so why is China's monetry policy bad for *china*

[cthulhu]

China is artificially keeping the price of the Chinese reminbi very low to make its expert market very competitive.

What is actually bad for china about this? Just that it cannot afford to buy imported goods? I'm trying to understand why it doesn't occur more often, it would seem to be a good idea for india and other places too?

[Username17]

In a very real way, it's fucking dreadful. Money doesn't really "matter" in any real way. It's just a scorecard for society. So what China is doing is taking real goods and services and giving them away in exchange for "money" that thet then don't spend. In any real sense they are bending over and getting fucked. It's just like Imperialism, but they are doing it to their own people.

The key is that the capitalist system is really weird. The limits on expansion are based on demand, not on supply. So by essentially giving products away they are unravelling the economies of their competitors. Weird but true.

-Username17

[cthulhu]

Right so the people getting boned are the chinese peasantry who are working for much less gain than they could otherwise demand.

Aha.

[PhoneLobster]

Though there are many sometimes lucid arguments against regulating that kind of thing I suspect the main reason it isn't done more is because there is a very strong philosophical movement against anything resembling regulation of the market.

So yeah, there may be reasons but they are basically secondary to "OMFG! He wants to regulate market forces!"

And since most anti regulatory arguments BEGIN with a conclusion like that I'm never particularly interested in the post facto excuses to justify it.

(Edit: I don't think Frank's response entirely explains why it isn't done more, completely boning oneself with a stupid economic policy is far from an unusual practice.)

[Lago_AM3P]

So by essentially giving products away they are unravelling the economies of their competitors. Weird but true.

So what's going to happen to them when the economies of their competitors collapse and all of their demand dries up?

[tzor]

1192450472[/unixtime]]

So by essentially giving products away they are unravelling the economies of their competitors. Weird but true.

So what's going to happen to them when the economies of their competitors collapse and all of their demand dries up?

The simple answer is they switch to other demand. It's sort like a slash and burn mentality. Once you drain the economies of say Europe and North America, you turn to the economies of Africa and South America and slash and burn them.

[Username17]

Actually, I'm pretty sure that the idea is that before the economies completely dry up but when the perceived value of their infrastructure is still decently in the tubes, you purchase the infrastructure of the opposing empires and then at some point you arbitrarily flip it over and have the other countries sending tribute of goods and services back to the motherland. And then you sit back on the fact that you're a Fascist regime to simply choose not to have your own industrial production turn off in response to the fact that cheap goods are flooding your economy.

It's only if you allow the market forces of capitalism to dictate whether you produce things and for what price you sell them that a source of cheap finished products causes your economy to collapse. Since China isn't playing that game, that's not a problem they have to deal with.

It's a very long range plan, and wouldn't work if the other players weren't committed to Neoliberalism.

-Username17

[ckafrica]

Not like the US isn't playing currency games of their own. It is the FED's policy to drive down the greenback against other currencies to reduce the effective value of the US national debt against foreign currencies which are holding it. Considering the percentage of the world reserves being held in US T-bonds, thats pretty dirty pool and everybody is playing along even though they know the US is playing dirty because it owns the table

[cthulhu]

Well, the response is just protectionist moves against china to demolish the strategy by artificially raising the cost of chinese goods, and people would just move to that long before they got destabilized.

[Crissa]

Artificially raising the price of incoming goods would work if those goods can be produced internally... And at a price that is comfortable.

It is currently no longer true that even the simplest microchips can be made in the US. The fab plants are gone - we can only make a few, highly specialized, and low volume chips in this country. And blocking the import or raising the price of those commodities would cripple the country.

So no, you can't just go all protectionist. This is without pointing out supply and consumption of basic resources.

-Crissa

[cthulhu]

Why couldn't you focus on china specifically by slowly raising important tariffs on goods made in china? You are correct that it would be total madness to impose a blanket ban on all countries tomorrow - but microchips and similar are mostly made in Singapore and other places, which are not an issue!

India as well has a lot of the same manufacturing capability too, and many of the same socioeconomic factors, but the infrastructure is worse. Swings and roundabouts.