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Author Topic: Canada joins the dollar dumping team, signs a deal with China to bypass it  (Read 5486 times)
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November 16, 2014, 07:01:09 PM
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The Chinese have said that if the US doesn't reduce its debt it will start offloading its US Treasuries/bonds - and when their export markets have expanded and domestic demand has grown they might well be in a position to do just that. Even the odd threat of it causes the dollar to plunge.
Quite frankly, the US debt market is exactly what allows Chinese to keep yuan undervalued by buying dollars.

As long as China wants to be an exporting country, they will have to amass dollars (or any currency of their trading partners), either directly (via CB) or indirectly (via outward private investment).

Economic adjustment doesn't happen overnight. By the time Chinese reorient their economy the dollar exchange rate would have already adjusted.

The US is bitching about the undervalued Yuan but it is a blessing for the US to be able to buy cheap products and it will not last for ever because the Chinese are shifting to having a strong currency, lots of Gold. They will keep producing a lot but they will consume most their products now

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November 17, 2014, 12:40:09 PM
 #62

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The Chinese have said that if the US doesn't reduce its debt it will start offloading its US Treasuries/bonds - and when their export markets have expanded and domestic demand has grown they might well be in a position to do just that. Even the odd threat of it causes the dollar to plunge.
Quite frankly, the US debt market is exactly what allows Chinese to keep yuan undervalued by buying dollars.

As long as China wants to be an exporting country, they will have to amass dollars (or any currency of their trading partners), either directly (via CB) or indirectly (via outward private investment).

Economic adjustment doesn't happen overnight. By the time Chinese reorient their economy the dollar exchange rate would have already adjusted.

The US is bitching about the undervalued Yuan but it is a blessing for the US to be able to buy cheap products and it will not last for ever because the Chinese are shifting to having a strong currency, lots of Gold. They will keep producing a lot but they will consume most their products now
Yep, it's good for the US consumption-based economy. But some people want the economy to rebalance a bit, and I think it's reasonable that the US might want China to consume more.
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November 17, 2014, 07:05:31 PM
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Very bold move by Canada, this will open up a lot of opportunities for them in the future, by being a first mover in North America.

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November 21, 2014, 01:49:46 PM
 #64

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The Chinese have said that if the US doesn't reduce its debt it will start offloading its US Treasuries/bonds - and when their export markets have expanded and domestic demand has grown they might well be in a position to do just that. Even the odd threat of it causes the dollar to plunge.
Quite frankly, the US debt market is exactly what allows Chinese to keep yuan undervalued by buying dollars.

As long as China wants to be an exporting country, they will have to amass dollars (or any currency of their trading partners), either directly (via CB) or indirectly (via outward private investment).

Economic adjustment doesn't happen overnight. By the time Chinese reorient their economy the dollar exchange rate would have already adjusted.

China is already in the situation where it doesn't need to export that much or close to the situation where it can dump the Dollar.

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November 23, 2014, 02:11:35 PM
 #65

USG is going to need a "reset" in 2-3 decades, so a crash really wouldn't be that bad, right? It's not like people take on boat-loads of debt, then hold onto the cash - they use it for major one-off expenses, generally. I don't really see why the "dollar" is looked at as something we have to protect, as if it magically *is* the economy. If the dollar died, industry would move on to a new currency, pay off their near-worthless debts (hope you don't have an ARM!), and rev up the economy like it's the WW2 boom again.

However, the US as a whole is in a pretty good position compared to many other countries because while it does hold a lot in debts, it also has an exceptionally high relative amount in free, productive assets which are not currently "taxed into money" (that is, sold to cover taxation). The US government's going to have trouble paying its bills, but if the government's prevented from collecting that from the people and businesses, turning productivity into government expenditure, I think a USD collapse would end up being a net benefit for a majority. The longer we keep tax rates low, the longer we can prepare our industry for the boom, and the stronger it'll be. To get things restarted "right," though, the government will need to start taxing at rates which cover its expenses, and hopefully that comes with some massive budget-trimming and an overhaul of how our legislative system works, where lawmakers stuff hundreds or thousands of unpopular appropriations (and worse) into bills which "must" pass.

I think a lot gold bugs and the like look at things like PMs and recognize how valuable hard assets would be in the event of a USD crash, but then don't recognize how much more valuable it is to have machines and other infrastructure to convert hard assets into something usable -- rather, they undervalue the actual US economy because they spend so much time looking at scary numbers indicating bad times for the USD or USG. A USD crash doesn't necessarily mean there's going to be a US economy crash, as far as the productive, non-parasitic economy's concerned. I could be way off-base, though... I'm kind of trolling just so someone can show me where my thinking's wrong. There're so many variables, it's difficult to get concise explanations.

If the USD does crash, the government would have failed in one of its key responsibilities of keeping inflation under control. People with mortgages would be happy - their debts would be easier to pay off. The weakest sections of society would be hit the hardest - the poor and the pensioners.
I don't see why the poor would be hit. Assuming the poor are debtors, they're fine (assuming the economy doesn't sympathetically collapse due to Huh). Pensioners are screwed if they're mostly holding USD-denom bonds and other USD-denom debt, but assuming they have a diversified basket, at least wouldn't be wiped out.

