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Something I Should Point Out to Breitbart Readers

Xelor

Xelor

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Some of you may have in June read my post #98 in the Modern Monetary Theory thread wherein I briefly discussed and economic theory called "optimal tariffs" (OTT). It's long been clear to me that OTT is the notion that underpinned Trump's tariff on steel. Just as that's been clear to me, so too has it been clear that he's provided nothing that supports applying OTT in imposing a tariff on steel imported from the PRC, which is the key target country for that tariff. Let me explain why, and in doing so also point out a material omission from the prose in a just published Breitbart essay by John Carney, "What Trump Knows about Tariffs that Establishment Trade Economists Forgot."[SUP]1[/SUP]

From the essay:
The idea, [introduced into modern economics in 1940 by British economist Nicholas Kaldor,][SUP]2[/SUP] is that for any large, wealthy country, a tariff can be used to increase national wealth rather than just protect domestic producers....Kaldor pointed out that the optimal tariff depended on three things. First, the tariff could not be too large—it probably has to be smaller than required to “protect” domestic monopolists. Second, the country has to be large enough to have something akin monopolistic power on global markets. Third, other countries would not retaliate.
Click to expand...

Blue:
  • Though the word "wealth" intervenes, the tariff imposing nation's wealth is irrelevant.
  • Kaldor's theory does not say "any large country" can effectively avail itself of OTT. It says that an "economically large" country may be able to do so with regard to goods where on the supply side it can control the global prices of the product on which it'd impose the tariff.
​

Kaldor's theory does not apply to the U.S. with regard to (raw) steel. It doesn't because the PRC produces over ten times the steel the U.S. does. Yes, overall the U.S. is economically large, but on an industry-by-industry basis, which is the basis that's relevant for Kaldor's theory, we're "productively large" in some and "productively small" in others.[SUP]3[/SUP] Insofar as we are not the top producers of steel, not even close, and cannot and won't be for a very long time, there is no way for Trump's tariffs to yield the returns proposed by OTT.
​

Brown:
OTT depends heavily on the fact that other countries won't retaliate. That is a reasonable assumption when one applies an import tariff on a product whereof one has global monopolist power.4 When one the tariff applier hasn't monopoly power, however, others most certainly will retaliate by levying tariffs of their own. That they will is what's already come to fruition re: Trump's tariffs.
​


Note:​


  1. [*=1]Nevermind that "establishment" trade economists didn't at all "forget" about "optimal tariffs."
    [*=1]For a brief overview of the history of OTT, click here.
    [*=1]The same "large-small" concept applies on the demand side, but the demand side isn't germane to OTT; the point of OTT is to effect demand-side outcomes using one's supply-side dominance to (1) crate greater profits than would be realized absent the OT and (2) protect one's strength in a commoditized global industry/market. Notice that OTT is about exerting monopoly, no monopsony, power over the would be buyers of the products on which it places the tariffs.
    [*=1]Think about it. If Eskimos put a tariff on imported ice, would you bother retaliating against their doing so?

​
​

From reviewing the above linked documents and research on OTT one finds that Carney omitted a key facet of OTT and that not one person in the Trump Admin has publicly attempted to air so much as even the most feeble reconciliation or exposition of the metrics of his tariffs vis-a-via OTT.
 
I think you are missing a key aspect... You are missing the real reason for the tariff, it's not to protect American goods but it's a retaliation to China's "tariffs".

It's sort of funny, you pointed out that the essential part in order for a tariff to work is that the other countries would not retaliate. Suggesting that other countries tariff's is a valid retaliatory measure to counteract another countries tariff on your goods. Chinese tariffs and restrictions on American goods and services have gone completely unchecked for decades.

There are a lot of people, even economists(because they have no knowledge about China) who have no idea how US goods are treated in China. The amount of tariffs and restrictions on US goods in China in comparison to the reverse is hardly even calculable. The Chinese steal American technology and research, all US companies are forced to surrender their technology if they want to do business in China, only 10 Foreign movies are allowed to show in China per year, and are under incredible scrutiny, every US business operating in China is taxed and restricted significantly more than any local business.

None of this mattered when China was a third world country, but now they have entered the modern world and these aggressive economic tactics are completely unacceptable.

