TPS Posted August 4, 2019 Posted August 4, 2019 13 hours ago, 3rdnlng said: Because the numbers can be so subjective the best way to determine how the economy is doing is to see how wages are doing. Wages go up when the labor supply hits a point where companies have to compete for workers. If wages are growing then the economy is doing well. It sounds pretty simple because it is pretty simple. I agree with you here. There are no perfect measures of employment or unemployment, and the nature of the economy is always changing. One way to help those at the bottom is to push the economy faster via stimulus and, at the same time, berate the Fed so they don't put an end to it with higher rates. Trump has done both.
Tiberius Posted August 5, 2019 Posted August 5, 2019 Oh boy... China responded to President Donald Trump’s tariff threat with another escalation of the trade war on Monday, letting the yuan tumble to the weakest level in more than a decade and asking state-owned companies to suspend imports of U.S. agricultural products. The moves antagonized Trump, who used Twitter to accuse China of “currency manipulation” which “will greatly weaken China over time!” He has previously criticized Beijing for not keeping to promises to buy more U.S. crops. https://www.bloomberg.com/news/articles/2019-08-05/china-hits-back-at-trump-with-weaker-yuan-halt-on-crop-imports?srnd=premium Guess Trump will be doling out more welfare payments now
TPS Posted August 5, 2019 Posted August 5, 2019 China can play the long game, Trump can't. It will be interesting to see how the ego will back down without looking like he lost....
GG Posted August 5, 2019 Author Posted August 5, 2019 On 8/1/2019 at 8:36 PM, TPS said: It's pretty simple. Given the bonds are issued in USD, the attempt to exchange pesos for USD would lead to a depreciation of the peso, increasing the price of imported goods. The extent of the depreciation would depend on how many holders of USD would be willing to exchange them for Argentine pesos. It takes two to tango. Advanced countries that issue debt denominated in their own currency do not face this constraint. Ok, now how about you provide a concrete answer for why QE did not lead to inflation? Explain the details, not some nebulous notion of the dollar's special status. Give me the accounting and money trail.... So, if I understand your argument correctly, the US Treasury has no limits to money making capacity, but the Argentinian central bank is limited by investor appetite? Are you saying that advanced economies, especially those that issue reference currencies enjoy special status that allow them more leeway than what fundamentals indicate? Did you credit Chinese buyers of US Treasuries for keeping US yields low? Nope, no contradictory logic at all. I've been very consistent in my opinion of why QE didn't lead to real inflation, although the move was fundamentally inflationary. There was still ample demand for US assets, especially as you point out the need by the Chinese to invest their trade surplus. They are perfectly free to buy rubles, Euros & Argentinian pesos. Why don't they? Let's continue this discussion if the Fed runs out of time and can't organically unwind the balance sheet bloat.
Tiberius Posted August 5, 2019 Posted August 5, 2019 3 minutes ago, TPS said: China can play the long game, Trump can't. It will be interesting to see how the ego will back down without looking like he lost.... Or if he digs in deeper! Maybe an embargo of all Chinese goods!
GG Posted August 5, 2019 Author Posted August 5, 2019 On 8/3/2019 at 8:02 AM, TPS said: 2012 181 2013 192 2014 251 2015 227 2016 193 2017 179 2018 223 2019 to-date = 165 These are the monthly averages (in 1000s) by year since 2012. The past 2.5 years has been nothing special. 2018 was boosted by Trump's "deficit spending." The current trend is not so hot... As I mentioned, he will have to buckle before the Chinese do. There is a budget deficit in Trump's administration. They did not deficit spend. They allowed the private sector to keep more of what the private sector earned and removed thousands of regulations. Please stop the insanity. The government cannot create true economic growth!! 1
GG Posted August 5, 2019 Author Posted August 5, 2019 1 hour ago, TPS said: China can play the long game, Trump can't. It will be interesting to see how the ego will back down without looking like he lost.... Define long. You're assuming that Xi has more than 18 months to ride out an economic slowdown and rising unrest in Hong Kong that can spill over to the mainland.
SoCal Deek Posted August 5, 2019 Posted August 5, 2019 1 hour ago, GG said: There is a budget deficit in Trump's administration. They did not deficit spend. They allowed the private sector to keep more of what the private sector earned and removed thousands of regulations. Please stop the insanity. The government cannot create true economic growth!! You didn’t build that! ?
