China

You are currently browsing articles tagged China.

China and the Weakening Dollar

October 24, 2009 in Money by Greg | 4 comments

Recently, Forbes reported why a weakening U.S. dollar continues to threaten America and why China is changing its monetary policy. Earlier this week Michael Pento wrote,

It seems nobody in this country wants to take responsibility for the secular decline in the value of the U.S. dollar. When Fed Chairman Ben Bernanke is asked about the currency’s decline, he refers the query to the Treasury Department. When the president is asked about the dollar, he often gives the tired old platitude that the U.S. has a strong dollar policy, but his vacuous words seem more like a perfunctory utterances than a bona fide dollar-boosting strategy.

Recently, in an interview with CNBC’s Maria Bartiromo, Treasury Secretary Timothy Geithner had some startling comments about the world’s reserve currency. When asked about its chronic weakness, and what specifically he was doing to safeguard the dollar, Mr. Geithner said, “…if you look generally, you know, I don’t talk about developments in the exchange markets.” He continued, “If you look at what’s happened over the last year, you’ve seen really a lot of confidence in the U.S. economy. When the crisis was at its peak … you saw the dollar rise when people were most concerned about the future of the world.”

Now that the U.S. dollar is once again caught up in a vicious secular bear market, losing nearly 16% of its value since March alone, the Treasury Secretary is once again opting to plead the fifth. Even worse, he claims that last year was a good example of global confidence in the currency, even though it was down over 8% for the year.

Can he really be counting on another collapse in the global economy to pull the dollar out of its downtrend? To use the previous year as an example of confidence and strength in the country, or the currency, is spurious in nature. It illustrates that our Treasury Secretary either tacitly condones a falling dollar or has no idea what causes a weak currency.¹

China and the Weakening Dollar »»

“Mr. Geithner: Stop Passing the Buck on the Dollar”. 21 Oct 2009. Forbes. 23 Oct 2009.↩

Dollar as Reserve Currency

October 8, 2009 in Money by Greg | 4 comments

For a number of decades, the U.S. dollar has acted as the world’s reserve currency. A reserve currency is essentially a currency,

. . . which is held in significant quantities by many governments and institutions as part of their foreign exchange reserves. It also tends to be the international pricing currency for products traded on a global market, such as oil, gold, etc. This permits the issuing country to purchase the commodities at a marginally lower rate than other nations, which must exchange their currency with each purchase and pay a transaction cost. . . It also permits the government issuing the currency to borrow money at a better rate, as there will always be a larger market for that currency than others.¹

Over the course of the last year, the dollar’s role as the world’s reserve currency has come under attack. The other day it was noted,

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar. Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars. . . .

This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region’s conflicts into a battle for great power supremacy.²

Read the rest of this entry »

“Reserve Currency”. Wikipedia. 7 Oct 2009.↩
Fisk, Robert. “The Demise of the Dollar“. 7 Oct 2009. The Independent. 7 Oct 2009.↩

Hyperinflation Video

October 1, 2009 in Money by Greg | 11 comments

Over the course of the last year, readers of this blog are aware that the United States has strayed away from the firm monetary policy¹ as outlined in the U. S. Constitution.²

The following video is part one of a three part series about the history – as well as the causes and effects – of hyperinflation. Although it is somewhat partisan, the video provokes a discussion about the competing forces over control of U. S. monetary policy.

Since 1913, the same year the Federal Reserve Act was enacted³, the dollar,

. . . has lost 96% of its purchasing power due to inflation. A common misconception today is that prices for goods and services have been going up. The truth of the matter is that prices have remained nearly the same in precious metals terms; it is the value of the dollar that has declined. It simply takes more and more dollars to buy the same products, since the dollar’s value has become less and less. Gold and silver were scrapped as a “control” mechanism for our economy, and ever since, we have been circulating a “robust paper” in place of real money. This “robust paper” is now the world’s reserve currency in central banks. From 2002 – 2005, the U.S. dollar lost over 40% of its value to the Euro, and had similar losses to other major currencies of the world.”⁴

As the government continues its inflationary policies based on Keynesian economics⁵, China and other nations continue to push for replacing the dollar as the international reserve currency.⁶

How should the U.S. solve its insolvency problem? (Pun intended.)

