China hits out at India for leaving it out of the Indian Ocean Naval Symposium

zraver

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It may be a good idea,so our exchange rate won't increase,but what we hold in our hands are all waste papers,it is so annoying.
You hold debt from a government that has never defaulted. Statements like what you just said, except made by your government amount to an unfounded economic attack. When the US misses a payment, then bitch, or don't buy our debt. But as long as your nation is buying, and we are servicing the debt on time don't complain it invites reprisals. Remember, if Obama wants he can at any time declare China a currency manipulator and crush your economy with tariffs.
 

Yusuf

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zraver,
Has not China run into a trap by buying all that debt?
If push comes to shove, you can ask China to take a hike!
 

Known_Unknown

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When the US misses a payment, then bitch, or don't buy our debt.
To be fair, the Bretton Woods system collapsed because the US would have missed payments.

Remember, if Obama wants he can at any time declare China a currency manipulator and crush your economy with tariffs.
And what effect would that have on the US economy? The US buys almost everything that China makes. There's a reason no sane US President in recent times has ever thought of applying large scale sanctions or tariff increases on China.
 

Yusuf

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India offers it's services as a manufacturing hub to rival China. US says great let's get on and rubs it into China.
There goes it's business and all that debt it has bought. What does China do now?
 

Known_Unknown

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You think India is not offering now? But India is not an attractive destination because of its crumbling infrastructure and high level of protectionism, and that will take a decade to bring up to Chinese standards.
 
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Known China does not control USA's economy in any way all the goods USA buys from China are non essential and can be replaced by anyone.
 

zraver

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To be fair, the Bretton Woods system collapsed because the US would have missed payments.
Remember, if Obama wants he can at any time declare China a currency manipulator and crush your economy with tariffs.[/quote]

And what effect would that have on the US economy? The US buys almost everything that China makes. There's a reason no sane US President in recent times has ever thought of applying large scale sanctions or tariff increases on China.[/QUOTE]

Bretton Woods collapsed because of European abuse of the system not US debt payments. At the end of WWII the US had all the gold or as much of it as really mattered. It agreed with Europe to set that gold at a fixed priced. Europe could thus buy gold at that price, but Europe allowed the private gold markets to fluctuate and they sold gold on those markets. Ie France buys a million of gold at Bretton Woods prices $35oz and sells it on the open market (London gold fix $40oz +) for a profit. It was a large theft of wealth and doomed to collapse.
 

Known_Unknown

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Known China does not control USA's economy in any way all the goods USA buys from China are non essential and can be replaced by anyone.
LF, both the Chinese and US economies are too intertwined. US buys everything from China, from clothes to barbecues. Why do you think China has accumulated such large reserves of US$? The business links between them are too deep, and are hard to break. They can't be replaced by anyone right away, but over a period of a decade or two, India can replace China as the major exporter of goods and services to the US.
 

Yusuf

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I think talking about other issues being discussed are relavent to the maneuvering going on between India, China and the US.
 

Known_Unknown

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Bretton Woods collapsed because of European abuse of the system not US debt payments. At the end of WWII the US had all the gold or as much of it as really mattered. It agreed with Europe to set that gold at a fixed priced. Europe could thus buy gold at that price, but Europe allowed the private gold markets to fluctuate and they sold gold on those markets. Ie France buys a million of gold at Bretton Woods prices $35oz and sells it on the open market (London gold fix $40oz +) for a profit. It was a large theft of wealth and doomed to collapse.
According to my knowledge, the basis of the Bretton Woods system was that the US$ was pegged to a certain quantity of gold, and the US promised the world that they would print no more dollars than they had gold reserves. However, in time, they broke that promise, and started printing way more dollars than they had reserves. Eventually, you suffered a balance of payments crisis because you could not reconcile the difference. So you unilaterally declared all your debts dissolved.
 

zraver

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According to my knowledge, the basis of the Bretton Woods system was that the US$ was pegged to a certain quantity of gold, and the US promised the world that they would print no more dollars than they had gold reserves. However, in time, they broke that promise, and started printing way more dollars than they had reserves. Eventually, you suffered a balance of payments crisis because you could not reconcile the difference. So you unilaterally declared all your debts dissolved.
Check again, as the gold was sold off the system became untenable.
 

Known_Unknown

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Zraver,

Here's what I found:

Under the agreements of 1944 the American dollar functioned as a virtual world currency, conferring great advantages on the US vis-à-vis the other capitalist powers. These advantages were limited, at least in theory, by the provision that the US dollar could be redeemed in gold at the rate of $35 per ounce.

As is often the case with financial arrangements, the gold backing system functioned very well so long as it was not actually tested. But it was founded on a contradiction. The system would continue to operate while the mass of US dollars circulating in the rest of the world was backed by gold held in the US. But the very expansion of the international economy tended to increase the need for international liquidity in the form of US dollars. That is, the more the global economy expanded, the shakier became the relationship between the dollar and gold.

In the 1960s, the dollar overhang—the difference between the dollars in international circulation and the value of the gold backing held in Fort Knox—began to grow as a result of increased US investment abroad and military spending. US administrations imposed policies aimed at restricting capital movements and like their British counterparts before them, US financial interests found the Euro dollar market a useful means for circumventing the actions of their own government.

US administrations also had an ambivalent attitude to the Euro dollar market. While trying to restrict capital outflows to counter the balance of payments deficit, the existence of the Euro dollar market meant that foreigners would be more likely to keep their holdings in dollars, thereby easing the pressure on the US currency.

