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Old 09-22-2015, 12:22 AM
 
87 posts, read 80,307 times
Reputation: 181

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Quote:
Originally Posted by ZachF View Post
Being the world's reserve currency is a net *negative*. Mathematically it forces you to run a persistent trade deficit in order to provide liquidity to global trade. It's made worse by countries hoarding dollars in order to boost there own weak economies. The US dollar is the World's reserve currency because The US is the only economy large enough/politically currently (though less so every day) willing to accept the costs.

Michael Pettis explains it best, as the "exorbitant burden", here:
Are we starting to see why its really the exorbitant “burden” | Michael Pettis' CHINA FINANCIAL MARKETSMichael Pettis' CHINA FINANCIAL MARKETS


The biggest beneficiary to ending the US dollar as the reserve currency would be the US economy. The biggest losers would be the mercantilist exporter brigade (China/Japan/Germany/Taiwan/etc).
Being able to control the world's reserve currency is clearly a net positive. The reason why we're running trade deficits is precisely because the tendency of foreign governments to hoard US dollars and Treasurys props up the value of the dollar relative to other currencies, which makes imports a lot cheaper. It's a delayed form of seigniorage. When they save the dollars, the relative value of an individual dollar goes up, which means people who are buying things in dollars today (ordinary Americans) can buy it at reduced prices. When they spend the dollars, the average value of the dollar goes down and erodes their purchasing power claims on the US market.

In the long run, under normal circumstances, countries are trade neutral because any currency that flows abroad must inevitably return in the form of increased demand for that country's goods and services. With a reserve currency, since foreign institutions tend to hoard it and not spend it, we're effectively gaining real goods and services in exchange for money that depreciates as soon as they want to spend significant amounts of it.

I know the term "trade deficit" sounds like a bad thing, but for a developed economy like ours, it's actually really good. It allows the average American to have a higher standard of living than they otherwise would have.
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Old 09-22-2015, 09:06 AM
 
Location: plano
5,960 posts, read 7,511,409 times
Reputation: 5017
Balancing Its books won't fix our fiscal issues. Future Liabilities such as promised social security, Medicare and pension costs all in the future are not reflected in how the fed gov keeps its books. Trillions of additional liabilities unfounded. However if a for profit business kept its boos this way all hell from the Feds and shareholders would break out and it should. Double standard?
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Old 09-22-2015, 12:02 PM
 
2,256 posts, read 1,400,072 times
Reputation: 4906
Quote:
Originally Posted by ZachF View Post
Being the world's reserve currency is a net *negative*. Mathematically it forces you to run a persistent trade deficit in order to provide liquidity to global trade. It's made worse by countries hoarding dollars in order to boost there own weak economies. The US dollar is the World's reserve currency because The US is the only economy large enough/politically currently (though less so every day) willing to accept the costs.

Michael Pettis explains it best, as the "exorbitant burden", here:
Are we starting to see why its really the exorbitant “burden” | Michael Pettis' CHINA FINANCIAL MARKETSMichael Pettis' CHINA FINANCIAL MARKETS


The biggest beneficiary to ending the US dollar as the reserve currency would be the US economy. The biggest losers would be the mercantilist exporter brigade (China/Japan/Germany/Taiwan/etc).
As I said...Triffin Dilemma
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Old 09-22-2015, 05:03 PM
 
Location: NH/UT/WA
283 posts, read 170,146 times
Reputation: 437
Quote:
Originally Posted by LordSquidworth View Post
It doesn't force you to run a persistent trade deficit. We have a choice whether we buy the cheap imports or not. I personally haven't stepped foot in Walmart in years, and this is a large reason why.
A country with a capital account surplus (i.e. importing savings, like the US) MUST run a current account deficit. The two *have* to equal zero. Countries that have an open current account like the US who allow foreign entities (with a closed(ish) like China) to accumulate their capital at will while not reciprocating will run goods deficits regardless of the preferences of their domestic consumer. It's these policies that falsely inflate malinvestment bubbles worldwide, and eventually create currency crises. It is no coincidence that since Bretton Woods broke down and current account surpluses/deficits have become more extreme that debt/malinvestment bubbles have grown both larger and more frequent.

