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

"S. Doo" <none@xxxxxxxxxxxx> wrote in message
news:t8olj2pkagtit9eqkt0c5fggoq7f17nv4u@xxxxxxxxxx
On Sat, 21 Oct 2006 09:47:30 -0600, "Robert Miller"
<stargazzr@xxxxxxxxxxxx> wrote:


"S. Doo" <none@xxxxxxxxxxxx> wrote in message
news:aecjj2hjujlen3sacp3c6tk43ehi7162sd@xxxxxxxxxx
On Sat, 21 Oct 2006 00:37:39 -0600, "Robert Miller"
<stargazzr@xxxxxxxxxxxx> wrote:


"S. Doo" <none@xxxxxxxxxxxx> wrote in message
news:755jj2lv1cq2q7dh8pb5i7ks1lvkppk8rg@xxxxxxxxxx
On Fri, 20 Oct 2006 22:11:20 -0600, "Robert Miller"
<stargazzr@xxxxxxxxxxxx> wrote:

China has a Trillion dollar balance. What could they do if they wanted
to
hurt us or get Taiwan?


....
OK, so the Chinese gov't borrows this money from its people, then it
invests this money in a trillion $US.

Then the Chinese gov't decides to drive down the value of the US
dollar by dumping it.

Let's say the dollar drops in value by fully half, a good 50%.

Now the Chinese people have had the value of their savings halved, and
their retirement wealth such as it was is gone, because the gov't
can't repay them. Now how happy are they with their gov't?

Can you say "Tiananmen Square times one billion"?

If I were the Chinese govt. and I dumped the dollar, I'd buy something
that was likely to go up in value. Say the Euro.

What makes you think the Euro is going to go up AFTER they dump the
dollar?

Not another brain dead dummy! who does not have even the slightest
understanding of the market.

~sigh~

So quick to insult, so slow to understand.

There are only so many Euro's in the world. If somebody
starts buying
lots of them. The price is going to go up. The more they buy the higher
the price goes.

AFTER as opposed to BEFORE, Mr master of understanding of markets.

If you have to, *must*, buy something, do you *tell* the seller before
you go and ask for his selling price? Let him know your need?

Do you imagine it will make a difference in the price the seller will
name you? ;-)

Try it sometime and see. ;-)

If the Chinese dump the dollar the only currencies that exist that
they could buy to replace it are the euro and yen.

They can "dump the dollar" by buying gold, land, oil, or shares of
stock or whatever.

The *moment* the markets get the idea that the Chinese may do this --
like when they threaten to do it as you say they will -- the value of
the euro and yen will explode upward. BEFORE the Chinese sell their
dollars. Is that too difficult for you to understand???

Then, if the Chinese actually proceed to act on their threat, while
they do -- and it takes substantial time to sell a trillion in
dollar-denominated investments -- the value of the euro and yen will
continue to rise ever further, as you so astutely observed.

And we've both already agreed that the dollar will fall
correspondingly.

So the result is the Chinese govt will have followed the *unique*
currency war strategy of first collapsing the value of its own
investments, and then seeking the most expensive possible replacement,
totally bankrupting itself -- creating Tiananmen Square riots in every
town across the nation among savers who've had their savings wiped out
-- after first *threatening* to do so!

Again, how does one say "hari kari" in Chinese?

Hey, this the "Blazing Saddles" currency war strategy. Remember when
the Sheriff put his gun to his own head and said "Everybody stay back
or I shoot!", and the leader of the mob said "I think he means it" and
they all backed up?

Well, you've the Chinese as the Sheriff, with the only difference
being you've got him going ahead and shooting.

Yeah, sell cheap and buy expensive, with everything you've got -- a
way to punish your enemies that they'll always remember. ;-)

So what happens if they swap the bonds and T-bills for shares of
common stock or for land ownership here in the states? What
happens if they simply _buy_ America?


