Register | Sign In


Understanding through Discussion


EvC Forum active members: 48 (9179 total)
2 online now:
Newest Member: Jorge Parker
Post Volume: Total: 918,259 Year: 5,516/9,624 Month: 541/323 Week: 38/143 Day: 11/17 Hour: 0/0


Thread  Details

Email This Thread
Newer Topic | Older Topic
  
Author Topic:   Testing The Financial Apologists
Phat
Member
Posts: 18457
From: Denver,Colorado USA
Joined: 12-30-2003
Member Rating: 1.0


Message 571 of 668 (919007)
06-12-2024 11:33 PM
Reply to: Message 570 by jar
06-12-2024 9:37 PM


Re: time to present your reasoning?
What is the benefit of being the world reserve currency?
Hirt: Having a dominant global currency provides ample demand for our debt instruments, which benefits U.S. companies and consumers through liquidity and stability of their currency. It further allows them to theoretically borrow at rates lower than what's available in the rest of the world. (Also...)
How does the US benefit from the dollar being the reserve currency?
Trust in and demand for the dollar also allows US borrowers to pay relatively low interest for home mortgages, auto loans and corporate debt. All of this helps to reinforce the very economic and financial dominance that made the dollar No. 1 in the first place.
In other words we will pay more while our competitors will then have the advantages. Less money at home means less ability to provide for any common good.

This message is a reply to:
 Message 570 by jar, posted 06-12-2024 9:37 PM jar has replied

Replies to this message:
 Message 572 by jar, posted 06-13-2024 8:34 AM Phat has seen this message but not replied
 Message 573 by Percy, posted 06-13-2024 9:49 AM Phat has not replied
 Message 581 by Theodoric, posted 06-13-2024 4:53 PM Phat has replied

  
jar
Member
Posts: 34136
From: Texas!!
Joined: 04-20-2004
Member Rating: 3.4


Message 572 of 668 (919008)
06-13-2024 8:34 AM
Reply to: Message 571 by Phat
06-12-2024 11:33 PM


Re: time to present your reasoning?
But what is the evidence?
Each nation sets interest rates based on the decision of its own financial governing body. Buying other nations bonds is based on the relative return against relative risk, in other words the stability and risk factors. Those are not dependent on whether it is a global standard currency.
Let's talk about buying cars and homes. Do people in other countries living under different currencies buy homes and cars? In fact, doesn't the US have a history of importing cars made in other countries? Doesn't the US have a history or limiting imports from many nations to protect us car makers and the employees?

This message is a reply to:
 Message 571 by Phat, posted 06-12-2024 11:33 PM Phat has seen this message but not replied

  
Percy
Member
Posts: 22700
From: New Hampshire
Joined: 12-23-2000
Member Rating: 3.7


Message 573 of 668 (919009)
06-13-2024 9:49 AM
Reply to: Message 571 by Phat
06-12-2024 11:33 PM


Re: time to present your reasoning?
You included material not your own without providing a link to the source, which I provide here: Why the US dollar remains a reserve currency leader
From the Forum Guidelines:
  1. Never include material not your own without attribution to the original source.
Had you provided a link people might have been able to discover that the article also says this:
quote:
However, dollar dominance is never a goal in itself for the US. Rather, it’s the stability and strength of the US, including the independence and credibility of the Fed, that attracts the rest of the world towards the US dollar, voluntarily adopting it as their international currency of choice.
In other words, the dollar's strength reflects the vitality of the U.S. economy, the quality of its federal money management, the stability of its government, and the strength of its military. It is those things that are most important. You know the old saying, "Take care of the pennies and the dollars will take care of themselves?" This is analogous. Manage your country well and its currency will take of itself.
--Percy

This message is a reply to:
 Message 571 by Phat, posted 06-12-2024 11:33 PM Phat has not replied

Replies to this message:
 Message 582 by Theodoric, posted 06-15-2024 11:13 AM Percy has not replied

