[ale] China..vs..Forsyth County Schools

[William Fragakis]

IAAE -

Countries like China and Japan that have trade surpluses with the US
have gobs of dollars that they have to do something with. We keep buying
stuff and paying with it in $ so we get toys and they have dollars. They
have to do something with all the dollars. Buying Treasury debt has
traditionally been a way to earn somewhat of a yield without the more
significant principal or credit risk of other $ investments such as
dollar-denominated stocks or corporate bonds. Likely, they own plenty of
that stuff, too, especially as the Fed has driven short term rates to
near zero. 

Of course, they could do other things with the $ but that would tend to
be more counterproductive. Say, converting the $ to yuan would drive up
the value of the yuan which clearly they are dead set against. Using the
$ to buy commodities in excess of their industrial requirements raises
the cost of manufacturing goods; again, not something beneficial. Also,
commodities do not have a fixed rate of return, rather, it costs money
to hold the inventory, something that retail gold investors will
painfully learn when, eventually, interest rates rise.

Their exploding property market is another symptom of the excess of $
and liquidity in their economy as cash rich banks, corporations and
institutions reach for returns in other investments. 

In a past life, my vocation was in helping institutions in a certain
foreign economy figure out what to do with their excess dollars they had
after you bought your first Camry, Accord or VHS player. 

regards,
William

On Fri, 2010-10-15 at 12:11 -0400, Lightner, Jeff wrote:
> Interestingly though the policies that allowed for this were mostly implemented by the folks that aren't the incumbents now.    This whole anti-incumbent talk is IMHO horsefeathers.   It is just a way to trade moderate republicans and democrats (moderate or liberal) for people that are more right wing.   We'll end up putting back in charge the same mindset that gave us these policies.
> 
> -----Original Message-----
> From: ale-bounces at ale.org [mailto:ale-bounces at ale.org] On Behalf Of Brian Stanaland
> Sent: Friday, October 15, 2010 11:56 AM
> To: Atlanta Linux Enthusiasts - Yes! We run Linux!
> Subject: Re: [ale] China..vs..Forsyth County Schools
> 
> IANAE (I Am Not An Economist) but I read somewhere that part of the
> reason China owns so much US debt is that it helps to keep their
> economy artificially higher compared to the US. Which is all well and
> good but you'd think the US Feds wouldn't allow that to happen. Or at
> least shouldn't. Which is part of the reason for so much
> anti-incumbent sentiment going on now.
> 
> --Brian
> 
> On Fri, Oct 15, 2010 at 11:24 AM, Chuck Payne <terrorpup at gmail.com> wrote:
> > 5 Years, wake up China owns us. They are #1 owner of our Debit.
> >
> > On Fri, Oct 15, 2010 at 11:17 AM, Charles Shapiro
> > <hooterpincher at gmail.com> wrote:
> >> 5 years?? Optimist.
> >>
> >> BTW Planet Money says the USA is still the largest manufacturer of
> >> goods on the planet.  Japan is 2nd. China is 3rd but growing.
> >>
> >> --CHS
> >>
> >> On Fri, Oct 15, 2010 at 11:05 AM, Lightner, Jeff <jlightner at water.com> wrote:
> >>> 5 years from now China will own America and so Forsyth will have to
> >>> convert to BSD and replace English in the curriculum with Mandarin.
> >>>
> >>> -----Original Message-----
> >>> From: ale-bounces at ale.org [mailto:ale-bounces at ale.org] On Behalf Of Cy
> >>> Kurtz
> >>> Sent: Friday, October 15, 2010 10:38 AM
> >>> To: ale at ale.org
> >>> Subject: [ale] China..vs..Forsyth County Schools
> >>>
> >>> Has anyone else noticed that Forsyth County schools and the Chinese are
> >>> going in opposite directions? How will this look a year .. 5 years from
> >>> now?
> >>>
> >>>
> 
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