If it were up to me, I would completely cease trade with China.... or put in such a high tariff, that it would be completely unprofitable to do business. And I would actively seek out free trade agreements to all of southeast asia. And I would keep that policey until China offers a complete free trade agreement, or at least very close to one.
 
celticwar17 said:
I think you are missing a key aspect... You are missing the real reason for the tariff, it's not to protect American goods but it's a retaliation to China's "tariffs".

It's sort of funny, you pointed out that the essential part in order for a tariff to work is that the other countries would not retaliate. Suggesting that other countries tariff's is a valid retaliatory measure to counteract another countries tariff on your goods.

There are a lot of people, even economists(because they have no knowledge about China) who have no idea how US goods are treated in China. The amount of tariffs and restrictions on US goods in China in comparison to the reverse is hardly even calculable. The Chinese steal American technology and research, all US companies are forced to surrender their technology if they want to do business in China, only 10 Foreign movies are allowed to show in China per year, and are under incredible scrutiny, every US business operating in China is taxed and restricted significantly more than any local business.

None of this mattered when China was a third world country, but now they have entered the modern world and these aggressive economic tactics are completely unacceptable.

If it were up to me, I would completely cease trade with China.... or put in such a high tariff, that it would be completely unprofitable to do business. And I would actively seek out free trade agreements to all of southeast asia. And I would keep that policey until China offers a complete free trade agreement, or at least very close to one.
Click to expand...

China's trade policy is not a reason to impose tariffs on our allies in Canada and the EU. So there goes that explanation. Why Trump imposing tariffs on our allies when they are who we need on our side to provide a united front against China's abuses? It makes absolutely no sense. It Trump cared one bit about China he woudl not have withdrawn from TPP either, that alliance was made specifically to deal with China and we are SOL.
 
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iguanaman said:
China's trade policy is not a reason to impose tariffs on our allies in Canada and the EU. So there goes that explanation. Why Trump imposing tariffs on our allies when they are who we need on our side to provide a united front against China's abuses? It makes absolutely no sense. It Trump cared one bit about China he woudl not have withdrawn from TPP either, that alliance was made specifically to deal with China and we are SOL.
Click to expand...

I'm only concerned about China personally. The TPP was a disaster.... but it had the right idea. I don't agree with the intellectual property internet regulations the USA has tried to push on everyone. That single thing they tried to do is what turned me off to the TPP.

I don't know enough about Canada and Mexico's trade issues to weigh in on that. I know both Canada and Mexico tariff U.S. goods as well, Trump has the opinion we do not have as good of a deal as we should with these countries.... it's also perfectly fine if you think we do, indeed, have fair trade practices with these countries.... but that is what Trump was elected on, looking for unfair trade practices and retaliating against them... Just because these countries are allies, doesn't mean we should try to make sure we have the fairest and most favorable of trade policies possible.
 
celticwar17 said:
If it were up to me, I would completely cease trade with China.... or put in such a high tariff, that it would be completely unprofitable to do business.
Click to expand...

How would that not crash the entire world economy, immediately? Some of the most profitable U.S. businesses rely on Chinese manufacturing. Had this been done step by step, government regulating business with sensible regulations...for example, it could have been managed.

But when has either party, especially Republicans, ever been gung-ho about wide-scale business regulations? Dems have from time to time. Republicans, hardly ever.

American business pushed to open up foreign trade and they capitalized on low labor costs and ****ty working conditions for decades. And now we see the problems it causes, and you want to punish the entire world economy? How about punish the businesses that profited from our loss? But even that will send markets tumbling. Even if you came up with a good reason why we shouldn't help China grow, our competitors in other countries may have no such concerns and may capitalize on the low labor/mfg costs in China to out-compete U.S. business that was too prudish to engage with China...and now America is screwed again. So American business argues opening up to everyone is best. This is what globalization means, and if you don't get it, you can't make good decision. Profit, they argue, is everything (it's not).

It is no secret how China operates. Any business opening up shop there new the risks. I did an analysis 8 years ago on opening a branch in China and I knew all this crap...the IP, the China ownership technically, the risk of government nationalization/seizure, tariffs, etc. None of it looked worth the risk.

