China and currency
3 responses | 0 likes
Started by wglassfo - Aug. 5, 2019, 10:59 a.m.

The PBOC has just allowed the renmbi [SP] to sink to lower levels

China in a lengthy explanation says this is just keeping pace with all other major currencies in the world

Trrump calls it currency manipulation

Regardless the USD is strong and the renmbi just got weaker

This has the effect of softening the blow, to Chinese producers, when Trump levies another round of tarriffs, almost as if china is saying to Trump, he should reconsider his tarriff decision

Trump responds by saying the Fed will lower the int rate and drive down the USD

This has all the indications of two countries, neither of whom will give an inch

Does the stk market go up or down with much lower int rates

I could see int going to 1% by 2020. Regardless of the stk market, afte rthe Fed action, if it does anything?? what more can the USA do to win the trade war

1% is not far from zero or negative int ratess

Perhaps that will drive the USD down as people decide they don't want to lend to the USA gov't

If so then the only alternative would seem to be the printing press and flood the world with fiat, and use that fiat to buy stks

Japan will soon own their entire stk market, as weird as that sounds, so there is a path of least resistance

So: Actions have consequences


Tump  knows and has said, the USA can not be the piggy bank to the world. Does that make sense to you???

Deficits can get out of contol as if they aren't already,

 I suppose he means more out of control, if the USA is forced to print fiat, to pay the bills with a greatly weakened USD

Trump is doing everything he can to weaken the USD

If imports become to expensive due to a weak dollar then opportunity exists for domestic production and more jobs.

I have no idea what Trump thinks but his words lead one to believe some or all of the above has been considered and some thing with the china trade deficit  has to happen

In summary

China is saying that a trade surplus favouring china and the accumulation of wealth is a right they have earned and will not budge an inch to change anything

Trump is saying some evasive action may be considered but otherwise, there is a great danger to the USA deficit, economy and the USA piggy bank [fiiat]

Full speed ahead and dam the torpedos

Comments
By metmike - Aug. 5, 2019, 11:32 p.m.
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Thanks Wayne,

The United States and China may be headed for a currency war

https://www.cnn.com/2019/08/05/business/usd-yuan-currency-war/index.html

But by allowing the yuan to move lower, Beijing is sending an unmistakable signal: It is prepared to deploy its currency as a weapon in the trade war with Washington. 

"The fact that they have now stopped defending 7 against the dollar suggests that they have all but abandoned hopes for a trade deal with the US," said Julian Evans-Pritchard, senior China economist at Capital Economics.

By metmike - Aug. 5, 2019, 11:35 p.m.
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China’s central bank denies it’s devaluing country’s currency to counter tariffs

https://www.cnbc.com/2019/08/05/chinas-central-bank-denies-its-devaluing-countrys-currency-to-counter-tariffs.html

Key Points

  • China’s yuan breaks through 7 against the dollar for the first time since 2008.
  • But People’s Bank of China Governor Yi Gang says China will  “not engage in competitive devaluation.”
  •  The yuan’s breakthrough came days after Trump abruptly heated up the trade war with China, announcing 10% tariffs on another $300 billion worth of Chinese goods.

The Chinese are not telling the truth.

By metmike - Aug. 5, 2019, 11:38 p.m.
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‘It could be very serious:’ Why some analysts fear a U.S.-China currency war


https://www.washingtonpost.com/business/2019/08/05/it-could-be-very-serious-why-some-analysts-fear-us-china-currency-war/


The United States and China just opened an explosive new front in their broadening economic confrontation: a currency war.

 

China allowed the value of its tightly controlled currency to fall to an 11-year low Monday, a move that threatens to hurt American producers by making their products more expensive for Chinese customers.

 

The Treasury Department retaliated late Monday afternoon by designating China a “currency manipulator,” a rare label it has only slapped on foreign countries a few times.

 

The twin actions were widely seen as a major escalation of the U.S.-China trade war. Analysts and economists said they fear severe economic consequences for both countries, including additional trade restrictions that could slow growth.

 

“It could get very serious if trade tensions between China and the U.S. morph into a currency war,” said Eswar Prasad, a professor of trade policy at Cornell University. “This could lead the U.S. to essentially shut down all imports from China.”