China new world super power?

[D J Kings]

Originally Posted by Ishkur

I believe, centuries from now, historians will look back on this and say that going off the Gold Standard was the stupidest thing modern economics has ever done.

As you say it always seemed madness to me to have come off the Gold Standard as how can one accurately collaterise or perhaps the word is securitise against something that is not tangible.

[Angelicus]

Yep going off the gold standard was a very bad idea.

[Angelicus]

[quote=DJ G]The USA is a third world country!

peasents!!!!!!!!!!!!!!!!

Shetland will consume you!!


mhmmmm

[DJ G]

mmmmmmmmmmmmmmmm

Chinese news channels are better than american ones!

less propaganda aimed at western people on Chinese news

[Angelicus]

[quote=DJ G]The USA is a third world country!

peasents!!!!!!!!!!!!!!!!

Shetland will consume you!!

Originally Posted by DJ G

mmmmmmmmmmmmmmmm

Chinese news channels are better than american ones!

less propaganda aimed at western people on Chinese news

Well I guess thats that, so much for the thesis that this political discussion thread is allowed while others are still not per the CURRENT TOS because its enlightening and fact filled, not just full of partisan bashing, and flaming.......LOL

Oh and by the way not only did I read the thread on the proposed changes, I participated in it, to date I don't see any thing said by the ptb or Ari himself, that says political discussions are allowed, or ok, nor has the TOS at the top of the forum been changed to reflect that either.

So my question still stands, why is this one allowed, and others are not? Or should we all assume that because this one is allowed others are?

[Pb]

Originally Posted by D J Kings

As you say it always seemed madness to me to have come off the Gold Standard as how can one accurately collaterise or perhaps the word is securitise against something that is not tangible.

Now here's an interesting dilemma. The gold standard is useful and stable when the growth of people is proportional to the amount of gold produced, such that everyone has a stable spending power. When there is a faster growing number of people, that little amount of gold has to be shared among more people, thus lowering the spending power of each person and shrinking the economy. Pegging a currency to some precious metal is just another way of pegging the currency to something everyone perceive as stable.

That said, I do agree that a country's currency should be secured against something other than a promise note -- just like a good financial manager -- diversify. Secure the currency against multiple other currencies, bonds, precious metals, commodities and its own resources.

[D J Kings]

Originally Posted by Pb

Now here's an interesting dilemma. The gold standard is useful and stable when the growth of people is proportional to the amount of gold produced, such that everyone has a stable spending power. When there is a faster growing number of people, that little amount of gold has to be shared among more people, thus lowering the spending power of each person and shrinking the economy. Pegging a currency to some precious metal is just another way of pegging the currency to something everyone perceive as stable.

That said, I do agree that a country's currency should be secured against something other than a promise note -- just like a good financial manager -- diversify. Secure the currency against multiple other currencies, bonds, precious metals, commodities and its own resources.

Do you know Pb I have never really thought about it deeply other than to say that I was speaking not of gold per se but of gold as some form of non paper commodity as certainly there is just not the Gold in the world to cover the international treasury requirement. So I take your point entirely, perhaps we can consider this weighty matter further and come up with a new gold upon which to put in place a new gold standard, perhaps old skool vinyl so some old DJs could become wealthy overnight.

[PhineasFreak]

Originally Posted by D J Kings

perhaps old skool vinyl so some old DJs could become wealthy overnight.

damn! i'll vote for that any day....

[ANGRY Shaved Whale]

Originally Posted by Sentinel

For some reason, you seem to think a trade deficit is a sign of a weak US economy. The real reason we have a trade deficit is that we have such a STRONG economy. The strength of our economy (which is not just manufacturing - in fact it's mostly not manufacturing) allows the US to buy goods from around the world instead of producing them. It's not really an issue of how much we are not producing; it's an issue of how much money we have available to spend and invest, due to our capital-based (investment, not manufaturing) economy. We just have too much money NOT to have a trade deficit.

Finaly someone has some of the facts straight.

When you compare China to the US you better get your facts stright. In eairily 1990 to 2000 the US national revenues has nearly doubled (1,032.0 - 2.025.2 Billion). With the USA per Capita at 40,100, it is very easy to see how we gained another TRILLION... With China, in 1980's there ecconmy was 186.6 billion, in 1985 it was 295.45 billion, and today there gross revenue is 825.227 billion. They have doubled and even went passed that mark, yet there per capita is only 5,600, compaired to the US's 40 thousand. Also China will have a very hard time rasing there per capita becuase of very low wage jobs, and unemployment. For China to beat the US as a "super power," there per capita and nation revenue as to explode to even come close. Even by the time China would catch up to todays mark, you cant forget USA is also growing, which they now have to meet this new mark.

As of right now, China's unemployment is at a est 20%, comparred to the US's adverage 6-7% (as of Jan 8th US employment his 4.9%) With that much work force out of work, it is very hard to keep a capitialist type ecconomy moving along. Just little education for you on capitialist style ecconmy's, when the work force is very high there will be inflation. And when the work for is very low there will be lack of money (the obvious).

