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Trumps Currency Trade War

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posted on Aug, 6 2019 @ 07:31 AM
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I have read, agreed with, and have argued the Chinese pegging the Yuan 6 to 1 against the dollar is why all our factories have shut down in the last 30 years and all our manufacturing has moved to China. Yesterday the Dow dropped 700 points because China change the peg from 6.x to 1 to 7.x to 1.

"China priced the yuan's reference rate at 6.9683 to the dollar, a hair above the target 7:1 ratio to the US dollar. Although that was the weakest level for the yuan in 11 years, many Wall Street investors feared China would price the yuan below that psychological 7:1 barrier.
The yuan, which trades more freely outside China, continued to fall below the barrier on the open market (to 7.07 to the dollar), but investors were still encouraged that the damage wasn't considerably worse."

The argument is this was done because of the trade war. When Trump puts tariffs on goods they become more expensive. So the Chinese just made all their goods artificially cheaper by changing currency exchange rate.

My problem with this is ALL our factories have gone away. My theory is the dollar is unit labor cost. So by pegging the Yuan a CEO gets, for sake of argument, 6 Chinese workers for every 1 American worker. No one worker can compete with 6 other workers. Maybe the numbers are 5 to 1 or 4 to 1. But the point is the Chinese pegging the Yuan hurts US workers and US manufacturing.

Do you care? Does it matter?

I care. I think we need to protect the American worker. But I guess I'm in the minority on this issue.




posted on Aug, 6 2019 @ 07:37 AM
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As someone fairly ignorant on all of this, what can be done? According to this administration the tariffs were supposed lead to an equal playing field. China called our bluff.

Is there actually anything we can do when China owns so much of our economy?



posted on Aug, 6 2019 @ 07:39 AM
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a reply to: dfnj2015

I care,
This trade war is doing damage to my 401k and I don't understand it well enough to prepare properly.
I thought I had a good plan to move some money to higher risk areas for a month when the feds cut rates, then move it back, but the China stuff made that plan backfire HARD.
I wish I knew how this would pan out.



posted on Aug, 6 2019 @ 07:44 AM
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a reply to: dfnj2015

Its surely a complicated issue.
As long as the playing field isnt level the labor will not be level.

An American making $15 an hour costs the company a minimum of $25 an hour.
A Chinese worker making $1 an hour costs a $1.
India is cheaper yet.

All because those governments dont care about their people an the western world wants to have stuff.

The only way to correct this problem is to lower the American worker to 3rd world status or to become isolationist and close off the economy to the world...

Any guess which opinion is more likely.



posted on Aug, 6 2019 @ 07:45 AM
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a reply to: dfnj2015

We dont agree on much but I am with you here, I think we are going to have to eat some hard shots to get to that even playing field people want.


The hard part will be convincing people to accept short term pain for long term gain, we as a society dont like to look that far ahead anymore, not like our great grandparents (or grandparents for some) that planted trees to prevent another dustbowl even though it would not be them seeing the benefit.


edit on 6-8-2019 by Irishhaf because: (no reason given)



posted on Aug, 6 2019 @ 07:58 AM
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a reply to: Irishhaf

Honestly it probably wouldn't be that bad if we narrowed the wealth disparity in this country.

With the mentality we have now, if we cut trade with China, the working class would eat the increased cost of everything, without seeing a raise, while CEOs post record income.



posted on Aug, 6 2019 @ 08:39 AM
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If we had the same conviction of evening the trade scales as we do staying in Afghanistan we could prevail but it takes time.

China is banking on this never happening. American people have short term thinking. Too dumb to understand anything beyond a few paychecks. China took massive losses for years to ensure US factories would close which they did. Now they have the factories without labor laws, without regulations. Whatever the US still has they tariff the hell out of it.

To add to it, corporate raiders in the US squeeze the few remaining industries and flip them like houses...slap paint on them, do some shotty repair work just to dump these companies for a profit. Corporate raiding is such a dirty business. I once witnesses a gutted US company sold for a lower bid because the raiders were friends. The higher bid wanted to fix the company up for real but no. INSANE but this goes on everyday.



posted on Aug, 6 2019 @ 08:43 AM
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a reply to: dfnj2015

The Dow has gone down 0.76% net over 5 days, the Yuan dropped about 2% vs the dollar. Sure, its likely a reaction, but it was absorbed like it was practically nothing in one fell swoop. China's Yuan continues to be affected by the change going forward.

(Screenshots via google searches for DJIA and Yuan to USD - set charts to 5 day)





edit on 8/6/2019 by dogstar23 because: The was spelled tye



posted on Aug, 6 2019 @ 08:47 AM
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This is all a show.

The Chinese have been pegging the yuan to the dollar in an aggressive way for 3 decades now. Presidents since the elder bush have been threatening them and begging them to let the yuan float free, and let the market determine its value.

They haven't done so, and won't.

if it was allowed to float, they couldn't make goods for the US cheaply enough to export. Their factories would all close and move to Malaysia.

Every two years, they used to promise the G8 that they were working on a path to floating the yuan. I mean ever since the Berlin Wall fell.

