China Devalues dollar by 30%(But protects U.S. treasuries)

I've just started using monopoly money. Nobody will take it though so I've had to start practicing some of those survival techniques I've been reading up on. I'm hungry...

I was restraining myself from commenting on this topic because I thought it would blow over.

But China is officially getting on my nerves... but IMO its not entirely their fault, its the politicians here in the US that continue to let the US economy fall prey to china.

This kind of thing should ring alarm bells. Where is the outrage?

Originally posted by ugie1028
I was restraining myself from commenting on this topic because I thought it would blow over.

But China is officially getting on my nerves... but IMO its not entirely their fault, its the politicians here in the US that continue to let the US economy fall prey to china.

This kind of thing should ring alarm bells. Where is the outrage?

How does this make us fall prey to China?

IMO this is a a necessary move.. and just that, a move that is most likely associated with the QE.
For a long term effect, this is a gentle way of bringing the world towards a more level spending ground. There's an incredible difference in the amounts we pay for energy, food and other goods than the rest of the world and it's been that way for a while.
time for a change.. no need to be scared or alarmed.. it's called history in the making

reply to post by Bspiracy


I am sorry if you missed my point. I replied with frustration and I am sorry if it didn't make sense.

Ill try and make a few bullet points on why I am concerned.

- Trying to make their currency (Yuan.) an international currency like the US dollar.

- China and US trade. The US has weak taxation on imports... while china taxes the hell out of their imports.

- Devaluing the dollar leaving their holdings unharmed. (in the op.) but they are not the root cause of it. the trade deficit is and its our politicians fault for letting it get that way.

- Chinese president seemed to be walking all over President Obama and seemed to be disrespecting the US.

- Making it increasingly difficult to pay down the US debt.

I could go on and on. I think my concerns are legit enough to make sense now.

To reiterate the point I want to make, they are both fake money. All money is fake, colored paper with pictures of dead politicians and monarchs and monuments and sometimes indians.

I believe all money is fake, even if it were backed by something like gold, because supply is produced not for the amount of people who want something but for how many can afford to pay the producers price even though there are enough raw resources and people to produce enough of almost everything to make everyone happy.
Most people demand healthcare and there's an infinite supply of that(just gotta be "patient"...) aside from gas the world can supply the world imo.

Anyway, Money is fake power made real power by people who want power. Even just the power to be fed immediately from a store.

If the dollar is worth less the US should be able to export more. Might bring down the price of grain for the poor too?

.

edit on 1/21/2011 by ugie1028 because: Softened my tone too

too funny..

Originally posted by ugie1028
reply to post by Bspiracy

 

I could go on and on. I think my concerns are legit enough to make sense now

.

edit on 1/21/2011 by ugie1028 because: Softened my tone too

Is this move in favor of China? sure.. they are a financial steam roller right now and the current administration is in shambles.

Is this an aggressive "take-over" move.. While it's in favor of China, this is actually a soft way of alleviating our debts while allowing breathing room for GOOD decisions to be made in the next year or so.
..holding my breath...

b

Why doesn't the US try evening the tax rates on imports with china. They tax all US goods imported at 25% we tax china goods at 2.5% how can we compete with that?

Also how would that affect the taxes collected if the chinese currency is devalued?

reply to post by monkey_descendant


They should be able to expect cheap or free grain just because we have the capability to mass produce cheap grain. But from a technical sense there wouldn't be inflation if we made things cheaper. It's impossible for money to be worth less and buy more, unless you're the government.

Moving on. It's becoming more expensive to export from china. It's more expensive to produce in most countries than it was in china. So no matter what the price of goods we get from china whether we continue to get then from china will become more expensive. It won't be a huge difference though. Gas prices are the main influence on the buying power of the dollar. Every penny gas goes up makes shipping prices go up which makes the price of all products go up so profits don't go down. But the profits go down anyway because people can't afford as much as they used to even though they're still making the same amount of money and spending the same amount of money.
Then you have the fed making fake money and lower banks making faker money from the original fake money. That inflates the currency as well as creates dept far surpassing money in circulation.

So I can't afford food. My house gets foreclosed. I blaim china, and the midde east, and the coorporate elite and zionists. And truly, while all of these things do effect the economy the two groups to blaim are the people and the government.

We have to blaim ourselves for even allowing the government to be a seperate entity from the people so that it has to be listed as a second group after the people.

Originally posted by monkey_descendant
If the dollar is worth less the US should be able to export more. Might bring down the price of grain for the poor too?

Right. A small bit of inflation is a good thing over time, and with us being upside down in debt, higher inflation is better. If Americans were sitting on huge reserves of assets and savings, then inflation would hurt us, but since we are mostly sitting on debt, the inflation actually helps us. It is a "soft" way of easing our debt.......so long as wages keep up with the inflation. If we begin to export more, then wages should keep up.

As long as America is a huge importer, we are still in the driver's seat of the world economy. Everyone (especially China) needs us buying their wares, it gives us a lot of influence. If we raise the tariffs as some have said, or if we stop buying the world's stuff and we start buying our own, then we lose political and economical influence around the world, although we do create some jobs here in the states, the benefits would be short-lived.

I am waiting and crossing my fingers like you. This could be a very good strategy, but Washington usually has a way of messing things up, and this could all backfire and just drive the average American further into debt and destroy the middle class. I'm hoping for the best.

reply to post by alchemist2012


Very interesting, and as the author says, "An elegant solution." You don't need nukes when you've got cash. And now, China will offer us yuan-based savings accounts.