Sources:

Money.↩
Gold and Silver Coin as Tender in Payment.↩
Federal Reserve Act”. Wikipedia. 1 Oct 2009.↩
“U.S. Dollar”. First National Bullion. 1 Oct 2009.↩
Keynesian Economics and Savings.↩
Dollar as Reserve Currency. See also, Goldstein, Matthew. “Q=A – Replacing the Dollar as the Reserve Currency”. 8 Jul 2009. Reuters. 1 Oct 2009.↩

Orrin Hatch on Cap and Trade

July 21, 2009 in Government by Greg | 6 comments

Utah Senator Orrin Hatch recently wrote about the “Cap and Trade” bill narrowly passed by the House of Representatives. Also known as the Waxman-Markey bill, the cap and trade bill is an emissions trading bill designed to control pollution by providing economic restrictions to the emissions of pollutants. Under the bill, the government will issue emission permits to companies which will be required to hold an equivalent number of credits which represent the right to emit a specific amount of pollutants. The total amount of allowances and credits cannot exceed the cap, limiting total emissions to that level.

Companies that need to increase their emission allowance must buy credits from those who pollute less. The transfer of allowances is referred to as a trade. In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions by more than was needed. Thus, in theory, those who can easily reduce emissions most cheaply will do so, achieving the pollution reduction at the lowest possible cost to society.¹

In a personal letter to a constituent, Orrin Hatch wrote about the negative affects of this legislation and why he will not support it:

Such proposals are not the most effective approach to reducing carbon emissions (CO2).
There is considerable debate within the scientific community regarding the theory of anthropogenic global warming (AGW). This theory is based on questionable assumptions.
If all provisions of the cap and trade program were implemented global temperatures would only decrease by nine-hundredths of a degree Fahrenheit.
A carbon cap-and-trade program could result in a 70 percent increase in the average Utah family’s electric bill, making it the highest increase in the nation.
As we seek to become more energy independent, this legislation will in fact result in an annual $120 billion reduction in our economy, while ensuring our competitors such as China, gain a distinct advantage over us in the worldwide marketplace. It will send more than a million of our manufacturing jobs to countries with less-stringent environmental standards resulting in a net increase of global CO2 emissions.
False markets simply redistribute wealth to preselected winners and losers, the winners here would be the select few who control carbon credits and the rest of us would be the losers.²

According to The Heritage Foundation:

Should [the cap and trade bill] become law, Waxman-Markey will reverberate throughout the economy, costing the nation an average of $393 billion annually and over a million jobs from 2012 to 2035.³

Besides the social-reengineering impact of the bill on the U.S. economy, the cap and trade bill’s intended benefits seem to flow to the United States’ trading partners who do not have to operate under the same limitations.

Loading ...

Sources:

“Emissions Trading”. Wikipedia. 21 July 2009.↩
Richman, Larry. “Cap & Trade Scam”. 18 July 2009. Richman Ramblings. 21 July 2009.↩
Lieberman, Ben. “Waxman-Markey: Homeowners, Small Businesses, and Farmers Hit the Hardest“. 21 July 2009. The Heritage Foundation. 21 July 2009.↩

China, Russia, and Fascism

January 25, 2009 in Fascism by Greg | 6 comments

Last week, I came across a couple of articles on China, Russia, and Fascism. I thought each one was well-written and important enough to add a short note to our blog.

China and Russia’s View of the United States

The first excerpt comes from The Richter Report and is reminiscent of Neal A. Maxwell’s statement that someday there will come a “gigantic, global collapse” as quoted in Pride and Selfishness:

The reckless expansion of credit and debt has been at the heart of all great depressions throughout history. However, our American politicians and “mainstream” economists believe that debt-spending is the key to economic recovery. That is why the perspective of outside observers can be very helpful.

A recent article published in the China Business News sent yet another warning shot in the direction of the United States. The article would not have seen the light of day had it not been approved for publication by the Chinese government. The author, Xiang Songruo, a professor at Central China University, said that America must “repay its debts” and “lead a more frugal life.” In the event that the United States asked China to buy more of its debts, the professor suggested that China should demand the following conditions:

1) The U.S. should cancel the limits on high-tech exports to China and allow China to acquire advanced technology and high-tech companies from the U.S.; 2) The U.S. needs to open its financial system to Chinese financial institutions, allowing all Chinese firms to open branches and develop business in the U.S.; 3) The U.S. should not prevent Europe from cancelling the ban against selling weapons to China; 4) The U.S. should stop selling military weapons to Taiwan; 5) The U.S. should loosen its limits on numbers of Chinese tourists and allow them to travel freely in the U.S.; and, 6) The U.S. should never restrain China’s exports to the U.S. and force renminbi appreciation in the name of domestic protectionism and employment.

And if we don’t do what China wants us to do? “Then China’s choice is quite simple: rationally adjust the structure of its foreign currency reserve assets and avoid the risk of U.S. national debt according to market rules.” Translation? You people are broke. We are going to make the rules from now on. If you don’t do what we want, we will dump all our US dollar foreign currency reserves and crash your economy even worse than it has already crashed.

China, Russia, and Fascism »»