End of US dollar? China moves towards currency convertibility

[tortoise]

Quote from oldtime:

please forgive achilles, he's probably a little out of sorts because that last claim he made still looks a little ridiculous.

If he was a gentleman, he would have politey asked (and since he isn't or won't I will)

How is a gold backed currency deflationary?
And how will that lead to industrial collapse?

(corky his imaginary nemesis)

Ah, got it. Ok, thanks.

As for deflation issues...if your economy grows, but the amount of money in the economy remains stable, the value of the currency rises as it becomes scarcer in relation to the size of the economy. Deflation.

That paradox was enough to give rise to the populist movement of the late 19th century--the "Cross of Gold"--and that in a much more responsible, pay-as-you-go era. Imagine the consequences in an era where debt loads are already crushing...and deflation would make just make that overhead more burdensome.

 

[achilles28]

Quote from tortoise:

Just saw this. Sorry, totally confused. I did not make a "claim" on anyone's rights or property. How, then, am I a "claimant"?

Also, who's Corky? Thnx.

English isn't your first language, I take it. A claimant is anyone who makes a claim (assertion or on property). As for Corky, you're full of shit and admitted as much. Not the sharpest tool in the shed.

 

[oldtime]

Quote from tortoise:

Ah, got it. Ok, thanks.

As for deflation issues...if your economy grows, but the amount of money in the economy remains stable, the value of the currency rises as it becomes scarcer in relation to the size of the economy. Deflation.

That paradox was enough to give rise to the populist movement of the late 19th century--the "Cross of Gold"--and that in a much more responsible, pay-as-you-go era. Imagine the consequences in an era where debt loads are already crushing...and deflation would make just make that overhead more burdensome.

yeah, rough if you owe a lot of money

in Rikards book "Currency Wars" he puts forth an interesting idea to back up 40% of M1 with gold, I guess, just to keep them honest.

 

[achilles28]

Quote from oldtime:

please forgive achilles, he's probably a little out of sorts because that last claim he made still looks a little ridiculous.

If he was a gentleman, he would have politey asked (and since he isn't or won't I will)

How is a gold backed currency deflationary?
And how will that lead to industrial collapse?

(corky his imaginary nemesis)

...says the guy throwing darts at a dart board. Okay there, grandpa. You know what they say about a fool and his money...

 

[achilles28]

Quote from tortoise:

Ah, got it. Ok, thanks.

As for deflation issues...if your economy grows, but the amount of money in the economy remains stable, the value of the currency rises as it becomes scarcer in relation to the size of the economy. Deflation.

That paradox was enough to give rise to the populist movement of the late 19th century--the "Cross of Gold"--and that in a much more responsible, pay-as-you-go era. Imagine the consequences in an era where debt loads are already crushing...and deflation would make just make that overhead more burdensome.

It's called bankruptcy, you turd. Debts are written off, reckless bankers are liquidated, and prices fall. This is called the business cycle. Fascinating, eh?

 

[tortoise]

Quote from achilles28:

It's called bankruptcy, you turd. Debts are written off, reckless bankers are liquidated, and prices fall. This is called the business cycle. Fascinating, eh?

You make an interesting point; not sure why you feel the need to lard it with such invective, but whatever.

The problem is that the "bankruptcy" you describe might be so complete that the legal institutions assigned with bankruptcies would simply cease to function. The path to such insolvency would not be smooth, either.

Again, consider the periods of economic contraction and social unrest that precipated the gradual, and continual, monetary easing that's brought us to this point. Then consider the impact of widespread insolvency in an era of unprecedented debt and leverage. The result would, I think, be the end of any "business cycle" so described.

I don't know what other conclusion one can draw, although I am eager to here a compelling alternative scenario.

 

[Whistlingleaf]

Yes please allow the RMB to float freely, so we can watch China's currency appreciate and their already deck of cards economy fail.

Some years from now people will write that we should have seen China's blow up coming taking the cue from Macau's gaming growth EXPLOSION.

People in the US complain about the 1% ... in China it's the .10%

 

[piezoe]

It seems unlikely that China's economy can continue to grow at 8% plus for too many more years. As China develops its growth rate will cool to that of other developed countries. Growth rates are relative measures and thus as the size of the denominator grows the ratio declines.

It's comical and sad at the same time to look back at the mistaken projections of the 1950's onward made by the CIA using grossly inaccurate data. Those projections assumed that the Soviet economy growth would continue to outpace growth in the U.S. economy, and thus a date then distant by only a few years was projected as the "crossover" date -- the date at which the Soviet economy would exceed that of the U.S. Irrational fear of the Soviet military resulted in unnecessary military expenditure in the USA, ultimately at the expense of mushrooming debt along with what became an out of control military industrial complex. Sadly, the correct data existed and was available, but few on the outside with accurate knowledge had any inkling of what was going on in the highest circles of US government because of excessive secrecy. One or two voices were raised in opposition but were ignored, or worse. President Ford, in 1976, fired one of his cabinet members for expressing the opinion that the Soviet Union would in time self-destruct.

By contrast with the old Soviet Union, the Chinese economy will eventually exceed those of the EU and the USA. China has a much larger population, so that would be a normal outcome assuming the Chinese manage their economy well. But naturally, their GDP growth rate will slow as the size of their economy increases. There is nothing to fear here. The USA would best be advised to pay closer attention to what is happening on the home front, and worry less about China.

 

[bone]

Quote from gwb-trading:

The minute the Chinese allow their currency to float freely against the dollar is the same moment they are doomed & their economy crumbles. Their entire economy is based on a bubble powered by the currency valuation imbalance driving export trade.

Well, that was really true in the 1990's and early 2000's but not so much these days. These days it is more about China's labor rates ( wages ) maxing out against overseas container shipment rates. The advantage is shrinking rapidly, and countries like Vietnam are going to compete with China for that cheap labor manufacturing export arbitrage.

 

[gwb-trading]

From Barrons:

Falling Star
The Chinese economy is slowing and is likely to slow a lot more. Get ready for a hard landing.

http://online.barrons.com/article/S...354.html?mod=BOL_twm_ls#articleTabs_article=1