  
Taq
Member
Posts: 10199
Joined: 03-06-2009
Member Rating: 3.1


Message 574 of 668 (919010)
06-13-2024 11:23 AM
Reply to: Message 564 by Phat
06-12-2024 5:33 PM


Re: Thinking In Todays Dimension..
Phat writes:
Anyone with a basic knowledge of math may conclude that we are in way over our heads. The Debt is over 34 trillion.
Why is 34 trillion in debt a problem for the US?
My basic argument is that a reset is inevitable once the average consumer loses faith in the US system.
Consumers have lost faith in the US economy many, many times in the past. We are still here and doing just fine. The US remained the global reserve currency through all of those periods.
The US blew it when we started weaponizing the global reserve currency and sanctioning a nation as large and powerful as Russia.
Do you think Russia should be allowed to invade any country they want and the US should do nothing about it?
We have largely lost petrodollar status due to some dimwit announcing that we will go green. China has picked up on that dropped opportunity and ha basicaly been promised a PetroYuan.
And yet less than 3% of global reserve currencies are in Yuan. People don't want the Yuan because it is one of the most heavily manipulated currencies on the planet, and it is backed by an opaque economy where no one believes the numbers that China releases. Also, it is believed that China is even more heavily indebted than the US, and their economy is teetering on an economic cliff as we speak. That's not to mention the demographic bomb that is about to explode.
Janet Yellin recently threatened to sanction Beijing if they supported Russia.
Good.
WE as a nation are arrogant and financially clueless.
If you think the Yuan is going to take the place of the US dollar as the global reserve currency, then you are clueless. If you think the BRICS countries are going to allow China to control their currency, then you are crazy. India and China are openly hostile towards one another, do you really think they are going to go all in on a shared currency where 90% of it is controlled by China?

This message is a reply to:
 Message 564 by Phat, posted 06-12-2024 5:33 PM Phat has seen this message but not replied

  
Taq
Member
Posts: 10199
Joined: 03-06-2009
Member Rating: 3.1


Message 575 of 668 (919011)
06-13-2024 11:30 AM
Reply to: Message 566 by Phat
06-12-2024 7:45 PM


Re: Thinking In Todays Dimension..
Phat writes:
The world is beginning to dedollarize.
The dollar still makes up about half of global currency reserves, and the dollar is used in 90% of international trades.
The debt is over 120% GDP
How is that a problem? Japan's debt is 250% of their GDP, and they are still kicking along.
Trillion every 90-100 days is added to the debt.
The real value of that debt decreases due to GDP increases and inflation.

This message is a reply to:
 Message 566 by Phat, posted 06-12-2024 7:45 PM Phat has replied

Replies to this message:
 Message 576 by NosyNed, posted 06-13-2024 11:57 AM Taq has replied
 Message 593 by Phat, posted 07-03-2024 12:40 AM Taq has replied

  
NosyNed
Member
Posts: 9007
From: Canada
Joined: 04-04-2003


(1)
Message 576 of 668 (919012)
06-13-2024 11:57 AM
Reply to: Message 575 by Taq
06-13-2024 11:30 AM


