Chinese Currency Devaluation

[Vigilante]

@GlobalWealth what is your read on the implications for worldwide cash markets and the impact on the United States economy?

 

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[LynnD5000]

@GlobalWealth what is your read on the implications for worldwide cash markets and the impact on the United States economy?

With so many countries in trouble financially it can't help but impact our economy - no money - no sales...True it's the governments that are in trouble and the people are still spending - but if a government starts to raise tarifs to increase revenue it hurts our economy.

In my opinion - the US currency is on shaky ground - the amount of US dollar FIAT currency that exists, the amount of debt the US owes and with the current near insolvent state of the FED makes it look pretty dicy.

When the world transitions to the new BASIL III standards (Gold & Hard Backing for all Currency) the US might hold its own because of its size and resources - but I think it will probably loose some value against the rest of the world especially if the Chinese manage to set up a bank that competes with the current World Bank System.

If the US continues to hold its position as the reserve currency of the world and oil continues to be priced and sold by the US dollar (Petro-Dollar) - it should do OK - if it looses its status as the reserve currency of the world then the dollar will be valued against the new reserve instead of the other way around...and I don't think we will far so well.

 

[loop101]

Since America wont stop printing money, and has stopped reporting how much it is printing, other nations are being forced to guess how many of their dollars they should give for US dollars. This will allow the US to print more money longer. Eventually, there will be a worldwide consensus on the US dollar's devaluation, and other nations will naturally raise the prices of their money and goods. This will cause the US to not be able to afford crap from China, and the jig will be up. The US policy is to delay this for as long as possible. The easy way to lower the value of other nation's money is to bomb them in to the stone-age and take their shit, so I think we will see more of that.

 

[Jake]

especially if the Chinese manage to set up a bank that competes with the current World Bank System.

Like this? http://www.zerohedge.com/news/2015-06-29/china-makes-it-official-launches-bank-humiliated-washington

 

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[Vigilante]

Since America wont stop printing money, and has stopped reporting how much it is printing, other nations are being forced to guess how many of their dollars they should give for US dollars. This will allow the US to print more money longer. Eventually, there will be a worldwide consensus on the US dollar's devaluation, and other nations will naturally raise the prices of their money and goods. This will cause the US to not be able to afford crap from China, and the jig will be up. The US policy is to delay this for as long as possible. The easy way to lower the value of other nation's money is to bomb them in to the stone-age and take their shit, so I think we will see more of that.

The reverse effect is actually happening though as the dollar is worth more in China, not less.

 

[jon.a]

The reverse effect is actually happening though as the dollar is worth more in China, not less.

So is your COG's going down yet?

 

[DrkSide]

So is your COG's going down yet?

Mine are. The last quote I got was cheaper on COG but higher on shipping but in the end was cheaper than the last quote per unit.

 

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[Shredder83]

With so many countries in trouble financially it can't help but impact our economy - no money - no sales...True it's the governments that are in trouble and the people are still spending - but if a government starts to raise tarifs to increase revenue it hurts our economy.

In my opinion - the US currency is on shaky ground - the amount of US dollar FIAT currency that exists, the amount of debt the US owes and with the current near insolvent state of the FED makes it look pretty dicy.

When the world transitions to the new BASIL III standards (Gold & Hard Backing for all Currency) the US might hold its own because of its size and resources - but I think it will probably loose some value against the rest of the world especially if the Chinese manage to set up a bank that competes with the current World Bank System.

If the US continues to hold its position as the reserve currency of the world and oil continues to be priced and sold by the US dollar (Petro-Dollar) - it should do OK - if it looses its status as the reserve currency of the world then the dollar will be valued against the new reserve instead of the other way around...and I don't think we will far so well.