If China would ever become a " super power" they have alot to do just in the economy stand point. If we would go into the millitary area, china is 50 years behind in technology.

Just little news flast for the European nations. There is something called a UN, and if the US has a strike aginst her land, by resolutions and UN agreements, all nations will defend one another. In other words if US gets attacked, all European nations are "attacked". So when comparing the US, keep inmind of treaties, and allies the country's have. So the US's population is 300+ million, then you have to add in the UN country's to that equation.

US budget source: http://www.cbo.gov/showdoc.cfm?index=1821&sequence=0

(BTW a yuen is 8.28 yuens to a 100 US dollars)

[Pb]

Originally Posted by ANGRY Shaved Whale

There is something called a UN, and if the US has a strike aginst her land, by resolutions and UN agreements, all nations will defend one another. In other words if US gets attacked, all European nations are "attacked". So when comparing the US, keep inmind of treaties, and allies the country's have.

Hehehe, I think not. The UN will sit around and debate on what it should do.

Really, the UN is not a bunch of allied nations like NATO who will hit back immediately. Its charter is to prevent war and uphold human rights. Afterall, Iraq is part of the UN, too.

[dirkpitt]

Originally Posted by Pb

Hehehe, I think not. The UN will sit around and debate on what it should do.

No truer words have been spoken.

[bobbymathews]

Originally Posted by ANGRY Shaved Whale

....Just little news flast for the European nations. There is something called a UN, and if the US has a strike aginst her land, by resolutions and UN agreements, all nations will defend one another. In other words if US gets attacked, all European nations are "attacked". So when comparing the US, keep inmind of treaties, and allies the country's have. So the US's population is 300+ million, then you have to add in the UN country's to that equation.

US budget source: http://www.cbo.gov/showdoc.cfm?index=1821&sequence=0

(BTW a yuen is 8.28 yuens to a 100 US dollars)

i dont think this was in peoples mind when they were refering to super power!.
..anyways i think its okay to compare the US on its own,if for instance someone at some time in the future should convince the UN that war against the US is valid,(like how the US tried to convince the UN that war against iraq was valid,and failed!)

[Ishkur]

Originally Posted by Pb

Now here's an interesting dilemma. The gold standard is useful and stable when the growth of people is proportional to the amount of gold produced, such that everyone has a stable spending power. When there is a faster growing number of people, that little amount of gold has to be shared among more people, thus lowering the spending power of each person and shrinking the economy. Pegging a currency to some precious metal is just another way of pegging the currency to something everyone perceive as stable.

It's not perceived as stable, it IS stable.

Gold will never become worthless. It is the de facto material commodity of the last 6000 years, the literal gasoline of civilization itself.

You can't say the same thing about fiat currency.

[Pb]

Originally Posted by Ishkur

It's not perceived as stable, it IS stable.

Gold will never become worthless.

But gold prices can be manipulated. Despite being pegged to gold, the GBP had to be re-valued twice during unstable economies. What's the use of pegging to gold, then? If it's at all feasible for all the countries to use gold as a currency, buy gold and pay in gold. Rapid expansion of economies cannot be matched by an equal expansion of gold supply.

The purpose of money is in its inherent ability to acquire other goods. It all relies on the confidence people have on the establishment behind the money, be it a precious metal or another economy. Sad as it might be, it comes down to faith that this system works. There's nothing absolutely stable out there to guarantee it with -- just like diamonds, our valuations of anything can be manipulated.

[D J Kings]

I don’t see how the gold supply can be considered stable or enjoy long term stability and ever again be used in the same way as previously. Demand is rising and supply is falling and as the south Asian countries become wealthier and the demand for gold increases for industrial production in China there cannot be enough to go around. Obviously I don’t want to get political but is not the shortage of gold one of the major reasons that “the coalition” is handing over control of Iraq to the Iranians and thereby having some influence over gold supply in the same way as the British instituted the Gold standard having seized the largest gold fields in the world and then setting the world agenda for 100 years. This act continues to influence modern times via the Cecil Rhodes scholarships enjoyed by those who have and are to become world leaders. So whilst agreeing that a return to the gold standard may be beneficial ,Gold as a commodity is not the product upon which to base any new gold standard because the means of production are no longer under the control of a world super power like Britain in days gone by.
Russian supply I haven’t touched upon but lots of instability there also.

[DeyC3]

Originally Posted by D J Kings

Do you know Pb I have never really thought about it deeply other than to say that I was speaking not of gold per se but of gold as some form of non paper commodity as certainly there is just not the Gold in the world to cover the international treasury requirement. So I take your point entirely, perhaps we can consider this weighty matter further and come up with a new gold upon which to put in place a new gold standard, perhaps old skool vinyl so some old DJs could become wealthy overnight.

quality post

nice posts Pb, i have come to look forward to your weighing in on such things.

i dont understand the golden standard and what it would prove but here is a little research:


193,000tons(metric) = 6,205,088,960 troy oz x 543USD = 3,369,363,305,280

all the gold in the world is worth less than the US national debt.

