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Good Gawd! -- FY '03 Deficit of $450 Billion

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  • #136
    Originally posted by Odin
    I don't fall to propaganda.
    Says you. I could easily say the same. Doesn't mean it is not true.

    You, on the other hand, throw people out of helicopters if they disagree with you.
    That's against the law as it is murder. I don't own a helicopter and wouldn't give up my life for a prison sentence.

    If I fell for propaganda I would be saying that soviet communism was good, it wasn't, it was a spectacular beauracratic disaster.
    Well I am not saying Hitler was good.. he was not. He was evil, pure evil. So I don't fall for propaganda.
    For there is [another] kind of violence, slower but just as deadly, destructive as the shot or the bomb in the night. This is the violence of institutions -- indifference, inaction, and decay. This is the violence that afflicts the poor, that poisons relations between men because their skin has different colors. - Bobby Kennedy (Mindless Menance of Violence)

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    • #137
      Originally posted by Kidicious


      Yeah right. We won't let them go bankrupt.
      Exactly what I said. How much did the S&L bailout cost? The GSEs will be a tad bit more expensive.
      “Now we declare… that the law-making power or the first and real effective source of law is the people or the body of citizens or the prevailing part of the people according to its election or its will expressed in general convention by vote, commanding or deciding that something be done or omitted in regard to human civil acts under penalty or temporal punishment….” (Marsilius of Padua, „Defensor Pacis“, AD 1324)

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      • #138
        Originally posted by Kidicious


        It's not in their interest to do that. The reason they have those holdings is to keep their currency undervalued so they can export to the US.
        That's not a problem for China. The Yuan is tied to the US dollar and the US is China's major export market. So if China sells down its US reserves, the US dollar tanks, increasing import costs for Americans, except for stuff imported from China. So as the cost of importing products from other countries increase for the US, the US will start importing more from China.

        At the moment, China benefits more by having the ability to push down the greenback, rather than actually doing it.
        Golfing since 67

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        • #139
          Keeping the Yuan tied to the US dollar would become more expensive as the US dollar came down in value wrt other currencies.
          12-17-10 Mohamed Bouazizi NEVER FORGET
          Stadtluft Macht Frei
          Killing it is the new killing it
          Ultima Ratio Regum

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          • #140
            Originally posted by Tingkai
            That's not a problem for China. The Yuan is tied to the US dollar and the US is China's major export market. So if China sells down its US reserves, the US dollar tanks, increasing import costs for Americans, except for stuff imported from China. So as the cost of importing products from other countries increase for the US, the US will start importing more from China.
            No, the way the rennimbi (yuan) is pegged to the dollar is by the Chinese building up their reserves. They undervalue their currency by doing this. They can't sell their reserves and peg the rennimbi to the dollar at the same time.
            I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
            - Justice Brett Kavanaugh

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            • #141
              At the moment, China benefits more by having the ability to push down the greenback, rather than actually doing it.

              Over the last month, to keep the Yuan tie with the USD, China has to buy US dollars to the tune of about $600 million per day.
              Last edited by DanS; July 17, 2003, 10:58.
              I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

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              • #142


                Ah guys, the Chinese government does not allow free market trading of the Yuan. As a result, the Chinese government does not buy or sell currencies to tie the yuan to the US dollar like, say Japan does to hold down the Yen.

                The only way the market affects China's foreign reserves is through import/exports. With China being a net exporter, it has more foreign currency coming into the country. That is why China's foreign reserves have increased.

                The Chinese government has not been buying US dollars to prop up the peg. The reserve have been going up because more people are have been shipping capital from the US to China.

                The downside for China is an increase in its money supply.

                But if China began selling off the US dollar while buying currency of other countries then it would not have the inflation problem. It would simply be switching its foreign reserve holdings.

                China could sell off 1%, 10%, 20% of its US cash reserves and it would have no direct affect on the peg.

                We are not dealing with a typical free market supply-demand curve here. We are dealing with a highly controlled currency.
                Golfing since 67

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                • #143
                  You have no idea what you are talking about.
                  I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
                  - Justice Brett Kavanaugh

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                  • #144
                    Tingkai: What you say is true, but then there are other forces that wreck those plans. China has indeed been buying about $600 million a day to keep the peg.

                    http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1057562469743


                    In pertinent part...

                    Inflows of "hot money" into China have recently forced the central bank to buy an average of $600m (£422m) a day to keep the currency steady against the dollar. This pushed China's foreign exchange reserves above $340bn by the end of June from $316bn at the end of March. The surge is viewed by many as evidence of the undervaluation of the currency.
                    I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

                    Comment

                    • #145
                      They're not buying dollars to keep the peg, in the sense that the Japanese government has been buying US$ to keep the Yen stable.

                      It is believed that Chinese nationals are dumping the US$ because they no longer consider it a safe currency. They now see the Yuan as being safe. This source of "hot money" is far more finite than "hot money" in other countries where currency rates are left to the free market.

                      The Chinese government's decision to purchase these US dollars is simply part of a long standing automatic currency mechanism.

                      The Japanese situation, a free market example, is different. Global market forces are weakening the US dollar. The Japanese government is arbitrarily and deliberately stepping into the market and buying US$. It is the result of a policy decision, not an automatic currency mechanism.
                      Golfing since 67

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                      • #146
                        The Chinese government's decision to purchase these US dollars is simply part of a long standing automatic currency mechanism.

                        Isn't that just another way of saying that China is buying dollars to keep the peg?
                        I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

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                        • #147
                          Tangkai,

                          Where do you get this information? The Chinese keep dollar reserves for the same reason the Japanese do. To keep their currency undervalued. The fact is that Chinese currency is the most undervalued of all.
                          I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
                          - Justice Brett Kavanaugh

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                          • #148
                            Originally posted by DanS
                            The Chinese government's decision to purchase these US dollars is simply part of a long standing automatic currency mechanism.

                            Isn't that just another way of saying that China is buying dollars to keep the peg?
                            My point is that there are many different ways to peg a currency. Hong Kong, Japan and Mainland China all use different systems.

                            So if any of these countries began selling off their US$ holdings, the results would be different.
                            Golfing since 67

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                            • #149
                              Originally posted by Tingkai
                              So if any of these countries began selling off their US$ holdings, the results would be different.
                              And the oriinal point was that they have no motivation to do that. They peg their currencies and collect reserves for a reason, and they will continue to do so.
                              I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
                              - Justice Brett Kavanaugh

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                              • #150
                                So if any of these countries began selling off their US$ holdings, the results would be different.

                                Of course the results would be different for each. But how does that change the answer to the question at hand?
                                I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

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