Nope, I see USA as an important country, without uncle sam, and if they disappear right now, more chaos would envelop as they are a legit police in this world.
1)If you suddenly take 200/300 hundred million dollars from the bank the price will drop because is not anymore in circulation. 2)the chinese instead of cashing in the bonds they buy companies using the bonds as payment and the owners cash the dollars so the dollars stay in country in the hand of people
More like a corrupt police that no one wants and no one has chosen, installing dictatorships across the world and provoking useless wars that have empoverished countries and continents such a nice and legit police that half the world hates.
China cashing in their debt would not cause much impact really. They own only 1.13 trillion of the debt. The federal reserve printed over 10X that bailing out the banks. China is holding interest in US properties for obvious reasons, they learned that democracy operates through political cycles. By taking over companies who influence politicians, they can push their agenda. It also makes it hard to retaliate against them as it creates inner dependence.
Pretending Pakistan would eat India's nukes just to help China? There's a reason neither of them invade each other for decades now, is that both are afraid of being nuked by the other. Both sides will never start a nuclear exchange if they can avoid it, instead they do little dinky strikes along the border and support terrorists and partisans to do strikes on each other. Basically your argument is that if the US and China got into a non nuclear war, China will say "oh, we don't have enough enemies (US, Australia, Japan, Korea, etc.), lets start a war with India too, and get Pakistan to start a Nuclear War". I understand you are just trolling but that's just pure silliness.
Don't know how much impact would have or if the US government has prevented or talked to the chinese about that, however the point is that the chinese ARE buying US business with US debt. Also don't know about how much impact but I refuse to believe that paying 1 trillion dollars to the chinese won't cause any impact. Maybe doesn't changes too much the internal economy but for certain it will make the dollar fluctuate.
Still damn important, even I am still bitter against them, but without them, then my country wouldn't exist anymore.
Removing money from circulation increases its value, deflates, no? Just like printing causes inflation? Still same problem in the end since they don't want the dollar to go up in value for exports IIRC.
When the central bank does it, usually is like that. When another government buys currency actually is the opposite. Imagine that the world is using a gold standard (your bills represent how much gold you have in your bank). When the bank prints bills is like you said, in this case is more like they are directly taking the gold. Is it more understandable now?
No, and I tried to find explanations elsewhere but didn't find any :-( From what I read, China actually does stock up on foreign currencies to keep the Yuan low compared to the other currencies, for export reasons. And in order to be able to pay for stocking up, they have to print money and incur inflation themselves. But how this would result in inflation for the US I don't understand. The dollars going there don't actually get destroyed, often they get loaned again to the US.
I'd like to add onto @earthdrake 's explanation. Or at least, try to explain it in my own way. I'll start from the very beginning to give a comprehensive picture. So first, China is an export economy. Everyone knows this.You see "Made in China" on many products. Why does the Chinese government want to keep the RMB undervalued? Let's say exchange rate is $1 USD = $2 RMB, and let's say you can buy 1 shirt in China for $6 RMB. So if an American wants to buy a Chinese shirt, it'll cost them $3. But what if the exchange rate is lower? Let's say it's $1 USD = $6 RMB. The shirt is still $6 RMB. But as an American, it'll now cost you $1. With an undervalued RMB, Chinese goods now become cheaper and much more affordable to other countries like the US. And that means more countries will be buying your goods. How does the Chinese government keep the RMB undervalued? Think of it as supply and demand. But these are the basic rules: (you can skip these bullets if you know basic Econ) an increase in demand = an increase in price If there is an increase in demand for the USD, the dollar will strengthen and the exchange rate will increase. So something like: $1USD = $2RMB ---> $1USD = $3RMB. Why? Simple. Imagine you are selling $1 USD: Buyer A: Hey I'll give you 2 RMB for 1 USD. Buyer B (who has a greater need and higher demand for the dollar): Hey, I'll give you 3 RMB for 1 USD. As someone selling USD, you'll obviously take Person B's offer since you get 3RMB instead of 2RMB. As you can see, an increase in demand equates to an increase in the price of the dollar in terms of the foreign currency. a decrease in demand = a decrease in price Same thing but vice versa. an increase in supply = a decrease in price a decrease in supply = an increase in price Knowing this, the Chinese government wants to decrease a demand for the RMB since that will weaken their currency. Similarly, they want a strong USD relative to their currency. (Random note, but strengthen =/= better and weaken =/= worse). How does the Chinese government weaken their currency? Through the buying of US Treasury bills (among other things). Treasury bills are essentially US debt, which is why you see so many people saying that China owns a lot of US debt. Spoiler: Random note: People commonly--and mistakenly--assume that China owns the majority of US debt. The true answer is that the American people and government do. Treasury bills are sold and bought in US dollars. To buy US T-bills or whatever US investments they fancy, the Chinese government needs to go on the open market and trade their RMB for USD. This means they are increasing the demand for USD and increasing the supply for RMB. As you read earlier, that basically increases the price of the USD with respect to the RMB. So like, $1USD = 6RMB instead of $1 USD = 2RMB. That's how they keep they artificially deflate the value of the RMB. You can similarly extrapolate what would happen if the Chinese government decided to sell their US T-bills. If they sell it, they'll suddenly have a whole lot of US dollars on their hands. If they want to exchange those US dollars back to RMB, they will be increasing the demand for RMB and increasing the supply for US dollars. That decreases the price of the dollar and weakens it, thus crashing the value.
