A Forum for Grinches and Ho-Ho-Hoes

[Sidd Finch]

Originally posted by Bad_Rich_Chic

Well, you implied the Chinese G was somehow doing something to suppress it, when it is in fact the US G's fiscal policy that is having a secondary effect of suppressing it, given the existence of the peg.

Of course it's the Chinese government doing so.

Do you think anyone other than the Chinese government could make the decision to keep their currency pegged to the dollar, or to let it float?

And do you think the policy would be any different if it wasn't having the effect of bolstering Chinese exports to the US by making them cheaper?


See my Q to Hank -- if their currency floated, but they subsidized exports and taxed imports, would you consider that a good thing? Even if the net effect were the same?



eta:

Well, I think they're wrong. I'm not quick to trust the thinking of a centralized communist state on market issues.

Perhaps you should check the growth rate of the Chinese economy over the last decade years before being so dismissive.

[Sidd Finch]

Originally posted by Spanky
Lets not forget the new service jobs created in the US because the US consumers have more discretionary spending from the money they saved on the cheap chinese products. Let us not also forget almost every citizen benefits from the cheap products were very few actually lose their jobs.

Again, see my question to Hank.

By your logic, we should be encouraging our trading partners to subsidize their exports to the US.

[Mmmm, Burger (C.J.)]

Originally posted by Sidd Finch
They keep the currency pegged to the dollar. It does not float on the free market. The kinds of mechanisms that you identify are relevant only to a currency that floats, not to one that is pegged.

You can say a currency is "pegged", but you have to back that up with something too, usually by convincing someone to buy your currency. If it's pegged, yet you run inflationary policies, holders of other currency aren't about to keep giving you a dollar for a yuan. The country's central bank just won't get any foreign currency, at which point you become known as Argentina.

[Not Bob]

Originally posted by Mmmm, Burger (C.J.)
You can say a currency is "pegged", but you have to back that up with something too, usually by convincing someone to buy your currency. If it's pegged, yet you run inflationary policies, holders of other currency aren't about to keep giving you a dollar for a yuan. The country's central bank just won't get any foreign currency, at which point you become known as Argentina.

What does this have to do with whether said pegging results in an anti-free trade effect?

(Hey, fringey, wanna play "yuan and the dollar"?)

edited to clarify question

[Tyrone Slothrop]

A few days ago, parsing the speeches of FDR.
Yesterday, eminent domain.
Today, yuan/dollar monetary policy.

With hot topics like these, it's no wonder the page hits keep cranking up.

[Bad_Rich_Chic]

Originally posted by Sidd Finch
Of course it's the Chinese government doing so.

Do you think anyone other than the Chinese government could make the decision to keep their currency pegged to the dollar, or to let it float?

Of course not. That doesn't mean they are doing so in an effort to suppress the currency vs. other currencies. If I order pizza from Sam's, and Sam's switches from bicycle to SUV delivery, my continuing to order from Sam's doesn't necessarily mean I'm attempting to destroy the environment; it may just be a side effect of a decision based on Sam's being cheaper than Dominoes or the only place that doesn't get the box top stuck to the cheese, maybe its too much effort to look for the instruction book to reprogram my speed-dial. My lack of dedication to green causes will certainly factor into my decision, but it's not the only factor and may not be the most important one.

And do you think the policy would be any different if it wasn't having the effect of bolstering Chinese exports to the US by making them cheaper?

Well, their policy wasn't any different when that was exactly the case and the dollar was strong (or even over-valued against other currencies), so I'd have to say "no."

The peg doesn't necessarily make the exports cheaper in the US, it mainly makes them cheaper compared to other countries exports in the US (for instance, India's).

See my Q to Hank -- if their currency floated, but they subsidized exports and taxed imports, would you consider that a good thing? Even if the net effect were the same?

Not necessarily good or bad. In general, I think floating currencies are a good thing and subsidies and duties are bad. But I don't understand what you think this counterfactual flushes out. Whether China floats, repegs, or whatevers their currency, either together with or independent of their other trade policies, does not change my general belief that reducing US subsidies and import duties, including with respect to trade with China, is beneficial to the US economy.

