Smoot-Hawley II has started (or not?)

And again, there is no entity called America which makes or buys anything.

So, I refer you back to post #18.

 

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FALSE. Certainly a few became very wealthy but the Spanish economy was destroyed (Sort of like is happening in the USA today. Wealth accumulating in the hands of the few is destroying the US economy.):

"… Money was available in Spain (the Andalusian warlords were enormously wealthy) but was not invested in the New World trade. Because the Spanish colonists were not yet producing their own staples such as wine, oil, flour, arms, and leather, and had large amounts of loot to pay for them, prices in Castile and Andalusia rose sharply as traders bought up goods to ship out. Oil, wine, and wheat prices tripled between 1511 and 1539."

Quote from: http://mygeologypage.ucdavis.edu/cowen/~GEL115/115CH8.html

Average Spaniards found it hard to buy food as do 49 million Americans now (and for the same reason – wealth is becoming very concentrated and if invested at all was mainly invested outside of Spain)

That is basically correct although some of the very rich did buy up huge tracks and convert the people into basically slaves / serfs to farm it , pick olives etc..

Not really. Spain became with a poor economy, many barely able to live, but yes there was a huge amount of gold in Spain – more than all the rest of Europe had, I think. Hoarding gold does not make for a healthy economy – that Mercantile POV has been discredited long ago, but you still think in mercantile terms:

Some in the USA are growing very wealthy but the US economy is not. Most have been losing wealth (including their homes and jobs) for a decade yet corporate profits are surging up.

SUMMARY: Drop your mercantile POV and learn that trade makes both trading nations more wealthy, even if one is earning less than it is buying (running a deficit) . In the US case a chronic deficit has not been corrected by decreasing value of the dollar to the extent it needed to be to restore equal funds flow. But that correction will come and it will not be smooth.

 

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Can't wait for Canada to tear up NAFTA and the U.S freetrade agreement, the U.S only follows what's good for itself in both agreements, they aren't even good for shitwipe.

 

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That is at best a silly quibble.

Everyone speaks of US import, Japanese import, etc. You can read measure of US manufacturing. For example the ISM for last month was released yesterday and showed a surprising drop which caused the stock market to turn down, but then the consumer confidence index came out and was better than expected, which reversed the impact of poorer than expected US manufacturing.

 

Yes, but they are referring to a *sum* of individuals...as am I.

You refer to nations as if they were singular entities, to avoid the reality that they include both buyers and sellers.

 

Well I certainly agree with you that extreme wealth concentration within any nation is undesirable. I think you will find this was the case throughout europe up until the modern era...not just Spain.

A trade imbalance is simply another form of uneven wealth distribution...so I dont see why you favour one form over another???

 

I doubt you want China to drop their mercantile POV...or Brazil???

This is a quote from the Wiki article on mercantilism:

"One notion mercantilists widely agreed upon was the need for economic oppression of the working population; laborers and farmers were to live at the "margins of subsistence". The goal was to maximize production, with no concern for consumption."

Sounds like China doesnt it?

They have gone from communism to mercantilism in a mere decade or two.

http://www.youtube.com/watch?v=kAnGBwjwpHI

 

When it is valuable labor and the goods produced by it being given for green paper, I agree. I.e. the Americans shopping at Wal Mart were enjoying the wealth that should have belonged to the under paid workers in China. - They produce that wealth by their labors but the system did not let them keep much of it.

You assume incorrectly. I favor a balance of trade (or more correctly stated, to include FDI also, zero average net flow of money in the long term). As I (and Adam Smith, long before me) explained this will normally come about smoothly as the currencies readjust in relative value.

That smooth adjustment did not happen because the US is a special case. It has been able for decades to gain most of the wealth others produced by giving them green paper. For various reasons, many of which are locally unique, the rest of the world willing accepted paper (with a total value of about 5 trillion dollars printed on it.) for their real wealth (including much of their irreplaceable natural wealth like copper ore, etc.). This is why Americans were so wealthy - could live much better than anyone else. - They did it on credit, just as an individual can for some years.

