No Excuses

ThinkProgress: Trump confidant dumped millions in steel-related stock last week (Also the Trade War thread)

Recommended Posts

18 minutes ago, FanboyOf91 said:

Oh Lord, of course Hawley is involved.

 

I've believed (based almost entirely on faith, not because I think I'm remotely qualified to make pronouncements on this topic) for some time that something has been allowing the US to run a sustained trade deficit for decades, and not have our currency fall.  And that the return of dollars to the US in the form of investment (real estate, T-bills, stocks) seemed like an obvious explanation.  

 

OTOH, I also have to believe that if the US were even to even look seriously at reducing the value of the dollar, the impact would be devastating. 

 

If nothing else, ending the US T-bills as the world's "gold standard" for "safest investment in the world" might easily double the interest we have to pay on our national debt.  The impact on the stock market might be even bigger, and much quicker.  And those two areas are based simply on investor perception.  Once those Articles of Faith are broken, restoring them might well be impossible

Share this post


Link to post
Share on other sites
Posted (edited)
1 hour ago, Larry said:

OTOH, I also have to believe that if the US were even to even look seriously at reducing the value of the dollar, the impact would be devastating. 

 

Assuming people are rational, that's unlikely (for now).

 

We can't do anything too extreme because if we do, the costs of energy (oil) (in dollars) will go up and that'll tank our economy.

 

As long as we don't do anything too extreme, it is completely worth China's (and other countries) while to keep buying US securities.  If they don't, we can't deficit spend.  If we don't deficit spend, we can't buy their stuff.  And if we don't buy their stuff, their economy will collapse.

 

At least for now, unless we do something completely stupid and irrational (that tanks our economy), we could reduce the value of the dollar (some) and not much would change (as long as everybody else is rational).

 

(now, decreasing the value of the dollar will decrease US consumption so won't do much with the trade deficit because energy costs will go up so more of people's paychecks will go to energy bills.)

Edited by PeterMP

Share this post


Link to post
Share on other sites

I thought we weren't importing as much energy as we used to. Thanks to fracking and things. 

Share this post


Link to post
Share on other sites
Posted (edited)
18 minutes ago, Larry said:

I thought we weren't importing as much energy as we used to. Thanks to fracking and things. 

 

We aren't, but oil and such are still traded on an international level.  We're still competing for oil (and natural gas, etc.) with every other country in the world.

 

If somebody in the EU is willing to pay 100 euros for a barrel of oil, then we'll have to pay the US dollars equivalent for a barrel of oil.  If the value of the dollar has gone down vs. the Euro (or whatever other currency), then that means more US dollars to buy a barrel of oil.  Which means higher energy prices.

 

Where the barrel of oil came from originally is irrelevant.

 

(and when Nixon was President he tried to put price controls on oil produced in the US and sold in the US.  And the oil industry's response was to just decreased the amount oil they were pumping in the US.  Exxon is an international organization.  If it can make more from a barrel of oil generated in Indonesia than the US, then that's where they will put their money in Indonesia.  So that sort of thing doesn't work.  If you want to go that route, your only real choice is to create a national oil company.)

 

(another possibility is that everybody else will essentially deflate equivalent to us, which will no real affect on anything)

Edited by PeterMP

Share this post


Link to post
Share on other sites

Was trying to figure out how a falling dollar would increase the price for domestic oil.  But I think I've figured out a way to do it.  

 

If your hypothetical oil is 100 Eureos, and the dollar falls, then that (US) oil might still fetch the same price in the US, but it is now worth more (more dollars) if it's sold in Europe.  

 

Although does that then generate pressure for the US to become more of an oil exporter?  Helping balance of trade?

Share this post


Link to post
Share on other sites
Posted (edited)
14 minutes ago, Larry said:

Was trying to figure out how a falling dollar would increase the price for domestic oil.  But I think I've figured out a way to do it.  

 

If your hypothetical oil is 100 Eureos, and the dollar falls, then that (US) oil might still fetch the same price in the US, but it is now worth more (more dollars) if it's sold in Europe.  

 

Although does that then generate pressure for the US to become more of an oil exporter?  Helping balance of trade?