Not exactly arguing with you but I kind of want to point out to others that they are not as export driven as they were a decade ago. Exports in 2006 was 36% of their GDP, it is down to just under 20% now. The US now is 19% of that Export market, down from 21% in 2006. Why make that point? The export trade with the US is about 4% (they were ~7.5% in 2006) of their GDP because for years they have been pushing to grow their internal economy and reduce their dependence on other countries. They have a lot of internal economic problems but they are trying to gain more economic security by investing internally, and the One Belt One Road initiative (which has its own separate problems). Btw, exports to all countries is 12% of the US GDP value, a bit more than half of China's, so they are a fair bit less dependent on other countries trade than China. It's part of why they have been stalling on negotiations with the US, every month they stall they are in better shape, as more money gets sucked into their internal economy, since tariffs don't really hurt them.
Buying up dollars with Yuan will decrease the value of the Yuan compared to the dollar, which is good for export. Doing the reverse (selling dollars for Yuan) does crash the dollar ... comparatively. That I already knew. But that's different from actual deflation or inflation in the US market. Probably related, but different. I need to stop using inflation or deflation here. Anyway, so they want to do something with those dollars and either lend them to the US again for an eternal loan cycle, or buy themselves things in the American market with it (like stocks or patents or whatever), as long as they don't need to reconvert to Yuan because that would increase the comparative value of the Yuan (and lower the dollar comparatively as a side effect). What confused me about the earlier explanation I got, he said that China does not want the money back (and like, US bonds are paid out in dollars?), because if they actually got the money back then the value of the dollar would crash. First, it crashes comparatively and second, the Chinese are fine with getting paid out in dollars! The supposed dollar crash (comparative) would only happen if they were exchanged back to Yuan! China can thus cash in the bonds if they so desire, but not exchange them back. They can sit on the dollars if they want. Or loan (thus keep buying bonds) or reinvest them (expanding their influence). Or use the bonds directly to buy stuff, works too. The earlier explanations and the gold standard example were very confusing, but I think I get the picture now? I feel a bit sorry for the long write-up you did, cause I didn't really learn anything new per se, but it did help me put things in the correct perspective, pointed me in the direction of what specifically I found confusing. Thanks!
Woah, this explanation totally rocks. I never thought I'll get to learn economics in NUF LOL. Great details and examples
india would eat pakistans nukes. read what i wrote ffs. i got my sources from a son of a military high ranking official in pakistan (good guy) that pakistan and india are already on the edge because US keeps pushing the line. pakistan already threatened thrice that they wont go to war. they will immediately nuke india if they keep doing shit. like earlier this year where pakistan air force shot down 3 indian air force planes. because of trespassing into pakistan air space for the umpteenth time china has more allies than western media tells us
If US and CN really fights, I'm voting for CN to win. US already holds too much powers in their hands so I would like to see them lose out
India and Pakistan have roughly the same number of nukes. Your friend can talk shit like some arrogant young master but no rational leader of a country would throw away most of their population over minor border disputes and some foreign ally. The only people who win if Pakistan nukes India is the countries who hate both them as they watch each country eat 150 nukes. China has lots of allies, that much I agree on. How many of them want to start a nuclear war that loses them 50 million citizens to make China happy is where we differ.
Absolutely correct. I didn’t want to over complicate things so I didn’t mention that stuff. I’m kinda drunk right now but I’ll try to reply later, maybe There’s a neat graph somewhere in the universe that illustrates your point nicely. Same to you. I’ll teply is earnest later. No problem. Glad I helped.
From my experience, China will create a legion army of hackers who steal people's credit card number which then used to fund the expenses to produce shittons of tanks to be used to rush into US bases creating decisive victory... Huh? What do you mean Command and Conquer isn't realistic?