipulating our currency. If our debt is tied to a communist country, then that country which is ruled by a fascist dictator can make sudden changes that could affect currency. If you believe they practice free trade in China you may be kidding yourself.

except that they only own 10% of our debt, if they made a sudden change it would make anything we produce much cheaper for the rest of the world, not to mention everyone on the planet would be pissed at China for doing that.
What they could do is stop rolling their debt over into more Treasuries, but that would still be a gradual process as they unwind.

 

[her209]

except that they only own 10% of our debt, if they made a sudden change it would make anything we produce much cheaper for the rest of the world, not to mention everyone on the planet would be pissed at China for doing that.
What they could do is stop rolling their debt over into more Treasuries, but that would still be a gradual process as they unwind.

How does it make "anything we produce much cheaper for the rest of the world"? The way I see it, it will have no effect on the cost of things that we produce in the US and make things that we produce with Chinese labor cost more.

 

[Brainonska511]

How does it make "anything we produce much cheaper for the rest of the world"? The way I see it, it will have no effect on the cost of things that we produce in the US and make things that we produce with Chinese labor cost more.

If the Chinese dump our currency on the open market, it will lower the value of the USD, thus making our exports cheaper for the rest of the world.

 

[her209]

If the Chinese dump our currency on the open market, it will lower the value of the USD, thus making our exports cheaper for the rest of the world.

It depends. Did we import the raw materials? Did we use external labor?

 

[soccerballtux]

It depends. Did we import the raw materials? Did we use external labor?

yeah.
But for anything we mostly produce in the US, it makes us more attractive.

Unfortunately for things like oil, gas would cost a lot more, since we have to import it.

There's a pretty large cushion between what we pay for products produced in China, vs. what we would pay for products if they were produced in the US, so it wouldn't be a huge deal for companies that design over here, produce over there, and sell over here.
Trade is always good for all parties involved, but that assumes that the consumer gets the savings. Unfortunately for most things, we outsource the production, but charge the same price, and the stock holders benefit with higher profits. This is a form of wealth shifting to the top.

In some cases we get a lot of the savings-- these Faded Glory shoes, for example, cost $14 at Walmart. Electronics has been a race to the bottom as well-- netbooks for $300 etc.

 

[nonlnear]

yeah.
Trade is always good for all parties involved, but that assumes that the consumer gets the savings. Unfortunately for most things, we outsource the production, but charge the same price, and the stock holders benefit with higher profits. This is a form of wealth shifting to the top.

In some cases we get a lot of the savings-- these Faded Glory shoes, for example, cost $14 at Walmart. Electronics has been a race to the bottom as well-- netbooks for $300 etc.

Wat?

So what manufactured products did you mean to imply have actually risen or stayed essentially level in real price terms due to globalized trade? Sure raw commodities may stay level and some go up, but that is stating the obvious, and somewhat beside the point... (In fact it serves to reinforce the complete opposite point: that the cost savings of expanded trade pretty much always do result in consumers realizing substantial savings, specifically from the savings realized in the manufacturing phase.)

 

[Moonbeam]

For all the fuming in DC abotu China's "manipulations", it's a lot of hot air about nothing. China found a way to subsidize exports and not officially breach WTO rules. So what? They are depressign their export prices by failing to charge their customers the true environmental cost of their aggressive industrialization. That's the long and the short of it. The Chinese people are slowly waking up to this, but it really is up to them to demand that their government stop selling their air and water quality to the rest of the world to line a few billionaire's pockets.

In the mean time we enjoy cheap exports (sure they're of dubious quality sometimes, but we don't seem to mind enough to quit buying them), and the net beneficiaries are the buyers. Yup, for all the rantings of the labor and manufacturing lobbyists, the benefit to the buyers of subsidized exports is almost always much larger than the cost imposed on the unsubsidized manufacturers who are put out of business by said subsidies.

So let's enjoy the ride while it lasts, because there's not much to be done in the mean time. After all, the only "solution" to this imagined problem is to create an international body which effectively ends monetary sovereignty for everyone. Now who would want to do a thing like that?... :hmm:

Why do you call a system that cannibalizes its environment an imaginary problem?

 

[nonlnear]

Why do you call a system that cannibalizes its environment an imaginary problem?

You are right. Perhaps some clarification is in order...

Isolating the "currency manipulation" as the crux of the international policy issue intentionally recasts the underlying issues into a framework where the real problems are imaginary and the imaginary problems are perceived as real.

Specifically, when the USA alleges that China's sovereign actions with its currency primarily hurt the USA, that is a fairy tale that is so far removed from the truth it is purely imaginary. The victims of China's currency position are its own people, and the beneficiaries are a handful of billionaires, many Chinese government officials getting kickbacks, and everyone who saves a buck at Wal-Mart. I am the first to admit that China's environmental problems are VERY real, having seen a tiny bit of them myself. However by focusing global attention on the imaginary problems, China's wanton destruction of itself is legitimized by all parties who continue to ignore the elephant in the room.

 

[Narmer]

If Chine wasn't so scared their president wouldn't have called Obama and talked on the phone with him for over an hour wanting to make some sort of deal regarding Iran and suddenly interested in attending a nuclear proliferation meeting at the end of April in Washington D.C.. China simply does not do things like this unless they feel pressured. Believe me, they are extremely concerned at what we can do.

