Posted on 08/05/2019 3:12:33 PM PDT by janetjanet998
IP Man?
They could call the debt. I dont think thatd be good for us.
Theoretically, that would mean war.
“They could call the debt. I dont think thatd be good for us.”
That is quite impossible. They only have two choices; hold the debt to maturity or sell it. The entire world is head over heels in love with US debt (see low mid and long term interest rates for your clue). What they have left, after selling some off over the last several years, wouldn’t make a difference.
A result of them selling US Treasury holdings would RAISE the value of the Yuan....the exact opposite of what they want to do.
“I suppose we could declare the debt void and see what they try to do about it.”
That would never happen. What we COULD do is put the interest payments into escrow.
Problem is more than half of our elected representatives are loyal to mainly China and other nations, not the US! That reminds me, has Diane Feinstein found a nee driver yet?
Exports account for about 9% of China's GDP and about 8% of the US'.
About 20% of their exports go to the US.
5) They have a very high debt to GDP ratio (twice USA).
6) They have poor accounting practices.
7) Their local banks have sold off most of the US dollars they held.
There is no such thing as Western style diplomacy for quite some time already.
The fact that discussion of the Chinese threat ceased two decades ago tells me much.
China has picked a bad time to amass troops on the border with Hong Kong.
You are exactly right. Also consider that if this situation continues to escalate, China will find itself unable to maintain its military or pay its troops (see: Russia - but for different reasons). Thats still in the long-term, but I just dont see anything but disaster for China if they continue to dig in their heels.
Chinas economy has been built on smoke and mirrors, and on their ability to strong-arm greedy and gullible western companies into turning over all of their intellectual property, at least that which China didnt already steal. Trump is forcing all parties involved to finally face the reality of what has been happening with this relationship. I hope he remains steadfast in his resolve.
Well said...someone is calling finally China's bluff.
I’m damn sure. Their vulnerability is the 3 Gorges Dam. A focused strike on it and the flash flood will destroy 60%+ of their infrastructure in a matter of minutes.
China’s Leader , Mr Yogi Bear goes , “Do’h”
China has manipulated their currency since the mid 80s or even earlier. If you force their currency to be value oriented as referendum on their economy, and at the same time impose a big traffic which itself alone will put their economy under even or at a net loss... Without Iran sanctions... That net loss is a fixed value currency loss and if not in a recessionary period the nexus of both fixed and tariffs squeeze than harder that George V’s colonists ever felt. Simply put any other erosion of iconic performance turns them into Spain’s economic situation. Six months of tariffs and currency value pain is literally setting up accelerated disengagement.
What does devaluation of their currency do to the value of the treasury bonds they own? Won’t it devalue the bonds in terms of dollars?
You are asking the wrong Freeper.
The bonds are now worth more in yuan. Are currency devaluations a bad thing for a country's economy? So far it's worked out pretty well for China. Assuming the country's economic policies are mostly sound in other respects (i.e. not like Zimbabwe's or Venezuela's), devaluations do improve a country's competitive position. Here's China's USD-CNY exchange rate history:
World Bank annual average middle exchange rate for US dollar to Chinese yuan[8] ( 1 US dollar to Chinese yuan ) |
|||||||
Year | US dollar | Year | US dollar | Year | US dollar | Year | US dollar |
2019 | 2004 | 8.2768 | 1989 | 4.9400 | 1974 | 1.9612 | |
2018 | 6.98 | 2003 | 8.2770 | 1988 | 4.8600 | 1973 | 1.9894 |
2017 | 6.89 | 2002 | 8.2770 | 1987 | 4.4600 | 1972 | 2.2451 |
2016 | 2001 | 8.2771 | 1986 | 3.4500 | 1971 | 2.4618 | |
2015 | 2000 | 8.2784 | 1985 | 2.9400 | 1970 | 2.4618 | |
2014 | 1999 | 8.2783 | 1984 | 2.8000 | 1969 | 2.4618 | |
2013 | 1998 | 8.2791 | 1983 | 2.6100 | 1968 | 2.4618 | |
2012 | 6.3123 | 1997 | 8.2898 | 1982 | 2.6200 | 1967 | 2.4618 |
2011 | 6.4615 | 1996 | 8.3142 | 1981 | 2.5200 | 1966 | 2.4618 |
2010 | 6.7703 | 1995 | 8.3507 | 1980 | 2.4000 | 1965 | 2.4618 |
2009 | 6.8300 | 1994 | 8.6187 | 1979 | 2.3000 | 1964 | 2.4618 |
2008 | 6.9451 | 1993 | 8.0213 | 1978 | 2.4600 | 1963 | 2.4618 |
2007 | 7.6075 | 1992 | 6.3700 | 1977 | 1.8578 | 1962 | 2.4618 |
2006 | 7.9734 | 1991 | 5.7400 | 1976 | 1.9414 | 1961 | 2.4618 |
2005 | 8.1943 | 1990 | 5.2300 | 1975 | 1.8598 | 1960 | 2.4618 |
If you examine the numbers at this link, you'll note that China went from dead even with India (and in the bottom 10% of all countries) in the late 70's, to 4x India's economic output per capita a few years ago, and the top third of all countries listed. Currency valuations are key to a country's competitive position, which is why so many countries with big trade surpluses against the US keep their reserves in dollars, and buy Treasury bonds with those dollars to earn some interest. They want to prevent their currencies from becoming more valuable against the dollar. Because to sell those dollars means their currency goes up, making their goods more expensive in the US market, and elsewhere.
What it also does is make the dollar-denominated bonds issued by Chinese companies - to take advantage of lower US interest rates - much more expensive to service. So if these companies were previously under any financial strain, that stress has gone up a notch, because they will need to produce more yuan to buy the same number of dollars necessary to make interest payments every 6 months.
if i buy jp yen now and sell them for us$ just before the tokyo jp 2020 summer olympics, would i be a currency manipulator too?
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