A 700 point drop in the dow is what, 2% ? BFD.

it needed to take a breather, and this was as good an excuse as any.
edit on 6-8-2019 by Graysen because: (no reason given)



posted on Aug, 6 2019 @ 08:54 AM
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a reply to: Graysen


Additionally, the value of the dollar is a juggernaut, crushing the other currencies under its wheels. Part of the reason for the trade deficit is that the dollar improves against ALL currencies, since before the 2008 crisis, but definitely since.

The Pound has taken a hit since Brexit; the Euro has too.

The US bankers all want a cheaper dollar. China just moved first, to make sure they got a shot in. If the FED (not the president or congress, who have no power) cut the dollar, they'd be doing the economy a favor. That was true last year, and it will remain true next year.

You could argue that this whole trade war was to give trump the excuse for getting the dollar devalued.



posted on Aug, 6 2019 @ 08:58 AM
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a reply to: Graysen

So the answer is to peg the yuan and then in 10 or 20 years the entire World economy collapses because of China's insanely high trade imbalances. I thought the Chinese people were about balance and moderation.



posted on Aug, 6 2019 @ 09:11 AM
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a reply to: dfnj2015

abosolutely not. They are about fighting an economic war with the entire west, and especially the USA. They are dependent upon us as a trade partner; but we depend on them for the technology that keeps our country in business. Their economy is still state-controlled, and they use it as a weapon. Just like they control Kim Jong ill, and use him as an alter ego to pester the USA and limit its influence in Asia.

Most Americans don't realize that after we pulled out of Vietnam in 1975, the Chinese tried to invade it in 1980. They failed and had to back out, but they wanted the oil that had been discovered there. So they invaded a communist country they had just supported through 20 years of war...

The Chinese economy is a mess, with no one really in charge. The central planners at the top of the party try to speak for all of china, but the various prefectures have independent armies (read that sentence again).

For instance, the big maker of assault rifles for the US market was NORINCO-- north infantry company. literally the northern Chinese army. They did that independently of the party. SOINCO had tried to make SUVs to sell in the US at one point, but the party stopped them. It was called the Dragon, I think. It was what the southern army used to pull artillery on the highways....

There has been a lot of ink shed about "sovereign corporate interests" interfering with US stock market, currency markets, and bank policy. Sovereign corporation is when a nation-state claims to be a company when investing in the USA. China and Sa'ud are the prime examples, with the queen of England in third place. It isn't even legal in most other countries. But the US we'll take you money and say nothing, and promise you a good rate of return.

Read up on sovereign investors. You'll lose hair.



posted on Aug, 6 2019 @ 09:15 AM
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American corporations move their manufacturing operation to China because it's profitable. And that's China's fault?

It's almost as if the tariffs are designed to bring down the US economy by causing a shortage of aluminum, steel and other building products we cheaply buy from China. China retaliates and who suffers? American farmers....

What a clever strategy to punish China!

China buys American gold to prop up its currency. And we sell it to them....WTF!!


edit on 6-8-2019 by olaru12 because: (no reason given)



posted on Aug, 6 2019 @ 10:23 AM
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a reply to: Graysen

Peg for show, float for dough? Or was it: drive for show, putt for dough??

Yeah, it’s all show.

The Chinese are still the largest foreign owners of US Public Debt — they ain’t holding dollars for show and definitely can’t peg it and get that dough.

The Chinese have accepted (err, mandated?) the plebes will acquiesce to a surveillance state as long as the economy is westernized; if they plan on that being the case for any stretch of time they’ll have to make that dough and the US dollar is the quickest way to that eventuality.

The Administration will have to play the long game — as long as an administration can given the ability for the next admin to reset it all — as the Chinese played their short game hand. The Chinese will acquiesce but it appears they waiting out a new administration...



posted on Aug, 6 2019 @ 10:23 AM
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a reply to: Graysen

Much of what you speak off sounds familiar from what I heard Steve Bannon talk off.

I'm working right now, but this is a very important thread as right now, the Chinese are actively engaging in an Economic War with the US, a silent war, without the big bangs and pops.



posted on Aug, 6 2019 @ 10:27 AM
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a reply to: Xcalibur254

But how can you address the wealth disparity when there are little to no jobs that average people can get that pay well with a decent benefits package.


We used to have those before China and India undercut the bejesus out of us, and our elected ninnies listened to the CEO's that were lining their pockets and passively stood by while it happened.



posted on Aug, 6 2019 @ 10:27 AM
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a reply to: Cravens

Whether you like Trump or not, he has called that point out as well, China is waiting for and betting on a Democrat to try and gain the Presidency as they are eager and willing to accept Chinese money.



posted on Aug, 6 2019 @ 10:36 AM
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a reply to: Arnie123

In general? I hope so, because I have no dog in the Trump/Dems/whoever fight.

Make no mistake about it though, this is the only administration to actively engage the Chinese in such a fashion, and if it’s using tariffs as a sledgehammer, so be it. In any other reality, tariffs would be laughed off as the mental midgetedness of mercantilism.

The is no good ending with the Chinese (as presently constructed) as the world’s hegemonic superpower. None.



posted on Aug, 6 2019 @ 11:06 AM
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S and f for a great thread. I tell everyone that for every cheap chinese piece of plastic you buy......you are financing a Chinese Aircraft carrier. Stop financing Chinese aircraft carriers.



posted on Aug, 6 2019 @ 11:13 AM
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a reply to: Arnie123

Dp
edit on 6-8-2019 by Cravens because: (no reason given)



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