 

There is no domestic oil price (really).  There is only an international price for oil.  In your example, the oil will be exported to the EU unless the US entity will pay more for it.

 

Yes that does help lower the trade balance by lowering US consumption.  BUT, it also means US manufacturing lost a barrel of oil to the EU, which means the US generated less whatever with that oil.

 

(and keep in mind, more fuel efficient cars are more heavily made outside of the US.  Increase of oil prices drive Americans to buy more fuel efficient cars and even US Toyota manufacturing are driven towards things mostly bought in the US (trucks, SUV, etc.)

 

And the same is true for most other goods too.)

 

We might be able to drive down the trade deficit some by lowering US consumption by driving down the value of the dollar.  But it isn't a sure thing either.

Edited by PeterMP
  • Like 1

Share this post


Link to post
Share on other sites

But with that reasoning, you're at least getting close to asserting that a falling dollar makes everything more expensive (to Americans), whether it's made in the US or not.  

 

Although I could maybe see that being an argument.  Perhaps you think of things having a value, and a falling dollar doesn't just mean it falls relative to the Euro, it means it falls relative to the Widget.  (A fictional "thing" which I use to represent all goods.)  

 

(Reminds me of the piece I'd read about, but never read, asserting that the value of a Big Mac seems to be pretty constant, world wide.)  

Share this post


Link to post
Share on other sites
Posted (edited)
1 hour ago, twa said:

Ya'll seem to be ignoring the restrictions on oil exports.(which have been eased somewhat, but are still restrictive)

 

https://www.ipaa.org/oil-exports/

 

How?

 

(I mean maybe it won't go out as crude, but that doesn't really matter and maybe what you'll see is a drop in US oil production (which means you don't even pick up the benefit of the increase in oil exports).  The end result is essentially the same.  Oil is not traded domestically independent of the international market.  The idea that there is a US oil market, an EU oil market, etc. is false.)

 

 

1 hour ago, Larry said:

But with that reasoning, you're at least getting close to asserting that a falling dollar makes everything more expensive (to Americans), whether it's made in the US or not.  

 

Although I could maybe see that being an argument.  Perhaps you think of things having a value, and a falling dollar doesn't just mean it falls relative to the Euro, it means it falls relative to the Widget.  (A fictional "thing" which I use to represent all goods.)  

 

(Reminds me of the piece I'd read about, but never read, asserting that the value of a Big Mac seems to be pretty constant, world wide.)  

 

Well not everything and supply and demand still matter more than the costs of production.

 

But the prices of most things will go up if the dollar goes down (we'll see a real increase in inflation).

 

(the only way that doesn't happen is if you believe markets are very inefficient and prices aren't really being controlled by supply and demand now (which is clearly true in some cases like healthcare, but largely doesn't seem to be the case).  You might be able to weaken the dollar and not see much change in healthcare costs.

 

Sort of like minimum wage, I'd be surprised if pass through is 100%, but it almost certainly won't be 0 either.)

 

Whatever you use to compare prices from this year to last year, prices will go up.  You can use a Euro, gold, a gallon of milk, oil.  Whatever.

Edited by PeterMP
  • Like 1

Share this post


Link to post
Share on other sites
2 hours ago, visionary said:

 

Just saying, at least it looks like the accusation is valid. (And I'm pretty sure it's been universally agreed on for decades). 

 

I mean, "China labeled a currency manipulator after they manipulate their currency."

 

Share this post


Link to post
Share on other sites
8 minutes ago, Larry said:

 

Just saying, at least it looks like the accusation is valid. (And I'm pretty sure it's been universally agreed on for decades). 

 

I mean, "China labeled a currency manipulator after they manipulate their currency."

 

Too bad Trump already labeled them on day 1 in office....

 

oh wait.

Share this post


Link to post
Share on other sites
5 hours ago, visionary said:

 

 

 

 

They should have never voted for him. An idiot billionaire form NYC? Only an idiot in farmland would vote for that...

  • Like 1

Share this post


Link to post
Share on other sites

I'd throw a history book of the Cultural Revolution at this guy, but they'd just call it socialist and it doesn't matter.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.