ETA: I take that back. The government would probably be one of the last to abandon the USD. If welfare amounts aren't adjusted MUCH more frequently than they are now, it could be devastating to the poor and economy at large.

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November 23, 2014, 02:25:40 PM
 #66

http://www.cbc.ca/news/politics/canada-china-sign-currency-deal-aimed-at-boosting-trade-1.2828707

after the EU, UK and Russia Canada joins the club and does a currency swap with China to trade directly CAD - Yuan without using USD.

Cheaper and more efficient way to settle payment.
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November 23, 2014, 09:38:40 PM
 #67

Quote
The Chinese have said that if the US doesn't reduce its debt it will start offloading its US Treasuries/bonds - and when their export markets have expanded and domestic demand has grown they might well be in a position to do just that. Even the odd threat of it causes the dollar to plunge.
Quite frankly, the US debt market is exactly what allows Chinese to keep yuan undervalued by buying dollars.

As long as China wants to be an exporting country, they will have to amass dollars (or any currency of their trading partners), either directly (via CB) or indirectly (via outward private investment).

Economic adjustment doesn't happen overnight. By the time Chinese reorient their economy the dollar exchange rate would have already adjusted.

China is already in the situation where it doesn't need to export that much or close to the situation where it can dump the Dollar.
I highly doubt that. The Chinese trade surplus this year is at record levels. There's a debt bubble in the economy. What China does is "export its way" out of a possible crisis.
Also I don't see any sense in "dumping" dollar. It's much better used to invest in overseas expansion.
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November 23, 2014, 10:53:38 PM
 #68

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The Chinese have said that if the US doesn't reduce its debt it will start offloading its US Treasuries/bonds - and when their export markets have expanded and domestic demand has grown they might well be in a position to do just that. Even the odd threat of it causes the dollar to plunge.
Quite frankly, the US debt market is exactly what allows Chinese to keep yuan undervalued by buying dollars.

As long as China wants to be an exporting country, they will have to amass dollars (or any currency of their trading partners), either directly (via CB) or indirectly (via outward private investment).

Economic adjustment doesn't happen overnight. By the time Chinese reorient their economy the dollar exchange rate would have already adjusted.

China is already in the situation where it doesn't need to export that much or close to the situation where it can dump the Dollar.
I highly doubt that. The Chinese trade surplus this year is at record levels. There's a debt bubble in the economy. What China does is "export its way" out of a possible crisis.
Also I don't see any sense in "dumping" dollar. It's much better used to invest in overseas expansion.

Buying up things with their USD reserves would be dumping the Dollar; China has a huge surplus and is accumulating Gold, they are producing a lot and it will not change because the Dollar crash

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November 23, 2014, 11:17:58 PM
 #69

Buying up things with their USD reserves would be dumping the Dollar; China has a huge surplus and is accumulating Gold, they are producing a lot and it will not change because the Dollar crash
Ok, I just don't like the word "dumping" because it sounds weird in this context.. Smiley
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November 24, 2014, 05:28:04 PM
 #70

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The Chinese have said that if the US doesn't reduce its debt it will start offloading its US Treasuries/bonds - and when their export markets have expanded and domestic demand has grown they might well be in a position to do just that. Even the odd threat of it causes the dollar to plunge.
Quite frankly, the US debt market is exactly what allows Chinese to keep yuan undervalued by buying dollars.

As long as China wants to be an exporting country, they will have to amass dollars (or any currency of their trading partners), either directly (via CB) or indirectly (via outward private investment).

Economic adjustment doesn't happen overnight. By the time Chinese reorient their economy the dollar exchange rate would have already adjusted.

China is already in the situation where it doesn't need to export that much or close to the situation where it can dump the Dollar.
I highly doubt that. The Chinese trade surplus this year is at record levels. There's a debt bubble in the economy. What China does is "export its way" out of a possible crisis.
Also I don't see any sense in "dumping" dollar. It's much better used to invest in overseas expansion.

At one point, the rest of the world will realize consuming and enjoying their own labor are way better off than supporting a dieing currency.
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November 24, 2014, 11:17:11 PM
 #71

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The Chinese have said that if the US doesn't reduce its debt it will start offloading its US Treasuries/bonds - and when their export markets have expanded and domestic demand has grown they might well be in a position to do just that. Even the odd threat of it causes the dollar to plunge.
Quite frankly, the US debt market is exactly what allows Chinese to keep yuan undervalued by buying dollars.

As long as China wants to be an exporting country, they will have to amass dollars (or any currency of their trading partners), either directly (via CB) or indirectly (via outward private investment).

Economic adjustment doesn't happen overnight. By the time Chinese reorient their economy the dollar exchange rate would have already adjusted.