The Chinese have decided to devalue the US dollar’s buying power, without devaluing the US Treasury holdings they hold. It is an elegant solution to their issues. It will be interesting to see if they can pull it off, while they try to prop up the European Sovereign debt markets at the same time.

The Chinese are attempting, successfully so far, to introduce the Yuan as a global currency in which to settle international trade. China is pumping into its own internal currency markets so much liquidity, they need an export market to develop for the Yuan or their own internal markets will overheat.

So China is going to start offering Yuan based savings accounts, to westerners as a vehicle in which to park capital. While this is a test case only, one might expect Yuan based accounts to be offered around the world sooner rather than later.

S&F

You can't blame the Chinese..


It's like asking daddy for a $20,000 loan and then blaming him for giving it to you after you spend it irresponsibly with no way to pay it back

Honestly, the U.S. shouldn't even be trading with China. Period. We were in a Cold War with a communist country for 40 years, and the people who lived through that are now in control. They were taught to never, ever trust communists, so why are we even in this situation?

Originally posted by SonOfTheLawOfOne

Originally posted by Xcathdra
Just another reason fo Congress to pass their trade snactions on China to force them to revalue the Yuan. China just does not get it. For the most part we buy crap from them that is sold cheap here. If this all goes to crap, They are going to jeopradize their largest market.

Not to kntpick or anything, but there is a difference in a 30% devaluation of buying power, and 30% devaluation of the US dollar.

edit on 20-1-2011 by Xcathdra because: (no reason given)

China will be just fine if the US crumbles... the rest of the world still needs goods that are made at the lowest possible cost, and just because we are their biggest consumer, does not by any means make us the only one.

Many other countries are coming up right behind us, like India, as a consumption based society and Europe is also an enormous consumer of Chinese goods, so they really have nothing to lose except perhaps a set back.

~Namaste

First off.. if you believe the US is going to crumble and not affect Europe or India you are not thinking it through. If the US crumbles then all the other nations will crumble just as much if not more which means our standing in the world remains the same. Second.. if China raises their prices then we can go to India or Ghana or Madagascar and set up some factories there. Do not underestimate the TPTB. If I was playing a game of chess I would want to be the US right now. We have China right where we want them. They have invested so much money to make us products and we can simply just leave them hanging. That is in my opinion why missles are flying up out of the water in LA. China is pissed cause we duped them.

reply to post by ProfATS


I think you're all assuming different things when I say China will be fine if the US crumbles...

There are a lot of ways that can go down, and the US won't disappear, that's not what I'm saying.

Just look at Europe if you want to see what's next for us. They had their shining moment with a huge empire and gigantic economy, and slowly it fell apart. That's what is happening here right now. China is bracing for what they already know is going to happen. They realize that they made a bad business decision investing in our central banks and debt, and are doing what they can to make the best of it.

There will always be SOME demand from the US, but like I said before, there are other consumers in the world who put quite a bit of money into China, especially India and believe it or not, Australia, so if the US fell behind economically, China would take a hit but they are well diversified enough in the world market now and would not be as impacted as people are making it sound. China is also the largest consumer in the world of THEIR OWN GOODS... which is why the US is desperately trying to break into their market and sell them US goods. Contrary to popular belief, they don't even hold that much of our debt, most of what they hold are investments in tangible US assets like land, businesses, mines, politicians, etc. So when I said China will be fine, they will be fine. Job losses in their country is nothing new, they started with most of their people having no jobs in the first place, so people have not come far enough to fall that far back down, which is a little different than here in the US.... people here are falling HARD. China still has a ways to go but they are now the largest consumer in the world, with the US being second, so I don't see what all the fuss is about.

Sorry for the confusion in my short post.

~Namaste

Can someone explain me one thing. Why is US pursuing the policy to make China revalue yuan. Most of the consumer goods come from china and it's a fact that US is a consumption based economy. I understand that they want to reduce their trade deficits, but as China's goal to establish yuan as an world reserve currency gets grip, US will lose its hegemony status. Or am I missing something important here?

People seem to miss an important point when they discuss how and why 'countries' do certain things and what effect that will have over the 'country' in the long-term. People run countries --- both here in the U.S. and in China. Don't think that the Chinese bankers and politicians are all that much different than the crooks we have running this country. They're all making policy decisions that benefit themselves in the near-term and which do not appear to have any consequences that can hurt them personally. The Chinese are dealing with the here-and-now and trying to do what they can to line their pockets and keep their disgruntled population from grabbing the pitchforks and torches. Same as here just slightly different problems.

I think this might be a little off topic but not too much. It's just 2 bit of history. First, china had the first fiat currency. It was either during the song or the yuan dynasty over 1000 years ago. It fails miserably over and over again. Just history, I'm not making any theories off of that. The other thing, china started trade with us in the 1800s so that england wouldn't have a monopoly on chinese goods in the west. Again, just something I learned while researching the first and second banks of the united states.

Oil is traded in USD... does this mean the price of oil will rocket?

Perhaps it's time to start trading oil in euro's.

Originally posted by gnosticquasar
Honestly, the U.S. shouldn't even be trading with China. Period. We were in a Cold War with a communist country for 40 years, and the people who lived through that are now in control. They were taught to never, ever trust communists, so why are we even in this situation?

Basic economics.

China has a huge population where labor is cheap. The west needs that cheap labor to keep it's own inflation rates down while maintaining it's profit margins.

Money. Money. Money.