But in the U.S., no one loves corporate welfare..welfare for the top 0.01%, more than Republicans. They wont' regulate banks, they will jsut bail them out on the back-end when we literally have to. They won't regulate business moving to China on the front-end, they will just try to screw it all up on the back-end.
 
celticwar17 said:
I think you are missing a key aspect... You are missing the real reason for the tariff, it's not to protect American goods but it's a retaliation to China's "tariffs".

It's sort of funny, you pointed out that the essential part in order for a tariff to work is that the other countries would not retaliate. Suggesting that other countries tariff's is a valid retaliatory measure to counteract another countries tariff on your goods. Chinese tariffs and restrictions on American goods and services have gone completely unchecked for decades.

There are a lot of people, even economists(because they have no knowledge about China) who have no idea how US goods are treated in China. The amount of tariffs and restrictions on US goods in China in comparison to the reverse is hardly even calculable. The Chinese steal American technology and research, all US companies are forced to surrender their technology if they want to do business in China, only 10 Foreign movies are allowed to show in China per year, and are under incredible scrutiny, every US business operating in China is taxed and restricted significantly more than any local business.

None of this mattered when China was a third world country, but now they have entered the modern world and these aggressive economic tactics are completely unacceptable.

If it were up to me, I would completely cease trade with China.... or put in such a high tariff, that it would be completely unprofitable to do business. And I would actively seek out free trade agreements to all of southeast asia. And I would keep that policey until China offers a complete free trade agreement, or at least very close to one.
Click to expand...

That sounds good except that China holds 10% of all US debt. If they were to suddenly call in $1.2 trillion dollars, the US would default and the dollar would lose reserve currency status and about 80% of its value. That is why we will continue to trade with China.
 
celticwar17 said:
I'm only concerned about China personally. The TPP was a disaster.... but it had the right idea. I don't agree with the intellectual property internet regulations the USA has tried to push on everyone. That single thing they tried to do is what turned me off to the TPP.

I don't know enough about Canada and Mexico's trade issues to weigh in on that. I know both Canada and Mexico tariff U.S. goods as well, Trump has the opinion we do not have as good of a deal as we should with these countries.... it's also perfectly fine if you think we do, indeed, have fair trade practices with these countries.... but that is what Trump was elected on, looking for unfair trade practices and retaliating against them... Just because these countries are allies, doesn't mean we should try to make sure we have the fairest and most favorable of trade policies possible.
Click to expand...

And just like Trump, what said went right over your head. We can't hope to fight China alone and that is what Trump has done...leave us all alone. It is criminal and will not stand. We will reverse every single thing Trump has done as soon as he is gone. Like the Germans reversed everything Hitler did after they lost the war. Trump will be nothing more than a footnote in our history.
 
veritas1 said:
That sounds good except that China holds 10% of all US debt. If they were to suddenly call in $1.2 trillion dollars, the US would default and the dollar would lose reserve currency status and about 80% of its value. That is why we will continue to trade with China.
Click to expand...

How exactly would that work, calling in $1.2 trillion dollars in T-bonds? I can't take a T-bond to the Treasury and ask for my money back.
 
In the first place, there is no chance of China suddenly throwing $1.2T in T-bills out on the market all at once. That is not the threat. All China has to do is cough on a T-bill round and we get instant pneumonia here. Our financial markets would show instant concern that China would balk at additional rounds and the financial sector would start asking for immediate answers. We have backed ourselves into such a corner that the issue is not China throwing them willynilly out onto the market. Its that China would stop buying them. That is all it would take.

As for tariffs and China. earlier posters have hit it exactly. The actual trade deficit argument is laughably absurd. Our trade deficit with China in real terms simply reflects US addiction to a low price. To be honest we love low prices even with the built in obsolescence it brings with it for some products. Remember we created built in obsolescence. Its IP infringement. That is the big problem.