Usenet is a great place to have a discussion, or was. Since they will let
anyone into
usenet these days there are so many who have no interest in discussion, or
even the
ability to if they wanted to.

Yes indeed, these days you've got all these obnoxious people who start
off their posts by insulting other with the likes of "another brain
dead dummy!", ruining it for everyone.

But, of course, we know that the first one to resort to insults loses
-- it's a dead giveaway of inability to keep up in reasoned
discussion. Why resort to insult if you could?

At some point a currency war could be cheaper than a naval / air war. Short
term loss
and keep all your stuff.

Um, losing a "currency war" by suicide as you propose the Chinese do
may indeed be cheaper for them then getting nuked in a shooting war,
but it ain't winning.

Since you sort of understand how supply/demand affects price (if not
the timing of how it does) here's another profound concept you can
move on to:

When the value of a debt falls, the debtor gains and the party to whom
the debt is owed *loses*.

Here the US is the debtor, and China is the party to whom the debt is
owed. Is that too difficult?

So the Bush tax cuts are actually an attack on China?

If the Chinese cleverly manipulate the collapse of the value of the
dollar, they wipe out *their own wealth* invested in it, AND unemploy
the masses working in their export factories too -- creating another
round of Tiananmen Square riots -- since they are now are undersold by
US workers who enjoy an export boom due to the new exchange rate.

But what if they use the bonds to buy the factories? Let us call it
a free market/capitalist form of nationalization.

Would that be cheaper than losing a shooting war with the US?

Well, I guess ... sort of as if you had an enemy who owed *you* a big
debt, and to hurt him you manipulated that debt's value down to zilch,
so that you went bankrupt and lost your job, which he then took
...well, that might be cheaper for you than attacking him with a bat
and having him shoot you with a gun... but would you really feel
*smart* at the end of doing all that, due to your relative cost
savings, as you stand broke in the unemployment line?

Lest we forget: We have the best government that money can buy.
Bonds and T-Bills are interest bearing money.


The dollar would go down maybe 50% to begin with, with whatever the
Chinese could buy to replace it going way up LONG BEFORE they could
liquidate anything like a trillion $.

If there are not other forces agianst the dollar. For example the
petro-dollar
would become the petro-Euro. All ready pressure there.

You're so darn scared of a dollar fall of 50% that you fear the
Chinese gov't will commit suicide just to make it happen.

But you well know (because I've told you twice) that the dollar has
*already* fallen that much, within your own lifetime.

What were all the terrible things that ACTUALLY HAPPENED then, only 15
years ago?

The, so called, "Clinton economy" much benefited from the fall of the
dollar. For many righties this is a terrible travesty. Anything that
would have helped the Democrats is a curse.

Please list them. Name them for us. What ACTUALLY HAPPENED.

We saw a blossoming economy for a while. But that is coincidence
and may or may not be any cause and effect. There were other things
happening at the same time, such as an increase in the progressivity
of the income tax.

Then tell us why virtually no average person alive in the US who lived
through that experience remembers it today -- and most never even
noticed it at the time while it was happening! Explain that.

Here, I'll start the list for you...

1) US debt is denominated in dollars, so the debt of the US increased
by zero.

2) Many more jobs were created for US workers in export industries,
and in domestic businesses competing with foreigners, as foreign
competitors were priced out of markets by the cheaper dollar...

Now, you continue that tale of woe... ;-)

There is no tale of woe for the vast majority of Americans
in the devaluation of the dollar other than rising oil prices.
We need to fix that.

They'd be wiped. Self-screwed. Hari-kari is a Japanese term, how do
you say that in Chinese?

It might cost less than say a military war with the US

Yeah, just remember the huge cost the US paid the last time the dollar
went down near 50%, 1990-91. You do remember that, right? After all
you were one of he survivors. ;-)

Meanwhile the Chinese have wiped out their own people's savings and
have Tiananmen Squares all over the nation.

Victory in the great currency war! ;-)

Smart Chinese govt! They sure taught the Americans a lesson!


--
"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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