India is now over 2 trillion dollar economy

[Sakal Gharelu Ustad]

The recent stock market crash has shown china what will happen if US crashes.

It is funny when Chinese posters think that their govt is too smart!! They did the same mistake as US i.e. overheat the economy with cheap credit. Now its coming back!

 

[Mad Indian]

And the countries pro- floating exchange rate are lagging behind even further after looking at the whole picture for 20 years. Good work

What do you mean lagging behind? Specify.

Then what will these exports do if they always take a net loss by receiving US dollars? They will slowly reduce the amount of US dollars in their pocket, which will lead to the end of US dollar era as world currency if this trend continues. The beauty of this is China doesn't need to face US pressure alone on this issue. China won't even be the one suffering most of loss.

Lol. More nonsense. As you guys buy more bonds from USA , the value of USA dollar remains higher even if the USA has trade imbalance. So it will allow USA to print moreoney for same exchange rates. So essentially , you guys are just trading goods for pieces of paper. And of course the moment you stop buying the bonds yuan will appreciate and put the balance of trade back in the hands of USA and the trade will balance itself ,, provided the economic conditions are all same. So yes in the long run, the free floating currency will always balance itself off


And also, how will the countries which buy the $ slowly lose the dollars? By burning them? :biggrin2: no they have to buy American products to lose that worthless piece of paper. And of course, even if USA dollar is not the trading currency, it does not change anything with what we said regarding the free floating currency. USA still can print money so long as the Chinese keep buying USA Treasury bonds and dollars.

Pieces of worthless paper for sophisticated manufactured goods is probably the best deal Americans can get:biggrin2:

I already give the reasons. If you don't understand what I am talking about, I can't help you.

The example you gave is BS . just because you don't understand what you are talking about does not make me wrong

If that is true, there will be no AIIB, simply because no one would join in;
if that is true, US won't even sign the nuclear deal with India;
If that is true, every drop of oil should be sold for dollar only.

Let me give a anecdote . let's see if you are smart enough to understand.

Twenty years ago- only my dad in my family could lift weights and buy for what the family needs and wants. So he had the powers in our family. But today, I have started earning and started lifting weights . so I have some say in family matters now. But since my father is not the only one who has a say in the family today, unlike twenty years ago, it must be proof that my father has become poor and powerless in my family, compared to twenty years ago despite him earning 10 times more than what he was earning 20years ago.

 

[Mad Indian]

US dominance is not collapsing by the logic you gave above. It is collapsing because China has equal economic power now.

Is this example close enough ?

Twenty years ago- only my dad in my family could lift weights and buy for what the family needs and wants. So he had all the powers in our family. But today, I have started earning and started lifting weights . so I have some say in family matters now. But since my father is not the only one who has a say in the family today, unlike twenty years ago, it must be proof that my father has become poor and powerless in my family, compared to twenty years ago despite him earning 10 times more than what he was earning 20years ago.

 

[Mad Indian]

No.

He said, and I quote, "Chinese is using these US securities to borrow money from the banks of the world and then use these money to buy raw material overseas."

same thing overall. It changes nothing

 

[Mad Indian]

Ok, what are those more efficient industries and services? What make them more efficient?
Technology? These high-end industries only represent a tiny fraction of economy. And they are also facing increasing competition from emerging economies. The pace of efficiency improvement in these economies is much faster than developed world. After all, catching up is easier than pioneering.

It's usually invincible unlike the "losses" taken in the imports industry .

Anyway to understand economics , you should look at it from a realistic view point without including these things like currencies and such. Focusing on unimportant statistics to miss the big picture will lead to too clever by half conclusions.

What is trade? Exchange of goods between two parties(or more ) on a mutually beneficial gain. A and B are two peopl(countries) trading with each other . both will only trade if both have to gain from it. So lets say A trades its product "a" , for B's product "b". Both are happy. But they find that trading " a" and "b" directly is combersome as they can't always carry the big products "a" and "b" . so they decide to use "I owe u" papers for trading. A trades with B for its "b" using its own "I owe you papers". Now this is nothing more than currency of A. Then B trades with A for " a" using the "I owe you" A had given already for buying "b", .ie B is using the currency of A to buy A's goods " a". The same will be the case with "I owe you" issued by Country B ( Currency of B ) too being used by B for buying A's "a".

Note that both the "I owe yous " are worthless so long as the countries with "I owe yous" don't cash it in as products.

Let's say B tries to be smart and starts selling lot of "b" for "I owe u"s(or currency of A) from A without buying " a" (or anything for that matter) from A. So B will start accumulating a lot of "I owe u"(currency of A) from A and A will accumulate the debts from B. So, so long as B does not use the currency of A(or I owe u from A" to buy from A, all B has is only pieces of worthless " I owe u" of A (or currency of A).the only way for B to get back the products worth its trade is by using the "I owe u" of A(currency of A) to buy from A. But if it does, then A won't be in debt anymore as it would have payed back its debt with its oown products "a"


Now if you are smart, you won't need to substitute USA for A , dollars for currency of A(or I owe u from A), "a" for USA exports, B for China, "b" for Chinese exports, and yuan for currency of B(or I owe u from B) to understand the obvious parallels

@Sakal Gharelu Ustad was my example correct?

 

[pmaitra]

Let me give a anecdote . let's see if you are smart enough to understand.