IP Infringement is what has made it possible for Chinese companies to get a very serious leg up in my old industry. They have stolen their way to a real advantage in the market for 5G telecom. How the f--k did that happen? Only one way. This one is nasty. They are likely going to make a fortune out of having stolen their way to an advantage in just that one area. It is also why I am not in favor of that Foxconn plant going up in Wisconsin. A Foxconn plant in Wisconsin is like putting the Fox in the hen house. If that plant, (Foxconn is a contract manufacturer) begins producing 5G gear for Chinese Telecom giants I am going to end up pulling what is left of my hair out. Foxconn has lots of business with US companies as well. But the first 5G hardware I see coming out of that plant with a Chinese Telecom brand on it, I am going to go completely ballistic. Of course idiot Trump touts that plant going up as a big victory for US manufacturing. Yea sure it is Donald. The Senate pulling the ZTE sanctions out of the MUST PASS bill already has me in a testy mood. Clearly that came from Donald pressure.

So TPP or something like it was exactly the approach we needed to deal with China IP Infringement and another agreement like TPP only with European countries so that we completely box China in on this issue of IP infringement and that is it! All of this nonsense about tariffs over here and tariffs over there is laughable trumpian BS, designed to rile his base who would not know a trade deal if it hit them over the head with a frying pan. Well Soybean farmers are starting to learn about trade deals and idiot tariffs now aren't they.

And in case nobody noticed, its Trump that blinked on Wednesday, not the EU. Its Trump that blinked finally after all his BS about hold on....gotta' wait this out.
 
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veritas1 said:
That sounds good except that China holds 10% of all US debt. If they were to suddenly call in $1.2 trillion dollars, the US would default and the dollar would lose reserve currency status and about 80% of its value. That is why we will continue to trade with China.
Click to expand...
Clearly you think the U.S. debt China holds works like an overdue loan. It does not. Neither China nor any other holder of a current U.S. debt instrument (contract) can "call in" the debt. They can sell the debt to someone else. They can opt to buy less new debt. They can hold on to the debt they have and continue to receive the recurring debt payments and when the debt matures, receive, as per the payment schedule defined in the debt contract, the final payment of principal and any remaining interest due.



celticwar17 said:
I think you are missing a key aspect... You are missing the real reason for the tariff, it's not to protect American goods but it's a retaliation to China's "tariffs".

It's sort of funny, you pointed out that the essential part in order for a tariff to work is that the other countries would not retaliate. Suggesting that other countries tariff's is a valid retaliatory measure to counteract another countries tariff on your goods. Chinese tariffs and restrictions on American goods and services have gone completely unchecked for decades.
Click to expand...
Red:
  1. The reason for Trump's tariff has not elided my notice. (BTW, no tariff's aim is to protect goods.)
  2. The OP isn't about the normative or emotional etiologies of the tariff Trump has implemented.
  3. The OP is about:
    • the economic efficacy of the tariff, and
    • the fact that the Carney's essay fails to note that the economic theory upon the tariff's efficacy is based, OTT, has three requirements (all three are noted in the OP) for the tariff to yield profit maximization outcomes equal to or greater than those achievable in the absence of a would-be "optimal tariff" and that two of those requirements are not met.
  4. Your remarks show you missed the actual point of the OP.

Blue:
Neither I nor Carney nor any of the authors of the linked content (Did you even read the linked content?) pointed out that the essential "part" is that other nations not retaliate. I, Carney and the linked content all noted that an essential requirement for a tariff to qualify as an "optimal tariff," and thereby produce the economic outcomes associated with being such a tariff, is that other nations not retaliate.

Tan:
I have no idea what meaning you intended that sentence fragment to impart. You've presented it as a complete sentence, but it is not one, and it's not possible for me to tell whether you meant it as an introductory subordinate clause to a new sentence or as a terminal subordinate clause to the preceding sentence.

Other:
I didn't include and won't respond to the rest of your remarks (the prose that isn't included in the above quote from post 2) from post 2 because its nature is qualitatively normative and the nature of my OP, thus the topic of discussion, is qualitatively positive.

​
 
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iguanaman said:
China's trade policy is not a reason to impose tariffs on our allies in Canada and the EU. So there goes that explanation. Why Trump imposing tariffs on our allies when they are who we need on our side to provide a united front against China's abuses? It makes absolutely no sense. It Trump cared one bit about China he woudl not have withdrawn from TPP either, that alliance was made specifically to deal with China and we are SOL.
Click to expand...
He withdrew, but he said we should negotiate with individual countries.
 