Re: Thinking In Todays Dimension..
How is that a problem? Japan's debt is 250% of their GDP, and they are still kicking along.
I'm not the expert but the Economist has expressed concern about the generally high and growing degree of indebtedness.
As I understand it, at the high level, it's ok if the debt is growing in absolute terms but is not increasing as a % of GDP. In the west (well, I think, everwhere) the debt is growing as a % of GDP in both bad times and good times. Keynesian economics suggests that in good times you shrink the debt (Clinton times) and in bad times you allow it to rise.
In these somewhat inflationary times a bit of pull back by the feds might be a wise choice.
This might be behind a paywall for most but:
America’s reckless borrowing is a danger to its economy—and the world’s
"America’s reckless borrowing is a danger to its economy—and the world’s
Without good luck or a painful adjustment, the only way out will be to let inflation rip
Dollar coins coming out of a purse hole."
"f prudence is a virtue then America’s budget is an exercise in vice. Over the past 12 months the federal government has spent $2trn, or 7.2% of GDP, more than it has raised in taxes, after stripping out temporary factors. Usually such a vast deficit would be the result of a recession and accompanying stimulus. Today the lavish borrowing comes despite America’s longest stretch of sub-4% unemployment in half a century. The deficit has not been below 3% of GDP, an old measure of sound fiscal management, since 2015, and next year Uncle Sam’s net debts will probably cross 100% of GDP, up by about two-fifths in a decade. Whereas near-zero interest rates once made large debts affordable, today rates are higher and the government is spending more servicing the debt than on national defence.
How has it come to this? The costs of wars, a global financial crisis and pandemic, unfunded tax cuts and stimulus programmes have all piled up. Both Republicans and Democrats pay lip service to fiscal responsibility. But the record of each side in office is of throwing caution to the wind as they indulge in extra spending or tax cuts. The biggest economic decision facing the next president is how generously to renew Donald Trump’s tax cuts of 2017, a step that will only worsen "
To summarize the rest: They suggest that belt tightening or more taxes (probably both) are necessary. If not done the rising debt will cause interest rates to have to rise and increase inflationary pressures.

This message is a reply to:
 Message 575 by Taq, posted 06-13-2024 11:30 AM Taq has replied

Replies to this message:
 Message 577 by Taq, posted 06-13-2024 12:26 PM NosyNed has not replied

  
Taq
Member
Posts: 10199
Joined: 03-06-2009
Member Rating: 3.1


Message 577 of 668 (919013)
06-13-2024 12:26 PM
Reply to: Message 576 by NosyNed
06-13-2024 11:57 AM


Re: Thinking In Todays Dimension..
NosyNed writes:
I'm not the expert but the Economist has expressed concern about the generally high and growing degree of indebtedness.
It is concerning, but it isn't world ending. We can't continue the same trajectory we have been on, that is for sure. However, the amount of debt we currently have isn't going to cause the next Great Depression. In fact, we probably have a lot more headroom to go before there are serious repercussions, as shown by Japan's ability to have a debt 250% of GDP and still function just fine, even without being the world's global reserve currency.
While the current debt won't ruin us, it is an opportunity cost. The money we are spending on interest payments could be going towards something much more productive.
As I understand it, at the high level, it's ok if the debt is growing in absolute terms but is not increasing as a % of GDP. In the west (well, I think, everwhere) the debt is growing as a % of GDP in both bad times and good times. Keynesian economics suggests that in good times you shrink the debt (Clinton times) and in bad times you allow it to rise.
That would be the wise thing to do. Could our economy be better without that debt? Absolutely. Is the US economy still one of the healthiest on the planet? Yep, sure is.
To summarize the rest: They suggest that belt tightening or more taxes (probably both) are necessary. If not done the rising debt will cause interest rates to have to rise and increase inflationary pressures.
We aren't far from that 2% Goldilocks zone now. Historically, a 3% inflation rate with 6% interest rates is much more the norm anyway. We have all gotten use to the weird economies created by globalization and the recovery from the 2008 financial crisis. We have forgotten what normal rates look like.
But I do agree with their suggestions, although I wouldn't go as far as to say necessary. I would agree that it is necessary to stop borrowing at the same rate.
One bonus for the US right now is our higher interest rates. Carry trades are becoming very popular. This is where you borrow money at a lower rate in some other currency, and then invest that money into US bonds that have a higher interest rate. This has also spilled over into the US stock markets which is part of the reason the Dow and S&P have been on a run. Even though the US economy is far from perfect, it is still the economy international traders want to invest in.
Adding some quick math in edit:
The US GDP is 25 trillion. 2% annual growth in GDP would be 0.5 trillion. This means that we could borrow 0.5 trillion per year and tread water relative to GDP.