Twenty years ago- only my dad in my family could lift weights and buy for what the family needs and wants. So he had the powers in our family. But today, I have started earning and started lifting weights . so I have some say in family matters now. But since my father is not the only one who has a say in the family today, unlike twenty years ago, it must be proof that my father has become poor and powerless in my family, compared to twenty years ago despite him earning 10 times more than what he was earning 20years ago.

This is yet another context switching that tries to divert away from the point just to avoid having to admit one's mistake.

Here is the chronology:

And I don't know what you mean by end of US dominance. They are as strong as they have been.

If that is true, there will be no AIIB, simply because no one would join in;
if that is true, US won't even sign the nuclear deal with India;
If that is true, every drop of oil should be sold for dollar only.

Let me give a anecdote . let's see if you are smart enough to understand.

Twenty years ago- only my dad in my family could lift weights and buy for what the family needs and wants. So he had the powers in our family. But today, I have started earning and started lifting weights . so I have some say in family matters now. But since my father is not the only one who has a say in the family today, unlike twenty years ago, it must be proof that my father has become poor and powerless in my family, compared to twenty years ago despite him earning 10 times more than what he was earning 20years ago.

________________________________________________________________________

Ok, so the question is, is @Mad Indian correct in claiming the US is (context is assumed to be the currency, US Dollar, since this particular poster likes to keep things ambiguous, very similar to that "unit" issue in an earlier post) is as strong/dominant as they ever have been?

Is it really that? Since the history of the US Dollar, has the US Dollar never have been more powerful that it is now?

I have already posted an article on how the US Dollar's share in the global currency market has fallen since the 1970s. See this article posted on March, 2015.

Returning to what @no smoking said, I have to address each one of his points.

• It is true that many countries have joined the AIIB, and they did so, because they sought to benefit from it, and saw some future in the AIIB.
• It is true that the US signed the Nuclear Deal in the hope of generating business and profits for the US Nuclear companies.
• It is true that oil was no longer sold only in Dollars, and India had used gold to buy Iranian oil, and now, Iran has its own agreement that will enable Russia to sell Iranian oil for any remuneration, other than Dollars.

Thank you @no smoking for at least making an attempt. Please continue to counter fairy tales. You might not convince the person you are arguing with, but do it for the sake of the debate, so that people can see both sides of the argument.

 

[no smoking]

It is funny when Chinese posters think that their govt is too smart!! They did the same mistake as US i.e. overheat the economy with cheap credit. Now its coming back!

Completely different cases. 2 different countries in different development stage: In US, it was the result of Wall Street pursuing super profit at any cost; China, it is the end of one economic circle as the similar collapse in 2001, 2007. No one says that Chinese gov is smart. I would rather say they are making the same mistake as Japanese and Korean.

 

[no smoking]

US killed its low productivity economy and moved to high productivity sectors. Ofcourse, once iPhone is conceptualized there is no need to produce it in US when it can be produced for peanuts in China.

No, that part of high productivity sectors have been existing decades ago, which designed and produced Motorla-the first mobile, Apple I, IBM PC.... the majority of the workforce laid off from "low productivity economy" was not absorb by "high productivity" department, they simply moved into the sectors still enjoying competition advantage by geological location, like Walmart, warehouse, etc.

In the long run, China would not want the US to default on its debt because that keeps it running. It is mutually beneficial because Americans can afford better lifestyle doing nothing and upgrade their technology.

US is playing as the bank of this world. What will happen if a bank default its own bond? It can't be the bank anymore. It took Americans 50 years and 2 world wars to kick British off and put themselves in that position. Do you really think they can afford losing that? Yes, they won't die, but they will save Chinese lots of effort.

US dominance is not collapsing by the logic you gave above. It is collapsing because China has equal economic power now.

Not even close. Being the world currency means you are controlling everyone's wallet.

 

[Sakal Gharelu Ustad]

No, that part of high productivity sectors have been existing decades ago, which designed and produced Motorla-the first mobile, Apple I, IBM PC.... the majority of the workforce laid off from "low productivity economy" was not absorb by "high productivity" department, they simply moved into the sectors still enjoying competition advantage by geological location, like Walmart, warehouse, etc.



US is playing as the bank of this world. What will happen if a bank default its own bond? It can't be the bank anymore. It took Americans 50 years and 2 world wars to kick British off and put themselves in that position. Do you really think they can afford losing that? Yes, they won't die, but they will save Chinese lots of effort.

You have no clue about what productivity means. If you think warehousing is keeping US alive then that is the funniest comment on this thread!!

Now coming to bank of the world part. Yes, it is bank of the world and hence it does not even need to default because no one would like it including the Chinese. So, they will keep that position at least for some years.

Not even close. Being the world currency means you are controlling everyone's wallet.

When do you control everyone's wallet? Go back to my last post and you will understand.

Completely different cases. 2 different countries in different development stage: In US, it was the result of Wall Street pursuing super profit at any cost; China, it is the end of one economic circle as the similar collapse in 2001, 2007. No one says that Chinese gov is smart. I would rather say they are making the same mistake as Japanese and Korean.

I did not say they are same cases but they are close. The WS was in the background just as the Chinese banks are now. The ordinary people fuelled the bubble using public money and hoping to cash it on right time.