Countries that structure their economies to export/falsely inflate savings will see their trade surpluses rise, and by nature that means other must have rising deficits. Experience has shown savings flows dictate trade deficits, not consumer preferences.
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Old 09-22-2015, 06:21 PM
 
2,450 posts, read 2,121,848 times
Reputation: 2168
Quote:
Originally Posted by Raysuxx View Post
Correct me with i'm wrong but the US is in a lot of debit, the most since WWII or something? Why then is it that they can't produce balanced or almost balanced budgets like other countries that have similar tax rates, far better and more extensive welfare systems, government funded health care, low unemployment and similar living standards? I thought military spending may have been a factor, but as % of GDP wise it isn't that significant I thought it's probably not...So what gives, surely with what I've outlined they would be running massive surpluses.
There would be a problem if it did not balance every year. As far as i know every bill gets paid every year.
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Old 09-22-2015, 08:50 PM
 
Location: New York Area
13,458 posts, read 5,234,599 times
Reputation: 10782
Quote:
Originally Posted by TheCityTheBridge View Post
North Korea is not capable of dominating South Korea, which has a stronger military and a much more robust economy and political system.
It is pretty hard to operate a first-world country with the pot being stirred so close unless you have an active defense effort (Israel) or the U.S. is defending you (South Korea).
Quote:
Originally Posted by TheCityTheBridge View Post
Was there some gamesmanship? Yes. But don't forget, in the run up to war, weapons inspectors were on the ground, making progress, and finding nothing. Why invading Iraq was a terrible mistake - CNN.com

"U.N. inspectors were asked to search for, report and destroy real weapons. As we found no weapons and no evidence supporting the suspicions, we reported this."

"We inspected many hundred of sites, including dozens that had been suggested to us by various governments' national intelligence organizations. In a few cases we found conventional weapons -- but no weapons of mass destruction."
If there was nothing to find why was Hussein sometimes even locking up the inspectors?
Quote:
Originally Posted by TheCityTheBridge View Post
The credible western threat was more than 2 decades of eastward expansion of NATO and the EU. Crimea is a strategically important location for Russia, and annexing Crimea came at very substantial political and economic cost.**********

See above. Ukraine is as far East as NATO/the EU can go without reaching Russia. The political and economic pain Russia is willing to endure in order to keep its hold there reflects its strategic importance.********
Sweden and Finland grow closer and closer to the west with the passage of time, and that threatens Russia's strategic interests. They are probably too far within the west's orbit for Russia to actually do anything about it anymore.*************

Finland and Sweden are famously neutral between the Soviet Union and NATO. But both are EU member stats and neighbor Norway is a longtime NATO member.*******
So the fact that Poland, Estonia, Latvia, Lithuania, Hungary, the Czech Republic, Slovakia and now Ukraine was to be part of Western alliances doesn't count for anything? Russia right, the West wrong?
Quote:
Originally Posted by TheCityTheBridge View Post
Of course they do--all recently joined NATO after being parts of the Soviet Union. NATO has rapidly expanded east, and there remains a question about whether the commitment to collective self-defense is strong enough to hold if the periphery were threatened by a powerful country like Russia. Russia has an interest in current and potential members questioning that commitment.
Check your facts. Poland was never part of the Soviet Union. Parts of it were occupied by Czarist Russia. And since you probably dislike what Israel is doing to protect itself, how do you distinguish the Soviet Union's more blatant annexations of Estonia, Latvia, and Lithuania, countries that did nothing to hurt the Soviet Union (unlike the Arab countries that surround Israel)? Or the Soviet Union's stirring up of chaos in Czechoslovakia (I don't know as much about what happened in the other countries) to give it an excuse to impose Communism?
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Old 09-22-2015, 11:51 PM
 