This message is a reply to:
 Message 576 by NosyNed, posted 06-13-2024 11:57 AM NosyNed has not replied

  
jar
Member
Posts: 34136
From: Texas!!
Joined: 04-20-2004
Member Rating: 3.4


Message 578 of 668 (919014)
06-13-2024 12:40 PM


The greed problem
What I do find of concern is the two fold issue of consumer prices increasing beyond inflation and the enormous profits recently.
Yes, there have been issues in the supply chain and in resource availability but neither can explain why consumer prices rise faster than inflation.
Greed can.

Replies to this message:
 Message 579 by Percy, posted 06-13-2024 1:10 PM jar has not replied

  
Percy
Member
Posts: 22700
From: New Hampshire
Joined: 12-23-2000
Member Rating: 3.7


Message 579 of 668 (919015)
06-13-2024 1:10 PM
Reply to: Message 578 by jar
06-13-2024 12:40 PM


Re: The greed problem
jar writes in Message 578:
Yes, there have been issues in the supply chain and in resource availability but neither can explain why consumer prices rise faster than inflation.
This could only happen if inflation were not a measure of the increase in consumer prices. Inflation levels are usually measured using the CPI (Consumer Price Index). See Inflation - Wikipedia.
--Percy

This message is a reply to:
 Message 578 by jar, posted 06-13-2024 12:40 PM jar has not replied

  
Theodoric
Member
Posts: 9371
From: Northwest, WI, USA
Joined: 08-15-2005
Member Rating: 2.7


Message 580 of 668 (919016)
06-13-2024 4:51 PM
Reply to: Message 564 by Phat
06-12-2024 5:33 PM


Re: Thinking In Todays Dimension..
Did you miss the '70's completely?
Inflation rate is down markedly. Looks like we have a good chance to be under 3% for the year.
What would you like the inflation rate to be?

What can be asserted without evidence can also be dismissed without evidence. -Christopher Hitchens

Facts don't lie or have an agenda. Facts are just facts

"God did it" is not an argument. It is an excuse for intellectual laziness.

If your viewpoint has merits and facts to back it up, why would you have to lie?


This message is a reply to:
 Message 564 by Phat, posted 06-12-2024 5:33 PM Phat has seen this message but not replied

  
Theodoric
Member
Posts: 9371
From: Northwest, WI, USA
Joined: 08-15-2005
Member Rating: 2.7


Message 581 of 668 (919017)
06-13-2024 4:53 PM
Reply to: Message 571 by Phat
06-12-2024 11:33 PM


Re: time to present your reasoning?
please provide some sort of source for these ramblings.

What can be asserted without evidence can also be dismissed without evidence. -Christopher Hitchens

Facts don't lie or have an agenda. Facts are just facts

"God did it" is not an argument. It is an excuse for intellectual laziness.

If your viewpoint has merits and facts to back it up, why would you have to lie?


This message is a reply to:
 Message 571 by Phat, posted 06-12-2024 11:33 PM Phat has replied

Replies to this message:
 Message 583 by Phat, posted 06-25-2024 1:53 AM Theodoric has replied

  
Theodoric
Member
Posts: 9371
From: Northwest, WI, USA
Joined: 08-15-2005
Member Rating: 2.7


Message 582 of 668 (919023)
06-15-2024 11:13 AM
Reply to: Message 573 by Percy
06-13-2024 9:49 AM


Re: time to present your reasoning?
I still think Phat does not understand the vast majority of what he watches and copy and pasted. He just feels like it supports his gut feelings and prejudices. Some people are just incapable of learning.

What can be asserted without evidence can also be dismissed without evidence. -Christopher Hitchens

Facts don't lie or have an agenda. Facts are just facts

"God did it" is not an argument. It is an excuse for intellectual laziness.

If your viewpoint has merits and facts to back it up, why would you have to lie?