TPS Posted August 5, 2019 Posted August 5, 2019 1 hour ago, GG said: So, if I understand your argument correctly, the US Treasury has no limits to money making capacity, but the Argentinian central bank is limited by investor appetite? Are you saying that advanced economies, especially those that issue reference currencies enjoy special status that allow them more leeway than what fundamentals indicate? Did you credit Chinese buyers of US Treasuries for keeping US yields low? Nope, no contradictory logic at all. I've been very consistent in my opinion of why QE didn't lead to real inflation, although the move was fundamentally inflationary. There was still ample demand for US assets, especially as you point out the need by the Chinese to invest their trade surplus. They are perfectly free to buy rubles, Euros & Argentinian pesos. Why don't they? Let's continue this discussion if the Fed runs out of time and can't organically unwind the balance sheet bloat. Argentina is subject to the market for USD to pay its bonds that are issued in USD. The US issues its bonds in USD and pays in USD. You can't see the difference? On inflation, you don't seem to understand what bank reserves are. 1 hour ago, GG said: There is a budget deficit in Trump's administration. They did not deficit spend. They allowed the private sector to keep more of what the private sector earned and removed thousands of regulations. Please stop the insanity. The government cannot create true economic growth!! Solely done for your benefit....? By injecting more spending than it takes out in taxes, government spurs greater wealth creation by the private sector--every debt is someone else's asset.... 28 minutes ago, GG said: Define long. You're assuming that Xi has more than 18 months to ride out an economic slowdown and rising unrest in Hong Kong that can spill over to the mainland. Longer than Trump can wait.
GG Posted August 5, 2019 Author Posted August 5, 2019 2 minutes ago, TPS said: Argentina is subject to the market for USD to pay its bonds that are issued in USD. The US issues its bonds in USD and pays in USD. You can't see the difference? On inflation, you don't seem to understand what bank reserves are. If your logic held up, investors wouldn't care if Argentina issued more pesos which would be converted to USD to repay USD debt. After all, it's as simple as the Argentinian central bank crediting the Argentine money center banks' reserves. Bank reserves don't matter when investors don't accept your currency. ie, see above.
3rdnlng Posted August 5, 2019 Posted August 5, 2019 2 hours ago, TPS said: China can play the long game, Trump can't. It will be interesting to see how the ego will back down without looking like he lost.... What if China loses much of its manufacturing base to countries like Vietnam and we purchase our cheap Walmart products from them? We are an important market for China and our agriculture products are needed. After all, soybeans do not grow on trees.
TPS Posted August 5, 2019 Posted August 5, 2019 1 hour ago, GG said: If your logic held up, investors wouldn't care if Argentina issued more pesos which would be converted to USD to repay USD debt. After all, it's as simple as the Argentinian central bank crediting the Argentine money center banks' reserves. Bank reserves don't matter when investors don't accept your currency. ie, see above. Once again, the statement made was "countries that issue debt in their own currency can never default." If you issue debt in another currency, then you are subject to constraints in the FX market. For example, If the US issued debt in yuan, I certainly would not make the same claim, nor would anyone else. Any country can certainly try and purchase those hard currencies with the currency they control, but you DO face a constraint on the other side of that exchange. You're being disingenuous and creating a straw man argument trying to treat all countries the same. Why do you think Argentina HAS TO issue bonds in USD in the first place? As I posted for you a second time, not all countries are alike, and the ultimate constraint they face in using "deficit spending" is inflation. Advanced countries with excess labor and capital, and developed financial markets, have much more flexibility than others. 2 minutes ago, 3rdnlng said: What if China loses much of its manufacturing base to countries like Vietnam and we purchase our cheap Walmart products from them? We are an important market for China and our agriculture products are needed. After all, soybeans do not grow on trees. I don't disagree, but it takes time to develop new supply chains. Trump has until next year--the election. Hell, the markets are yelling at him now to stop this shiz. Soybeans grow in Brazil too....
3rdnlng Posted August 5, 2019 Posted August 5, 2019 7 minutes ago, TPS said: Once again, the statement made was "countries that issue debt in their own currency can never default." If you issue debt in another currency, then you are subject to constraints in the FX market. For example, If the US issued debt in yuan, I certainly would not make the same claim, nor would anyone else. Any country can certainly try and purchase those hard currencies with the currency they control, but you DO face a constraint on the other side of that exchange. You're being disingenuous and creating a straw man argument trying to treat all countries the same. Why do you think Argentina HAS TO issue bonds in USD in the first place? As I posted for you a second time, not all countries are alike, and the ultimate constraint they face in using "deficit spending" is inflation. Advanced countries with excess labor and capital, and developed financial markets, have much more flexibility than others. I don't disagree, but it takes time to develop new supply chains. Trump has until next year--the election. Hell, the markets are yelling at him now to stop this shiz. Soybeans grow in Brazil too.... I know they grow there. Why was China buying them from us in the first place? If China was convinced that Trump would win reelection then we would already have a deal with them. If Trump does not win then we'd better have someone win that will pretty much follow the same policies as far as trade goes. This trade correction had to be made. The theft of intellectual property has to be stopped.
TPS Posted August 5, 2019 Posted August 5, 2019 9 minutes ago, 3rdnlng said: I know they grow there. Why was China buying them from us in the first place? If China was convinced that Trump would win reelection then we would already have a deal with them. If Trump does not win then we'd better have someone win that will pretty much follow the same policies as far as trade goes. This trade correction had to be made. The theft of intellectual property has to be stopped. If you've read my recent stuff, then you know I don't disagree. I am in the business of predicting what I think will happen... The Chinese State can wait longer than Trump can, and it certainly seems in their best interest for Trump to lose 2020. As a prediction, I don't think this is controversial.