Location: Tucson/Nogales
16,498 posts, read 20,049,343 times
Reputation: 22462
Balancing the books is a sure ticket to an imbalanced populace and eventual anarchy!
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Old 09-23-2015, 11:56 AM
 
3,484 posts, read 1,702,384 times
Reputation: 2207
Quote:
Originally Posted by jbgusa View Post
It is pretty hard to operate a first-world country with the pot being stirred so close unless you have an active defense effort (Israel) or the U.S. is defending you (South Korea).
South Korea spends about 32 billion annually on its military, which is almost as much as North Korea's estimated GDP. The North is outmatched by the South. The North fears the South's leaflets.

Quote:
Originally Posted by jbgusa View Post
If there was nothing to find why was Hussein sometimes even locking up the inspectors?
Cite? In the run up to the war, inspectors were making progress and finding nothing. Nothing has been found in a dozen years after the invasion. There was nothing.

[quote=jbgusa;41299894]So the fact that Poland, Estonia, Latvia, Lithuania, Hungary, the Czech Republic, Slovakia and now Ukraine was to be part of Western alliances doesn't count for anything? Russia right, the West wrong?[quote=jbgusa;41299894]

The point is that western military and political organizations have pressed Russia's sphere of influence further east than the Ottoman sultans, the Persian Shahs, Napoleon, and Hitler ever managed for an extended period of time. It's not a question of right and wrong--it is a question of influence. Russian influence has waned as western influence has waxed. And western influence has now reached as far east as it can go without reaching into Russia.

Quote:
Originally Posted by jbgusa View Post
Check your facts. Poland was never part of the Soviet Union. Parts of it were occupied by Czarist Russia. And since you probably dislike what Israel is doing to protect itself, how do you distinguish the Soviet Union's more blatant annexations of Estonia, Latvia, and Lithuania, countries that did nothing to hurt the Soviet Union (unlike the Arab countries that surround Israel)? Or the Soviet Union's stirring up of chaos in Czechoslovakia (I don't know as much about what happened in the other countries) to give it an excuse to impose Communism?
Poland was "independent," occupied, and communist. The Soviet Union collapsed. It has been widely discussed that NATO committed to Russia that eastward expansion was not on the table--and of course, NATO has moved dramatically East.

Russia does not want expansion to continue. If potential partners don't think that NATO is committed to their self-defense because they are too peripheral, then they are unlikely to engage in NATO expansion if they expect they may incur a response from Russia. So Russia is actively asserting itself towards countries that consider participation or who are on the fringes of the alliance. It's not all that complicated.

https://www.foreignaffairs.com/artic...broken-promise
NATO's Eastward Expansion: Did the West Break Its Promise to Moscow? - SPIEGEL ONLINE
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Old 09-23-2015, 02:28 PM
 
Location: Buckeye, AZ
25,441 posts, read 14,535,447 times
Reputation: 9227
Quote:
Originally Posted by Reynard32 View Post
We of course did have budget surpluses between FY 1998 and FY 2001. Over those years, some $363 billion worth of debt held by the public was repurchased. CBO estimated the 10-year budget surplus at around $5.5 trillion. Then came George W Bush. He turned record surpluses into record deficits to fund his wars and tax cuts for the rich. We've been in a bad way fiscally ever since.
Wasn't that an on the books surplus but not a real surplus. I seem to remember claims that there was a deficit still those years but it was hidden with I think Social Security. The Clinton Surplus Myth
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Old 09-23-2015, 02:52 PM
 
2,450 posts, read 2,121,848 times
Reputation: 2168
Quote:
Originally Posted by mkpunk View Post
Wasn't that an on the books surplus but not a real surplus. I seem to remember claims that there was a deficit still those years but it was hidden with I think Social Security. The Clinton Surplus Myth
The point is everything went downhill when the GOP took the office with GWB. We're still trying to dig out from that disaster, fiscally and otherwise.
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