However, the growth of the Euro dollar market had exactly the effect that Keynes and Harry Dexter White, the chief US negotiator at Bretton Woods, had foreshadowed. Growing amounts of finance capital were now able to move around the world outside the control of governments. The system of fixed exchange rates could not be sustained. The pound came under pressure in 1967, followed by the dollar in 1968. In 1971, a qualitative change took place as the US, for the first time since before World War I, experienced a balance of trade deficit, leading to the Nixon announcement on August 15.

In the immediate aftermath of the decision there were attempts by Japan, as well as the European powers, to resurrect the Bretton Woods system, at least in some form, through the exercise of capital controls. The US opposed all such measures because they would have restricted its freedom of operation both internationally and at home.

Under Bretton Woods, or any other system of regulation, the US would have had to take action to rectify the imbalances in its international position. One method would have been to cut back military spending, particularly on the Vietnam War. But this would have meant weakening the position of the US vis-à-vis the other major powers. In 1971 an administration grouping under the leadership of Paul Volcker (later to become chairman of the US Federal Reserve Board) concluded that financing for US deficits has “permitted the United States to carry out heavy overseas military expenditure and to undertake other foreign commitments” and that an important goal was to “free ... foreign policy from constraints imposed by weaknesses in the financial system.” Looking back from the 1990s, Volcker commented that “presidents—certainly Johnson and Nixon—did not want to hear that their options were limited by the weakness of the dollar.”

Another way to reduce the balance of payments deficit, ease the pressure on the dollar and so maintain a system of regulation would have been to cut spending in the United States. But the consequences would have been to induce a severe recession. Facing a rising tide of militancy in the working class, the student radicalisation produced by the Vietnam War, and the rebellion of black youth in the cities, this was not considered an option.

Moreover, there was considerable support for the view within US ruling circles that if the system of controls on capital movements were scrapped, the US would be able to maintain its hegemonic position because of its weight within the world economy. Other nations would want to hold dollars because of the role it played in the international monetary system. This outlook was summed up by the treasury secretary in the Nixon administration, John Connally, in remarks to a European audience as follows: “The dollar may be our currency but it’s your problem.” Or, as he told an American audience: “Foreigners are out to screw us. Our job is to screw them first.”
 

zraver

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Now get the info on the gold and back up the statements the US defaulted on its debts.
 

Known_Unknown

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Umm...what do you think I posted above? The US did not have enough gold to back up the billions of $ it was printing to finance the Vietnam War, so when other countries asked the US to devalue the dollar, Nixon unilaterally scrapped the gold-dollar equivalence, which in one swipe, erased almost all the US debt to Europe.
 

zraver

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You left out Europe's role and it didn't wipe out the debt. Europe had already converted its debts to dollars and was using the gold to finance their own economic growth at the expense of the US. Oh and the US was owed more than it owed.
 

Known_Unknown

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You left out Europe's role and it didn't wipe out the debt.
Europe wasn't the only one holding US$, the whole world was.

Europe had already converted its debts to dollars and was using the gold to finance their own economic growth at the expense of the US.
No one was doing anything at the expense of the US. The US was the one who took the lead in drafting the new economic system post WWII, and everyone was merely following it until the US unilaterally scrapped it.

Oh and the US was owed more than it owed.
What the US was owed was paid back, but the US never paid back what you owed.
 

zraver

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Europe wasn't the only one holding US$, the whole world was.
Not really



No one was doing anything at the expense of the US. The US was the one who took the lead in drafting the new economic system post WWII, and everyone was merely following it until the US unilaterally scrapped it.
Yup, blame the US for the actions of others



What the US was owed was paid back, but the US never paid back what you owed.
BS, the US never defaulted, although we ended up having to forgive most of what was owed to us to prevent a default by others.
 

Known_Unknown

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Are you kidding? Did you read the stuff I posted? There was a balance of payments crisis in your country, not in Europe. And you forgave Europe's debt? :rofl:
 

zraver

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Are you kidding? Did you read the stuff I posted?
yes, apparently you didn't. I sell gold for $35 an oz, you buy it in dollars, convert it to Francs, convert the franks to dollars and buy more gold. That is what was happening.



There was a balance of payments crisis in your country,
A crisis is not a default


not in Europe. And you forgave Europe's debt? :rofl:
Did you think two world wars and the reconstruction of Europe and continued financial propping before and after the Marshall plan was free?

By the way where is the info on Europe or anyone loosing a dime when Bretton Woods collapsed?
 

yang

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That is called sidestepping the issue.
[
Thank you.
The US is not printing money, the US is issuing debt. If you do not understand what the differences are the discussion cannot continue so i will explain.
Yes,but I may be a little more professional than you in this point.

The US is not printing money, the US is issuing debt. If you do not understand what the differences are the discussion cannot continue so i will explain.
You mean the US gov is using open market operation,one of the three monetary policy tools.

Printing money not backed by anything such as debt or assets increases the money supply.
What the US is doing is issuing debt, and when that debt is bought using the proceeds to print money. In effect the US is converting forgien currencies into dollars but not increasing the overall global money supply.
To get out of a recession government spending has to go up to compensate for reduced consumer spending, that is the way the market works.
You may know that,the value of the note(money) is based on real economy.You know why the financal crisis happen?It is the leverage of the risk asset,you can't be lied by the virtual economy .The paper money is just a symbol of equal value goods.
Debt backed money issuance won't risk inflation. All it is, is a currency transfer not new money creation.
You may know that wheather it is backed by debt or not,one result of the monetary policy is the increased currency, decreased rate,increased national income.Then people increased their consumption,corporation increased their investment,aggregate demand increased,so there comes a inflation.

Are they going to print, or issue debt and print based on the sale of the debt?
Maybe.
 

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