Lovebug said:
He withdrew, but he said we should negotiate with individual countries.
Click to expand...

Which is no way to deal with China's IP Infringement.
 
jnug said:
See post 9 in this thread.
Click to expand...
Not to be difficult, but agreeing to TPP and keeping our head in the sand doesn't seem like a solution, but more like giving up complete control.
 
Lovebug said:
Not to be difficult, but agreeing to TPP and keeping our head in the sand doesn't seem like a solution, but more like giving up complete control.
Click to expand...


No its not. You need groups of countries (multilateral agreements) to rein in China IP Infringement and China IP Infringement is the only real problem we have with China. The trade deficit is a fabricated problem, fabricated for political purposes. Participating in and encouraging a global market was not a mistake. The mistake was in not addressing the second half of that policy decision, retraining skilled workers to be technically sufficient skilled workers. That is not $100,000 4 year degree, education plans. For 20 years now Depts of Labor and Depts of Education have let us down and the ones we have now don't even understand the problem nor do they care. There is far too much political gold they think they can mine continuing to make people believe that globalization and trade deficits are a problem and going back to the 1950's "is easy".

Technology wipes out far more jobs than globalization ever thought of wiping out and the lack of a meaningful effort to understand what skilled work force means in the 21st Century, complete unwillingness to address it effectively IS THE PROBLEM. In addition, wiping out the dollars we needed to have a real infrastructure effort in this country was criminal. $600B wasted by taking the nominal corporate tax rate all the way down to 21% when 26% would have been just fine. We are getting nothing REPEAT NOTHING for having spent that last $600B in a corp tax cut that was radially too step. $600B down a rathole. Got a spare $600B I can borrow at 0 interest rate? One consequence was nothing meaningful left for Infrastructure which is why this administration has an Infrastructure week about once every two months and NOTHING happens. How many jobs long term would a real Infrastructure program yield given the condition of the current Infrastructure. That's real jobs, not these gotta' work 3 of them to have an actual take home pay worth talking about with no wage growth.
 
Mach said:
How would that not crash the entire world economy, immediately?
Click to expand...

Needs to happen. We need to bite the bullet for the future. Or have a steadily increasing tariff to all Chinese goods every year without end. It gives time for China to cooperate and American businesses to move elsewhere.
 
veritas1 said:
That sounds good except that China holds 10% of all US debt. If they were to suddenly call in $1.2 trillion dollars, the US would default and the dollar would lose reserve currency status and about 80% of its value. That is why we will continue to trade with China.
Click to expand...

I think we will have to bite the bullet for the future. We wouldn't have to default, they have to sell the bonds... they can't just call them xD
 
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Xelor said:
Clearly you think the U.S. debt China holds works like an overdue loan. It does not. Neither China nor any other holder of a current U.S. debt instrument (contract) can "call in" the debt. They can sell the debt to someone else. They can opt to buy less new debt. They can hold on to the debt they have and continue to receive the recurring debt payments and when the debt matures, receive, as per the payment schedule defined in the debt contract, the final payment of principal and any remaining interest due.




Red:
  1. The reason for Trump's tariff has not elided my notice. (BTW, no tariff's aim is to protect goods.)
  2. The OP isn't about the normative or emotional etiologies of the tariff Trump has implemented.
  3. The OP is about:
    • the economic efficacy of the tariff, and
    • the fact that the Carney's essay fails to note that the economic theory upon the tariff's efficacy is based, OTT, has three requirements (all three are noted in the OP) for the tariff to yield profit maximization outcomes equal to or greater than those achievable in the absence of a would-be "optimal tariff" and that two of those requirements are not met.
  4. Your remarks show you missed the actual point of the OP.

Blue:
Neither I nor Carney nor any of the authors of the linked content (Did you even read the linked content?) pointed out that the essential "part" is that other nations not retaliate. I, Carney and the linked content all noted that an essential requirement for a tariff to qualify as an "optimal tariff," and thereby produce the economic outcomes associated with being such a tariff, is that other nations not retaliate.