Well the day of reckoning is now or soon at hand. Foreigners do not want to hold 6 trillion dollars of paper promises. China is actively reducing the dollars it holds. To continues to enjoy the benefits of trade America will need to export real wealth, not just green paper. To sell manufactured goods as part of the "real wealth" exported, real wages in US must be lowered (and they are being). Unfortunately the abuse of cheap foreign labor is coming to an end. With the 5 trillion they acquired, they will be soon abusing Americans - getting even.

For example when they will no longer finance US deficits, the US/ Americans will either destroy the dollar with printing presses (say make their 5 trillion have only the purchasing power of 500 billion) or US/ Americans must work their asses off long hours for very low pay, as the Chinese did, to produce goods so cheaply that the foreigners will buy 5 trillion worth from the US instead of competing cheap producers like Vietnam.

I am almost sure the US/ Americans will chose the first alternative - watch their saved dollars turn into dimes as far as purchasing power is concerned. We are well started down that road already. Also to add to the suffering of Americans, the US is provoking a trade war. US Congressmen (and women) do not seem to realize that will be much more destructive to the US than China. China has the power to destroy the US financially but will not use it now. Probably just weakening the US economy and the military* for than a decade via their control over the Rare Earths will be China's first big shots in this trade war. (The just imposed in retaliation tariff on US chicken parts is a warning shot across the bow - not a big blow to the US economy.)

For how China can hurt the US military see: http://www.sciforums.com/showpost.php?p=2626723&postcount=11

 

Both Brazil and China are greatly improving the wealth of their populations, but you are correct both were exploiting them for the wealth and power of a few until recently.

In president Lula's 8 years, now ending, 20% of the lower class has be come middle class, in large part because of "Bolsa Familia" a very significant wealth redistribution system which directly paid to the poor families who would keep the kids in school until 18 (normally those kids went to work in the fields with their father after a few years of schooling.) Bolsa Familia basically pays for itself in increased economic activity via the "multiplier effect" as these previously cashless people spend in stores now. Its long term economic benefits will be enormous as the now educated kids get factory jobs etc and pay taxes - much more economically beneficial than even the US's GI bill of right as those GI already did have some education.

In China real wages (purchasing power) is increasing about 20% annually in the coastal areas now and life is being greatly improved in the interior with 100 new cities, each for a population of 1 million being built in this and the next five year plan plus new air ports, high speed rail etc. - Many good jobs for the lessor skilled are being produced by China's stimulus programs.

China too is ceasing to be mercantile - has invented a new and better economic system. Infrastructure is planned by engineers with decades long time horizons (not just til the next election as in the US) and yet lets Adam Smith's invisible hand determine what is in the market place for consumers (not the USSR's central planning that occasionally left the country without even toilet paper or lids for the cans it produced.)

 

Oh good...then we agree on favouring balance. However seeing as most currencies are highly manipulated how can this adjustment happen?

Milton Friedman also believed trade balances would occur through floating currency exchange...but China seems to have found a way around that huh?

Have you abandoned your plan to sell hundreds of billions in cane ethanol to the US...in our quest for equilibrium?

 

Brazil's Lula was clearly far more sincere in his ethical intentions towards the working class than the Chinese government.

Like the mercantilist sovereigns of the 17th century, they wish to build a strong military, and a vast population labouring at 'the margins of existence' is the path they have chosen. Starving people are their greatest resource.

One wonders if Sam Walton ever imagined he would one day re-build China's armies?

Forgiveness is not a virtue in Chinese culture, and they soon hope to challenge old enemies...in Taiwan, Japan and possibly India as well.

Consumer comforts are very much a secondary priority.

 

One more stumble towards the abis:

".Global finance leaders failed Saturday to resolve deep differences that threaten the outbreak of a full-blown currency war. Various nations are seeking to devalue their currencies as a way to boost exports and jobs during hard economic times. The concern is that such efforts could trigger a repeat of the trade wars that contributed to the Great Depression of the 1930s as country after country raises protectionist barriers to imported goods.

The International Monetary Fund wrapped up two days of talks with a communique that pledged to "deepen" its work in the area of currency movements, including conducting studies on the issue.
The communique essentially papered-over sharp differences on currency policies between China and the United States...”

