Re: What could China do to the American economy if they traded their dollars for Euros?

"Zerge" <zerge@xxxxxxxxxxx> wrote in message
news:1161479255.668464.309720@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Nospam wrote:
Zerge wrote:

No, it's the other way around, I insist. They could certainly cause
waves in the currency market if they wanted, but so could many other
large countries. If China where to try something like that, US could
shut down China completely in a month by imposing trade barriers.

Nope, will be the other way around.

If China and US break any relations, the Chinese still have the industry on
their soil. They can produce clothing, computers etc...

And sell them to whom, may I ask? Who CARES if you can produce, if you
can't sell?

You can certainly consume the stuff you produce as opposed to selling it.
But if you don't produce then you are dependent on those who do.


US on the other side already dismantled all textile factories and moved them
in China. All the looms were disassembled from US factories shipped offshore
and new factories were build. The old factories become warehouses to store
imported products.

If a blockade happened tommorrow, US will need to rebuild their textile
factories from zero. And we need to build the looms since if the relations
betwen China and US are stopped, be sure the Chinese gov. won't allow the
equipment to be disassembled and moved back in US.

No, the US need not do that. The US would simply buy its stuff from
OTHER third world countries who would be more than happy to step in for
China.

And what will we trade for these goods? We really do not have anything
to offer other than green house gases and fear.


But the manufacturers of the looms are already moved ..... In China too. We
need to start rebuilding their factories before we can produce looms for
our new textile industry.

But the manufacturers of the parts for the looms are in China too. There are
also the manufacturers for the PCB for the computers and other electronics
required by the parts makers.

Yes. It took 30 years for the US manufacturers to slowly move their
production in China along with the equipment. But today the disaster is
complete: We are 100% dependent on China for clothing.

Worry not! Here in Mexico we manufacture clothes too! I'm sure Mexican
textile companies would be more than willing to fullfill demand,
together with all the other Asian countries that manufacture textiles
and ALL the other stuff China manufactures.

And what will the US sell to these people? What is it that they will
get for producing the goods and sending them to us?

If we mobilize in front of such a disaster, we can rebuild back the
industry faster. It won't take 30 years, neither 20 but you can expect
a 10 years before we are again a self reliant economy.

Who want to be a self reliant economy? Self reliant economies are poor;
being self reliant violates the economic principle of comparative
advantage.

That principle requires reciprocation.

I as an individual am not self reliant; I don't make my own
clothes and shoes, nor do I hunt and prepare my own food, and God knows
I could NEVER build a car. So I specialize in what I do, I get paid for
it, and exchange my money for other goods and services, whose producers
specialize in them, so we all win. If we didn't use this system, we
would all be cavemen wearing skins and hunting our own prey.
This is the fundamental principle of economics: specialize in
something, trade with the rest. Countries do it too.

So what is the "specialty" of the USA? The answer is that our stuff
ain't worth spit and that is why we have a trade deficit. The stuff we
specialize in is imperialism only; that and aristocratic Republican pig
prancing.


Heck. You won't even find textile workers in US today.

Good! Why do you want to specialize in low productivity industries that
pay employees low wages? The US is doing great economically because it
specializes in things like engineering, marketing, financial services,
etc.

That is why we have this huge trade deficit, you see. It is because our
stuff is in such demand all over the world. Only Americans know how
to provide "financial services". Get a clue. No military threat by the
USA to the rest of the world, and we will all be quite poor.

The guys fired 30
years ago are already in retirement or underground, and nobody went anymore
to learn that skills since there was no job offer forthem. It will be
required maybe at least one year only to get the skilled workers to do the
job.

In meantime, China having all the industry there will just provide cheaper
products on domestic market and their economy keep growing.

Let face the reality Zerge:

US corporations was able to do to US what Hitler, Stalin and Bin Laden
couldn't even dream about. Destroy it independence.

I'm sorry my friend, but you, as most people in this planet of ours,
have a fixation on manufacturing.

It is actually an intuitive knowledge that tells us that those who are
productive will have a trade surplus, while those who are consuming
and not producing will have a trade deficit.

That's because it's easy to perceive
the value of a manufactured object, but it is not easy to perceive the
value that SERVICES bring.

Horsecrap.

An example. The laptop I'm using right now
cost me $3000 USD, so I can easily perceive THAT value, because I
dished out the money.

Ya wanna buy _my_ laptop? You don't seem to have a good handle on
value.

Therefore I would tend to think that the value
was generated by the manufacturing of the laptop. This is only partly
true; a very large percentage of the value is brought by the service
part of the product: the engineering, marketing, logistics, retail
distribution, customer support, lawyers to protect patents, etc. etc.
Without all those services, this laptop might cost twice as much.

Or, half as much.

Therefore services allow a more PRODUCTIVE creation and distribution of
manufactured goods.

Some do, some don't.

All first world countries are predominantly services economies; any
county that depends or agriculture and mining is at the bottom of the
third world list, and many economies in the middle are becoming more
service and less manufacturing economies. Mexico's service sector, for
example, is 2.6 times larger than its manufacturing sector. I bet you
didn't know that.

Economics is a hard subject, and very counterintuitive.

No. On both accounts.

--
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org


.

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