China is already in the situation where it doesn't need to export that much or close to the situation where it can dump the Dollar.
I highly doubt that. The Chinese trade surplus this year is at record levels. There's a debt bubble in the economy. What China does is "export its way" out of a possible crisis.
Also I don't see any sense in "dumping" dollar. It's much better used to invest in overseas expansion.

At one point, the rest of the world will realize consuming and enjoying their own labor are way better off than supporting a dieing currency.

If the State takes 100 he will give back 40-80 so you lose

Buying up things with their USD reserves would be dumping the Dollar; China has a huge surplus and is accumulating Gold, they are producing a lot and it will not change because the Dollar crash
Ok, I just don't like the word "dumping" because it sounds weird in this context.. Smiley

Selling then

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December 02, 2014, 11:24:56 PM
 #72

the dollar pyramid crash,coming soon to your place,with the lessons on democracy and libertarian economics
life quality drop and massive riots
soon on your favourite unbiased tv channels

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December 02, 2014, 11:34:51 PM
 #73

the dollar pyramid crash,coming soon to your place,with the lessons on democracy and libertarian economics
life quality drop and massive riots
soon on your favourite unbiased tv channels

The statists will not admit their mistakes and will blame the problems on the Free Market even if there was no Free Market in the first place. They will suggest more Government action.

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December 03, 2014, 07:54:30 PM
 #74

the dollar pyramid crash,coming soon to your place,with the lessons on democracy and libertarian economics
life quality drop and massive riots
soon on your favourite unbiased tv channels

The statists will not admit their mistakes and will blame the problems on the Free Market even if there was no Free Market in the first place. They will suggest more Government action.
It would be the same under a "free market". I wonder what would you blame then.

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December 03, 2014, 08:27:24 PM
 #75

the dollar pyramid crash,coming soon to your place,with the lessons on democracy and libertarian economics
life quality drop and massive riots
soon on your favourite unbiased tv channels

The statists will not admit their mistakes and will blame the problems on the Free Market even if there was no Free Market in the first place. They will suggest more Government action.
It would be the same under a "free market". I wonder what would you blame then.

The Real estate bubble and most bubbles are created by the State by law allowing the bubble to inflate with the tax payer money or its liability.
Bubbles in the free market burst early and the bad companies and bad debt is eliminated. The last 15years, Washington has been inflating bubbles not to have a recession and not to lose the next election.

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December 03, 2014, 10:56:40 PM
 #76

at this pace dollar reserves will become useless real soon and will be dumped.
thats when America gets to import its inflation back.
Can you explain why the dollar will become useless?
He's deluded. The dollar is not becoming useless SOON. How can it go from #1 currency in the planet by a large margin to "useless" soon? That would mean an insanely big crash that would turn into WW3 minimum, and that is not going to happen. If the dollar crashes, it will be a gradual crash.

Your lifestyle as american depend directly on the rest of the planet having a need for USD. That need doesn't come in existence by magic (see: Nixon's shock). And that need is fading for some 20 years already, again not by magic (see: Euro 1999, PRC 2007). We have arrived at the later stage in this game, and no solution is available to the USG to avoid the outcome. Not even war. US society can't sustain a war now, it will break apart.

Fortune cannot take away what she has not given.
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December 03, 2014, 11:37:10 PM
 #77

at this pace dollar reserves will become useless real soon and will be dumped.
thats when America gets to import its inflation back.
Can you explain why the dollar will become useless?
He's deluded. The dollar is not becoming useless SOON. How can it go from #1 currency in the planet by a large margin to "useless" soon? That would mean an insanely big crash that would turn into WW3 minimum, and that is not going to happen. If the dollar crashes, it will be a gradual crash.

Your lifestyle as american depend directly on the rest of the planet having a need for USD. That need doesn't come in existence by magic (see: Nixon's shock). And that need is fading for some 20 years already, again not by magic (see: Euro 1999, PRC 2007). We have arrived at the later stage in this game, and no solution is available to the USG to avoid the outcome. Not even war. US society can't sustain a war now, it will break apart.

You have Big non western Nations that have the atomic bomb so a direct war against them is not likely but maybe "side wars" and destabilization as the USD Dollar is fading away as the first exchange currency.

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December 04, 2014, 08:17:53 AM
 #78

Summary: A bunch of people without economy background writing BS for their amusement of Gloria and Armageddon. Ieeehh.
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December 04, 2014, 12:43:28 PM
 #79

Summary: A bunch of people without economy background writing BS for their amusement of Gloria and Armageddon. Ieeehh.

How about actually scientifically and mathematically refuting these claims instead of writing sarcastic American propaganda in one line?
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December 04, 2014, 03:49:00 PM
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Summary: A bunch of people without economy background writing BS for their amusement of Gloria and Armageddon. Ieeehh.

How about actually scientifically and mathematically refuting these claims instead of writing sarcastic American propaganda in one line?

It is a complicated subject but the Dollar is not invincible, increasing the amount of Dollar of 20% and more every year will have consequences in a world where the US industrial production is an always smaller portion of the World's industrial production every year.

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