Tan:
I have no idea what meaning you intended that sentence fragment to impart. You've presented it as a complete sentence, but it is not one, and it's not possible for me to tell whether you meant it as an introductory subordinate clause to a new sentence or as a terminal subordinate clause to the preceding sentence.

Other:
I didn't include and won't respond to the rest of your remarks (the prose that isn't included in the above quote from post 2) from post 2 because its nature is qualitatively normative and the nature of my OP, thus the topic of discussion, is qualitatively positive.

​
Click to expand...


I'm not sure you understand my argument.

We need to economically retaliate against China... period. Tariffs are one way to do that. They are meant to damage both the USA and China, in order to hopefully get a better deal in the future... that is the goal. The tariffs have nothing to do with strategically improving America's economic situation naturally, they are meant to damage China's economy to the point to where they will talk and make changes.

The USA needs to become less reliant on China, we need to take some loses in order to make that happen.... in my opinion.
 
veritas1 said:
That sounds good except that China holds 10% of all US debt. If they were to suddenly call in $1.2 trillion dollars, the US would default and the dollar would lose reserve currency status and about 80% of its value. That is why we will continue to trade with China.
Click to expand...

Where do you get this stuff ? Unbelievably for its incredible ignorance.

China holds approx. $1.1 trllion of $21 trillion in US debt. (less than 5%) Soc. Sec, owed almost $3 trillion, is the US govt.'s biggest creditor.
(too bad soc. sec can't 'call in' its debt)

China (or any holder) calling in their debt ? They and nobody else can 'call in their debt.' The ignorance of the American people shouldn't but does
continue to amaze me.

Why is it that anyone could cut the right wing (repub) hypocrisy and ignorance with a knife ?

You pay a mortgage. Can the mortgage co. suddenly 'call in' your debt ? Foreclose when you have abided by the terms ? NO !!

All any US debt holder can do, is...sell the debt.

I am thinking it is this kind of ignorance that drives our political/fiscal fortunes and look at where we are.

So no, the US will not default and yes, the US$ will remain the world's reserve currency unless of course Trump has plans to mess that up too.
 
iguanaman said:
And just like Trump, what said went right over your head. We can't hope to fight China alone and that is what Trump has done...leave us all alone. It is criminal and will not stand. We will reverse every single thing Trump has done as soon as he is gone. Like the Germans reversed everything Hitler did after they lost the war. Trump will be nothing more than a footnote in our history.
Click to expand...

Any legacy now for Trump will be as a very sad and tragic figure. A spoiled aire to a fortune he couldn't handle with his ego obsessed insecurities.

That insecurity, avarice, greed rules the man over and above, family and country.
 
jnug said:
In the first place, there is no chance of China suddenly throwing $1.2T in T-bills out on the market all at once. That is not the threat. All China has to do is cough on a T-bill round and we get instant pneumonia here. Our financial markets would show instant concern that China would balk at additional rounds and the financial sector would start asking for immediate answers. We have backed ourselves into such a corner that the issue is not China throwing them willynilly out onto the market. Its that China would stop buying them. That is all it would take.

As for tariffs and China. earlier posters have hit it exactly. The actual trade deficit argument is laughably absurd. Our trade deficit with China in real terms simply reflects US addiction to a low price. To be honest we love low prices even with the built in obsolescence it brings with it for some products. Remember we created built in obsolescence. Its IP infringement. That is the big problem.

IP Infringement is what has made it possible for Chinese companies to get a very serious leg up in my old industry. They have stolen their way to a real advantage in the market for 5G telecom. How the f--k did that happen? Only one way. This one is nasty. They are likely going to make a fortune out of having stolen their way to an advantage in just that one area. It is also why I am not in favor of that Foxconn plant going up in Wisconsin. A Foxconn plant in Wisconsin is like putting the Fox in the hen house. If that plant, (Foxconn is a contract manufacturer) begins producing 5G gear for Chinese Telecom giants I am going to end up pulling what is left of my hair out. Foxconn has lots of business with US companies as well. But the first 5G hardware I see coming out of that plant with a Chinese Telecom brand on it, I am going to go completely ballistic. Of course idiot Trump touts that plant going up as a big victory for US manufacturing. Yea sure it is Donald. The Senate pulling the ZTE sanctions out of the MUST PASS bill already has me in a testy mood. Clearly that came from Donald pressure.