[Pb]

Originally Posted by DeyC3

china is not overflowing with resources...

Ahh, I think they *just* figured out that limitation and they are buying... ^_-

Originally Posted by DeyC3

all the gold in the world is worth less than the US national debt.

Oh my. That's funnily ironic.

To answer your question, by adopting the gold standard means a currency can be exchanged for real gold if you bring it to the central bank. The central bank needs to keep a reserve of gold to back up its worth of printed money. If you ever come across a US greenback with a red seal on it, keep it! You can exchange it for real gold (or silver), or hawk it on eBay ^_-

If we're curious about who is capable of taking over the lead in economic power, the BRICs have a chance.

[Sentinel]

Originally Posted by D J Kings

The long term effect, as the Asian economies mature, must mean increasing levels of unemployment in the US and rising inflation leading to stagnation. Yes you have lots of the green stuff but you print it don’t you and can continue to do so but unless it has a value in the world it becomes as unless as the mark between the wars

?? Why does a rising Asian economy equal a falling US economy. When are people going to realize that manufacturing jobs in the US are dead? Just because there are no manufacturing jobs does not mean that there must be unemployment; the economy can mature and form a new style in the absence of maufaturing, and that change is very obvious. When I look around, I see bankers, lawyers, doctors, builders, salespeople, cooks, but I see very few assembly line jobs. The US dollar will maintain its value as long as foreign investors demand US securities and the US remains stable (doesn't default on loans).

To repond to your second point
But is the dollar rising or falling, I think relatively it is falling. As you say “china gives it back” much like a parent might give pocket money, but if the parent did not give it back but moved it into rupees for instance where would the US economy be then. And I do agree that china keeps the dollar inflated but once again should it decide not to do so what then. Surely a great economic power like the US cannot place its future prosperity in the uncertain hands of a foreign power which is benign at the moment but may not be in the future.
Why would the Chinese worker want or need to buy foreign goods as like the US in years past they can buy high quality goods produced at home?

Why do you want or need a BMW? And what if China wanted missles? The US is the place to shop! Anyway, yes the current situation is unsustainable, but it is stable nevertheless. Until China decides that they don't need US investment - that they can sustain themselves (which is another key to becoming an economic superpower) - until then the US can maintain a deficit and a low interest rate and low unemployment. But once the global market decides to not buy US securities, the value of the dollar will fall internationally and domestically we should see inflation. But we have time to adapt our economy before that happens.

*I think I am correct, but it is possible that I have made a mistake (like saying something will rise or fall when the opposite should happen). If you catch any mistakes, please let everyone know (as long as you can explain it economicly). I don't want to spread misinformation. My posts should be mostly correct though

[Ishkur]

Originally Posted by Pb

But gold prices can be manipulated.

Only if there's an infinite amount of it.

There's not.

[D J Kings]

Originally Posted by Sentinel

?? Why does a rising Asian economy equal a falling US economy. When are people going to realize that manufacturing jobs in the US are dead? Just because there are no manufacturing jobs does not mean that there must be unemployment; the economy can mature and form a new style in the absence of maufaturing, and that change is very obvious. When I look around, I see bankers, lawyers, doctors, builders, salespeople, cooks, but I see very few assembly line jobs. The US dollar will maintain its value as long as foreign investors demand US securities and the US remains stable (doesn't default on loans).


Why do you want or need a BMW? And what if China wanted missles? The US is the place to shop! Anyway, yes the current situation is unsustainable, but it is stable nevertheless. Until China decides that they don't need US investment - that they can sustain themselves (which is another key to becoming an economic superpower) - until then the US can maintain a deficit and a low interest rate and low unemployment. But once the global market decides to not buy US securities, the value of the dollar will fall internationally and domestically we should see inflation. But we have time to adapt our economy before that happens.

*I think I am correct, but it is possible that I have made a mistake (like saying something will rise or fall when the opposite should happen). If you catch any mistakes, please let everyone know (as long as you can explain it economicly). I don't want to spread misinformation. My posts should be mostly correct though

I do agree that invisible earnings have an impact and play a significant part in a countries financial well being. Britain is a case in point where invisibles have historically played a very significant part in the economy as they also have in the USA, which I believe earns double what Britain does and therefore a lower percentage of GDP. In the UK they account for something like 5%, and rising, of GDP and to some degree have helped replace income from manufacturing but the global economy is developing rapidly with increasingly open and integrated capital markets, freer trade in goods and services, and fiercer competition. India is a typical tiger in this regard as invisible exports have recently overtaken visible exports in the past couple of years. So in short I don’t think that the long term growth that mature economies through their historical control of banking, insurance, knowledge based transfers and all the other things that make up commercial invisibles is sustainable. As the man Bob Dylan might have said “The old world order is rapidly fadin'. and the first one now will later be last for the times they are a-changin'.”

Don’t worry about your posts being correct or not as I never do and even the brightest “experts” do not agree with one another. Was it not Mark twain who said as much. The figure given somewhere on this thread illustrates this where it states that Chinese unemployment is at 20%. If such a high number were doing nothing they would certainly starve.