[SlaveNoMore]

Bad_Rich_Chic
Wow. If you can tell that my drunken babble is French, my French is better than I think it is.

Good point. Maybe it was the Klingon.

Or is that your nice way of telling me that my posts are so filled with friendly-aggressive-incoherent blather that it is evident that, for me, the cocktail hour has already begun? Hic.

Nah. You know I love you, pookie.

And stop calling me a Hick.

[SlaveNoMore]

Tyrone Slothrop
A few days ago, parsing the speeches of FDR.
Yesterday, eminent domain.
Today, yuan/dollar monetary policy.

With hot topics like these, it's no wonder the page hits keep cranking up.

No, no, no Dammit. Say it like this:

Parse FDR?
Merits of the Takings Clause?
Yuan peg? Gag me!!!

[Say_hello_for_me]

Originally posted by Tyrone Slothrop
A few days ago, parsing the speeches of FDR.
Yesterday, eminent domain.
Today, yuan/dollar monetary policy.

With hot topics like these, it's no wonder the page hits keep cranking up.

Its probably got something to do with me leaving. Seems like there is less name-calling, less shrieking, and less blindside shots since I've taken a rest. And holy fuck has work been busy the last few months!!!!

And I've noticed that more than one of your people has not posted on this board since I piped down. Silenced 10 leftists just by keeping quiet myself? Best work I ever did on an internet chat board!

[Tyrone Slothrop]

4K!

[Tyrone Slothrop]

Originally posted by Tyrone Slothrop

All I can say is, bless the man for working so hard to improve our relations with Old Europe.

[Mmmm, Burger (C.J.)]

Originally posted by Not Bob
What does this have to do with whether said pegging results in an anti-free trade effect?

Okay, let's go back to Int'l Monetary Policy 101.

In the beginning, everything was pegged to gold. Then people realized that this meant every currency was pegged to every other, and some countries started running out of gold when other countries came to them and traded excess bumpkinbucks for their gold.

So, they gave that up, and pegged to the dollar, because it was recognized as stable.

but then they realized that monetary policy had to accord with U.S. policy, lest their currency become "overpriced" and no one would want it or the goods they produce.

So people let things float freely, except for small countries with such bad monetary policies that it was better to bind themselves to US monetary policy. They recognized that this prevented them from inflating their own currency by, e.g., printing more money. But it means that they have to have fiscal and monetary discipline lest they fall into the same trap everyone did in the early 1900s

but could big countries sensibly do this? that is, peg? Sure, but then their hands are tied to the monetary policy of the peggee currency. If not, and they pursue inflationary policies, then they will have currency that is not worth as much as it purports to be domestically, exports will fall, and they won't be able to import, because who wants worthless PenskeBuks?

But, let's assume China doesn't care--how would the strategy posited by Sidd work?

To make their goods cheap, they want 1 dollar to buy more Chinese stuff. One way to do that is to say that $1 is now worth 1.5 yuan, so my dollar goes further in China now. But that would break the peg.

So what's the other approach? You deflate the currency internally, so that 1 yuan buys twice as much. But how does one accomplish this? One way is to stop printing money, or even take it out of circulation. Another is to jack up interest rates, which at least temporarily can cause deflation. but are either of those sensible strategies? Nein! Either one will stifle domestic growth in anything beyond the short run.

[ltl/fb]

Originally posted by Spanky
I am new here, but is this some sort of jealousy thing? Was I supposed to give you the compliment and not Sidd? Would that help with the insecurity issue?

You gave Sidd a compliment?

No, I just am starting to see you more as a gullible child than a thinking adult. Sort of another club.

[Spanky]

Originally posted by Sidd Finch
Again, see my question to Hank.

By your logic, we should be encouraging our trading partners to subsidize their exports to the US.

As I said in the short run it benefits our consumers because the French taxpayers francs are being used to give us cheaper products. However, this still distorts the market and makes it inefficient and in the long run that effects everyone negatively.

[ltl/fb]

Originally posted by SlaveNoMore
No, no, no Dammit. Say it like this:

Parse FDR?
Merits of the Takings Clause?
Yuan peg? Gag me!!!

Are you saying "par-say" for parse, or "ar-uh" for R? I don't want to recite it wrong.