So TPP or something like it was exactly the approach we needed to deal with China IP Infringement and another agreement like TPP only with European countries so that we completely box China in on this issue of IP infringement and that is it! All of this nonsense about tariffs over here and tariffs over there is laughable trumpian BS, designed to rile his base who would not know a trade deal if it hit them over the head with a frying pan. Well Soybean farmers are starting to learn about trade deals and idiot tariffs now aren't they.

And in case nobody noticed, its Trump that blinked on Wednesday, not the EU. Its Trump that blinked finally after all his BS about hold on....gotta' wait this out.
Click to expand...

You are correct about Trump and yes, he is very dangerous especially with US trade.

But no country (or any holder) in its right mind will sell any large blocks of US debt which lowers the price and soon...is losing money.
Countries sell US debt. all of the time. IIRC the largest seller in 2017 was Belgium...about $30 billion...a rounding error of total US federal debt.

They do it for the cash.

As for needing China to buy our debt...hardly. 10 yr. T-bills the benchmark of US securities is selling out in minutes and at still historically low rates...under 3%.

Do you guys just make this stuff up as you go along ?
 
celticwar17 said:
Needs to happen. We need to bite the bullet for the future. Or have a steadily increasing tariff to all Chinese goods every year without end. It gives time for China to cooperate and American businesses to move elsewhere.
Click to expand...

Ok, I'll go with that but only if like for the farmers, there's a few billion $ to help me get through this. Ok deal ?

The American capitalist, historically among the most venal, had no problem and the Chinese know all about capitalist greed, giving up technology
to use oppressed, virtual Chinese slave labor.
 
Pedestrian said:
You are correct about Trump and yes, he is very dangerous especially with US trade.

But no country (or any holder) in its right mind will sell any large blocks of US debt which lowers the price and soon...is losing money.
Countries sell US debt. all of the time. IIRC the largest seller in 2017 was Belgium...about $30 billion...a rounding error of total US federal debt.

They do it for the cash.

As for needing China to buy our debt...hardly. 10 yr. T-bills the benchmark of US securities is selling out in minutes and at still historically low rates...under 3%.

Do you guys just make this stuff up as you go along ?
Click to expand...

So you need to understand that China still buys a very large chunk of the US t-bill rounds. In fact, they likely have to buy a certain amount of US T-bills in rounds. But they don't have to buy as much as they do and if they ever get the notion to only buy what they "need" to buy, the US financial market may not get pneumonia but it will catch at least a very bad flu. China drove the rate up on the first round of the year just whispering about cutting back.
 
The US still consumes a tremendous amount of the world's resources relative to your actual percentage of world population. It is STILL something like 25% of the world's resources with something like 12% of the world population. Which is a big part of the trade deficit.

If you were an Alien on a spaceship headed toward Earth here is what the planet would look like as a caricature. As an Alien in your spaceship you would see this place called China pumping God only knows how much in toxicity into the atmosphere and these ships going back and forth over this big blue/green patch to this other place that turns out to be the US. Looking at the US you would see another patch of dense fog of toxicity, not quite as dense as what is over China but still pretty bad and you would see all of this stuff (garbage) being thrown all over the place from the US...into the ocean, over the land just everyplace you can think about. You would also see that all of the blue/green patches everywhere are rising and infringing on the brown/green bits. Your inclination would be to think that China was making a whole bunch of stuff and shipping a bunch of God only knows what to what turns out to be the US and the US is just taking it off the ships, making another bunch of stuff with it and tossing it every which way, willynilly with most of it ending up in what looks like land repositories for it and into the blue/green patches thus filling them up and making them rise infringing on the brown/green bits. Elsewhere you would see brown/green patches turning the color of dust and the dust patches growing and growing. The Alien would not know what that was about. But it would look strange to him that these brown/green patches were turning this pale lifeless color. Is the spreading dust color some blight that is attacking this planet?

The Alien in his spaceship approaching the Earth would not be entirely accurate in his analysis from space. But he would not be far wrong either.
 
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