GG Posted August 5, 2019 Author Posted August 5, 2019 14 minutes ago, TPS said: Once again, the statement made was "countries that issue debt in their own currency can never default." If you issue debt in another currency, then you are subject to constraints in the FX market. For example, If the US issued debt in yuan, I certainly would not make the same claim, nor would anyone else. Any country can certainly try and purchase those hard currencies with the currency they control, but you DO face a constraint on the other side of that exchange. You're being disingenuous and creating a straw man argument trying to treat all countries the same. Why do you think Argentina HAS TO issue bonds in USD in the first place? My entire point is that not all countries are the SAME. That's why some countries can get away with far more fiscal irresponsibility, that has nothing to do with how the central banks fund the private banks' reserve accounts. I'm glad you finally came around to agreeing with my point. Argentina and Brazil have greater labor and natural resource capacity than Japan, yet they don't have the same credibility with investors. So please stop with the textbook answers. Developed financial markets is a nice way of saying that the government knows its place in the economy. Quote Solely done for your benefit....? By injecting more spending than it takes out in taxes, government spurs greater wealth creation by the private sector--every debt is someone else's asset.... How did the government under Trump "inject" more spending than in the previous administration? The markets were more accommodating to Trump, because they understand that temporary government revenue shortfalls are better than unsustainable expense growth. Both create a deficit. One is better than the other. There's nothing more disingenuous than insisting that all deficits are the same.
3rdnlng Posted August 5, 2019 Posted August 5, 2019 5 minutes ago, TPS said: If you've read my recent stuff, then you know I don't disagree. I am in the business of predicting what I think will happen... The Chinese State can wait longer than Trump can, and it certainly seems in their best interest for Trump to lose 2020. As a prediction, I don't think this is controversial. Yes, they can probably wait longer than Trump but can they wait longer than the USA? That's the question here.
keepthefaith Posted August 5, 2019 Posted August 5, 2019 (edited) 5 hours ago, 3rdnlng said: Yes, they can probably wait longer than Trump but can they wait longer than the USA? That's the question here. Do you think that if Trump loses his successor is gonna stay on the same path with China? Very doubtful IMO. What I do think will happen is that these current events will convince many U.S. CEO's that China is not the best place in which to set up shop. You can almost feel a cold war coming given the economic, technological and military rivalry that is developing. I just don't see the Chinese being as accommodating to the U.S. than as we have been to say the Japanese and the Japanese auto industry. That meaning that China is a lot less likely to welcome foreign companies to gain market share on their soil. Their style has been to steal/copy or buy their way in (Lenovo and Ingram Micro) to markets. Edited August 5, 2019 by keepthefaith
TPS Posted August 5, 2019 Posted August 5, 2019 1 hour ago, 3rdnlng said: Yes, they can probably wait longer than Trump but can they wait longer than the USA? That's the question here. To answer you and Faith, there is no doubt that the supply chains of the US companies that are producing in China have been changing and will change even more because of this. The cost differences between manufacturing in China and the US aren't so great any more, and companies have gradually shifted. It is US Multinationals that caused most of the shift to China and other countries, so they do need a push by politicians. I doubt very much the next president will be as belligerent on this as Trump, which is why I predicted China would stall on this a couple months back. Maybe it started with Clinton, but US interests have pushed globalization and outsourcing for a long time. When companies move, it's Wall STreet and shareholders that win, and workers lose.
TPS Posted August 5, 2019 Posted August 5, 2019 1 hour ago, GG said: My entire point is that not all countries are the SAME. That's why some countries can get away with far more fiscal irresponsibility, that has nothing to do with how the central banks fund the private banks' reserve accounts. I'm glad you finally came around to agreeing with my point. Argentina and Brazil have greater labor and natural resource capacity than Japan, yet they don't have the same credibility with investors. So please stop with the textbook answers. Developed financial markets is a nice way of saying that the government knows its place in the economy. How did the government under Trump "inject" more spending than in the previous administration? The markets were more accommodating to Trump, because they understand that temporary government revenue shortfalls are better than unsustainable expense growth. Both create a deficit. One is better than the other. There's nothing more disingenuous than insisting that all deficits are the same. Apparently you just aren't reading my posts very carefully, because I said it (all countries are NOT the same) long ago... The reserve accounting EXPLAINS WHY QE DID NOT LEAD TO INFLATION. A deficit occurs when spending exceeds tax revenue. Here's where we differ: I believe It's the size of the deficit that matters (and of course the state of the economy when they occur); you believe it's more important whether they are caused by spending increases or tax cuts. You believe that larger deficits caused by tax cuts lead to stronger growth than deficits caused by spending increases, but this supply side religion has never worked in practice--the evidence does not support it. Haha! Thanks for bringing Japan into this...who do you think holds the majority of their government's debt?
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