This message is a reply to:
 Message 573 by Percy, posted 06-13-2024 9:49 AM Percy has not replied

  
Phat
Member
Posts: 18457
From: Denver,Colorado USA
Joined: 12-30-2003
Member Rating: 1.0


Message 583 of 668 (919096)
06-25-2024 1:53 AM
Reply to: Message 581 by Theodoric
06-13-2024 4:53 PM


Re: time to present your reasoning?
Theo writes:
please provide some sort of source for these ramblings.
OK. My basic assertion is that the US Dollar is not as strong as the media ties to show us.
After Nixon took us off of the gold standard in 1971 (August 15th) we became a fiat currency (money that has value because the government says it does) until 1973 when agreements between the US and Saudi Arabia essentially anchored the dollar to oil (a hard asset commodity) and mandated that Oil could only be sold in US Dollars, with any excess beeing promised to T-Bills. This forced more nations to hold dollars in order to cover their trade purchases in oil.
SOURCES:
U.S.-Saudi Petrodollar Pact Ends after 50 Years
Markets Today(MSN):
The 50-year-old petrodollar agreement between the U.S. and Saudi Arabia was just allowed to expire. The term “petrodollar” refers to the U.S. dollar’s role as the currency used for crude oil transactions on the world market. This arrangement has its roots in the 1970s when the United States and Saudi Arabia struck a deal shortly after the U.S. went off the gold standard that would go on to have far-reaching consequences for the global economy. In the history of global finance, few agreements have wielded as many benefits as the petrodollar pact did for the U.S. economy.
Critics can argue that hard assets also only have value because people(or governments) say that they do, but inflating a currency debases its value. Granted, one advantage of getting off of a strict gold standard was that big crashes were avoided. Gold is a definite discipline that betrays those who try and inflate it.
I still think Phat does not understand the vast majority of what he watches and copy and pasted. He just feels like it supports his gut feelings and prejudices. Some people are just incapable of learning.
Perhaps to an extent. I've been known to exhibit batsh*t crazy manic episodes at times, and I feel one coming on now. Give me a moment until it passes.

This message is a reply to:
 Message 581 by Theodoric, posted 06-13-2024 4:53 PM Theodoric has replied

Replies to this message:
 Message 584 by Percy, posted 06-25-2024 8:15 AM Phat has replied
 Message 585 by Theodoric, posted 06-25-2024 1:38 PM Phat has replied
 Message 592 by Taq, posted 06-27-2024 4:42 PM Phat has seen this message but not replied

  
Percy
Member
Posts: 22700
From: New Hampshire
Joined: 12-23-2000
Member Rating: 3.7


(1)
Message 584 of 668 (919097)
06-25-2024 8:15 AM
Reply to: Message 583 by Phat
06-25-2024 1:53 AM


Re: time to present your reasoning?
What would be the point of trying to discuss anything with you?
--Percy

This message is a reply to:
 Message 583 by Phat, posted 06-25-2024 1:53 AM Phat has replied

Replies to this message:
 Message 586 by Phat, posted 06-25-2024 7:12 PM Percy has replied

  
Theodoric
Member
Posts: 9371
From: Northwest, WI, USA
Joined: 08-15-2005
Member Rating: 2.7


Message 585 of 668 (919098)
06-25-2024 1:38 PM
Reply to: Message 583 by Phat
06-25-2024 1:53 AM


Re: time to present your reasoning?
Not what I asked.

What can be asserted without evidence can also be dismissed without evidence. -Christopher Hitchens

Facts don't lie or have an agenda. Facts are just facts

"God did it" is not an argument. It is an excuse for intellectual laziness.

If your viewpoint has merits and facts to back it up, why would you have to lie?


This message is a reply to:
 Message 583 by Phat, posted 06-25-2024 1:53 AM Phat has replied

Replies to this message:
 Message 587 by Phat, posted 06-26-2024 5:41 AM Theodoric has replied

  
Newer Topic | Older Topic
Jump to:


Copyright 2001-2023 by EvC Forum, All Rights Reserved

™ Version 4.2
Innovative software from Qwixotic © 2024