From: http://news.yahoo.com/s/ap/20101009/ap_on_bi_ge/us_global_finance

 

It won't (See post 32). The US can only pay its debts by crashing the value of the dollar, already on its way down. This aids US exports and hurts exporters in more responsible governments as their currencies rise in value. For example, there is a flood of dollars coming to Brazil as it has high interest rates to constrain inflation as the buying power of the lower classes has greatly increased. Factories producing applances and cars, items typically bought with credit in Brazil, are only able to meet demand as it is constrained by high costs consumer loans.

Yes they are buying up the flood of printing press dollars coming to China to protect their exporters. I.e. they are playing defense against the fierce attack of thin air money coming from the US. Who is fundamentally to blame?

No, but selling more ETOH to the US will NOT be a move towards equilibrium - just the opposite: It will increase the flood of dollars already coming to Brazil. The US should import tropical ETOH to:

(1) Reduce CO2 (actually remove some from the air as the cane grows and the carbon removed is stored in ocean tankers, port storage tanks and even car's fuel tanks) and burn cleaner for less pollution in the cities.

(2) To cut the cost of Joe American's driving/ per mile driven. By about 50% when including what Joe is paying to subsidize the silly corn to ETOH program and what that is adding to his food bill as corn price for feeding pigs and chickens (and Joe when eating at Taco Bell) increases.

(3) To help the world's poor (instead of foreign aid) and cease sending billions to the very rich of Saudi Arabia, etc. who fund the terrorist.

 

People in the west speak of a trade war now as if they are just waking up...while Asians realize they have already WON a war they have waged for more than a decade.

 

Well then...there is your answer.

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If you want equilibirum Brazil should reduce it trade surplus from 24.62 billion to zero!

Buy more GM flex fuel cars and let American farmers keep the rewards of the ethanol revolution.

 

It takes two to make a war. The US has for decades imported real goods for pieces of green paper. Thus it was not necessary to keep its factories modern and competitive. Now that China has decided to ceased* giving away real goods for green paper the pain will be the US's as high inflations. In that sense you can say they won.

*For decades young Chinese worked long hours in dingy factories for little pay so Americans could enjoy low cost goods at Wal-Mart, etc. They have stopped doing that now. Wages in those coastal factories are up ~20% in purchasing power and still there is labor shortage there. Chinese no longer need to leave their interior homes to find work. China is building the world's largest (by miles of tracks) high speed rail system and in this and the next 5 year plan 100 cities for a population of at least one million. That is a lot of jobs in the interior.

Please, I beg you, take a look at this short post to understand China better:
http://www.sciforums.com/showpost.php?p=2630786&postcount=309

 

That would naturally occur (as explained in prior posts) if the US were not flooding the world with more than a trillion printing press dollars each year.
Get straight who is driving the world economy into disequilibrium, starting a trade and currency war. I don't have exact numbers, just now, but the FDI into Brazil each month is of that 24 billion magnitude as smart people get their money out of the US to protect its value (Investing in Brazil's growing economy is better protection against inflation in the US than buying dead asset gold in the long run.)

I don't understand you here. All makes of cars made in Brazil are "flex fuel" now and are more than 90% of all new car sales.

Yes the rich farm industry like Cargill, world's largest family owned company, (no stock exists) are getting richer quickly on the back of Joe tax payer, but I think this should stop.

 

Yes, I saw that earlier Billy...of course I read all your excellent posts.

Its very impressive, but then so were the naval Armadas of mercantilist Spain.

The standard of living among Chinese slave labourers is still apalling.

I could sit here posting pictures of Chinese poverty all day.

 

Article title: Finance Leaders Call for IMF Role in Averting ‘Currency War’

"... Oct. 9 Policy makers called on the International Monetary Fund to help guide the process of rebalancing the global economy and avert what some have warned is a potential protectionist “currency war.” ..."

From: http://noir.bloomberg.com/apps/news?pid=20601087&sid=apIVaOYNdVSg&pos=1

Billy T summary:We failed this week in DC so we are passing the buck to you, the IMF.

 

Yes by US standards, but a huge improvement over the conditions a decade or so ago. That (and good propaganda techniques) is why the CCP is very popular with the masses - I.e. they still remember starvation conditions when a crop failed, etc. It is a "Bellies first, liberty later" POV.

please post a couple, but make sure they were taken in the last 12 months.