EDIT: China is not part of any American-oriented institution such as the Trilateral Commission where problems like this can be dealt with in a friendly manner, not unlike the Plaza Accord with Japan. They are a dictatorship but one with pressure to perform lest they want the population to get restless. So, the Chinese rely on economic growth to show the public that they are entitled to stay in power. But I have no doubt that Congress will pressure the Administration and China to come to some agreement in the next couple of months.

 

[Moonbeam]

You are right. Perhaps some clarification is in order...

Isolating the "currency speculation" as the crux of the international policy issue intentionally recasts the underlying issues into a framework where the real problems are imaginary and the imaginary problems are perceived as real.

Specifically, when the USA alleges that China's sovereign actions with its currency primarily hurt the USA, that is a fairy tale that is so far removed from the truth it is purely imaginary. The victims of China's currency position are its own people, and the beneficiaries are a handful of billionaires, many Chinese government officials getting kickbacks, and everyone who saves a buck at Wal-Mart. I am the first to admit that China's environmental problems are VERY real, having seen a tiny bit of them myself. However by focusing global attention on the imaginary problems, China's wanton destruction of itself is legitimized by all parties who continue to ignore the elephant in the room.

How is China different than the US, then. It seems we have the same billionaires who own our government and destroy our own environment at will. It looks like the only real libertarian solution to this is when the billionaires also start to die from environmental collapse. Perhaps the last billionaire from his underground complex will plug in an LED before he turns it off for the last time.

 

[Moonbeam]

If Chine wasn't so scared their president wouldn't have called Obama and talked on the phone with him for over an hour wanting to make some sort of deal regarding Iran and suddenly interested in attending a nuclear proliferation meeting at the end of April in Washington D.C.. China simply does not do things like this unless they feel pressured. Believe me, they are extremely concerned at what we can do.

Walk softly but carry a huge imagination.

 

[nonlnear]

How is China different than the US, then.

Indeed.

The USA loves to piss and moan about trade violations when they shamelessly ignore WTO rules on a regular basis. Peace is war.

It seems we have the same billionaires who own our government and destroy our own environment at will.

We have managed to put a couple checks on their ability to rape the commons. Not many, but some.

It looks like the only real libertarian solution to this is when the billionaires also start to die from environmental collapse.

I am becoming more and more convinced that there is a pragmatic path to libertarian ideals. The problem is the discussion is so clouded by corporate lobbyists who hijack libertarian rhetoric. Then the anti-corporate lobbyists fixate on the bastardized meanings injected into the debate by the corporate lobbyists and you have the perfect white noise generator for occluding real libertarian thought. Those corporate lobbyists keep the rage of libertarians focused on handouts to the poor that they ignore the handouts to the rich - which are precisely twice as immoral (if not more). In this way libertarians become voluntary stooges for the corporate, and anti-corporate collectivists.

 

[Narmer]

Walk softly but carry a huge imagination.

Can you put that in layman's term?

 

[Moonbeam]

Can you put that in layman's term?

Yes but I am struggling not to be rude. It seems that most folk are less defensive if you don't begin by kicking them.

What I wanted to modestly suggest is that your prescription possibly lacked 100% as far as being grounded in reality, a modest defect, I know.

 

[Moonbeam]

nonlnear: The USA loves to piss and moan about trade violations when they shamelessly ignore WTO rules on a regular basis. Peace is war.
We have managed to put a couple checks on their ability to rape the commons. Not many, but some.

M: I often wonder and have no real way to know one way or the other, which country may be most able to deal with big political issues. Here we have the possibility that an enlightened public can get enlightened laws passed to save the commons. In China only a few individuals need to be enlightened, those who run the country. Given that you can't be average and be a Chinese leader, one might think the Chinese system may have really smart people that need enlightenment, whereas here we need millions of average people to be so. That must be weighed in with the rewards of the status quo for China's leaders, etc. It's a tall order no matter how you look at it. Of course, I have not defined enlightenment so we don't have even a specific quantity to think about.


n: I am becoming more and more convinced that there is a pragmatic path to libertarian ideals.

M: That might make a good thread.

n: The problem is the discussion is so clouded by corporate lobbyists who hijack libertarian rhetoric. Then the anti-corporate lobbyists fixate on the bastardized meanings injected into the debate by the corporate lobbyists and you have the perfect white noise generator for occluding real libertarian thought. Those corporate lobbyists keep the rage of libertarians focused on handouts to the poor that they ignore the handouts to the rich - which are precisely twice as immoral (if not more). In this way libertarians become voluntary stooges for the corporate, and anti-corporate collectivists.

M: Real understanding is difficult to come by, it would seem. The answer to your problem, it seems to me, is a third way, a synthesis of understanding at a higher level of understanding, the collapse of opposites as limited views of exactly the same thing. For example:

Nobody values anything they get for free. Charity, therefore, state or private, will not change a thing. You can only help others by keeping them from discovering that you are helping them to learn how to help themselves. This means you have to create an environment where people can do things that earn them self respect, even little things.

Somebody is working with beggars. He loans them money to buy some almost worthless good when the beggar then sells and pays off his loan. He then gets a bigger loan. Thousands of beggars have become businessmen in this way. They teach other beggars. If you can sell you can't be totally worthless.

So Democrats that give for free or Republicans who want to give privately, they are both out to lunch.

It is an immutable truth that you only value what you earn and you hate anybody who helps you.

 

[theeedude]

Pros: we get more jobs
Cons: stuff gets more expensive