I must partially agree with you. While it's true that the US gov really abuses the status of the US Dollar as the reserve currency, in the end it's a game of confidence. As you stated, with so many countries in trouble the shaky ground is everywhere. The US still has the most liquid markets and in the eyes of the international monetary games, we are still a winner. There is a reason why huge Russian yachts were parked by the NYC shore during the RUS/Ukraine tensions and not in China. Again, money is not tangible - it is about the confidence that wins the game in today's world. We are the safe heaven.

You're correct about the fiat currency but as long as there are buyers out there (i.e. world's demand for dollars) our gov doesn't have a thing to worry about. I recommend Martin Armstrong's blog to everyone in order to gain understanding about currency flows and economics in general.

 

[Vigilante]

So is your COG's going down yet?

I want my factories to make more profit

 

[jon.a]

I want my factories to make more profit

I want you to make more profit

 

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[Vigilante]

I want you to make more profit

My largest concern right now is keeping the companies I am aligned with in Asia in business. With their intentional deflation of their currency, many companies may end up going under there and resurfacing as new entities. The Chinese government may prop some of them up. There are a lot of variables there. It is also a volatile time to wire money to Asia. @biophase and others might want to devise ways to minimize unsecured risk (smaller, more frequent orders, small lead times between cash and shipment).

My main suppliers still ship me on terms, but I have at least one order that is uncharacteristically delayed right now for a supplier that is usually methodical.

Concerned.

 

[jon.a]

My largest concern right now is keeping the companies I am aligned with in Asia in business. With their intentional deflation of their currency, many companies may end up going under there and resurfacing as new entities. The Chinese government may prop some of them up. There are a lot of variables there. It is also a volatile time to wire money to Asia. @biophase and others might want to devise ways to minimize unsecured risk (smaller, more frequent orders, small lead times between cash and shipment).

My main suppliers still ship me on terms, but I have at least one order that is uncharacteristically delayed right now for a supplier that is usually methodical.

Concerned.

Is there opportunity in there somewhere?

 

[Vigilante]

Is there opportunity in there somewhere?

There always is opportunity inside of turmoil.

 

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[Trivium iz rC]

I got one of my orders coming my sea and should be arriving in a couple of days. While devaluating the Chinese currency isn't good for the Chinese people. It will be good for importers in the USA since we will have more purchasing power.

But i'm sure Janet Yellen is getting ready to announce QE4 very soon. If anyone is interested in a good book about the currency war. I recommend two books.

Currency Wars- By: Jim Rickards
Death of Money- By: Jim Rickards

 

[biophase]

My prices are the same. I think they should be going down, but like Viglante, I'm happy with my margins, so if they make more over there then fine. What would suck is if my factory went under. Then I would lose big time due to delays in getting more product. Imagine if you can't get your inventory for December!

My orders seem to be taking longer this year. I don't know if it is because they are bigger or if the factory is busier, or if there is some other reason. At this point, I have 4 orders left for this year to arrive. Once they arrive, I will be stocked up until at least Feb.

The $ is up 35% in Africa and I still have the same prices over there too. Not too happy about that one.

 

[yoyo]

There always is opportunity inside of turmoil.

Hi Vigilante, I think your post is great.
I've noticed that you are the one of the staffs of this site, could you PM me because I have some questions about the site but I didn't get reply from your site's information system after I handed in my questions. Thank you!

 

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[ZCP]

Last night, a discussion on budgets with my boys led to a discussion on debt and then the U.S. debt. How to bring in more money was the question to them........ Tax the rich, they said. Lebron makes a lot of money they said. Well 20% of $20M is only $4M, we need $1T. What about Michael Jordan, they said. Ok, we are at $8M, we need $1T. Wouldn't they just move if we taxed them too much, they asked (a key observation!). Finally the youngest had a solution..... Make more money, he said. What do you mean, I asked, we just talked about how there may not be enough people to tax. No, PRINT more money, he said........

 

[LynnD5000]

Last night, a discussion on budgets with my boys led to a discussion on debt and then the U.S. debt. How to bring in more money was the question to them........ Tax the rich, they said. Lebron makes a lot of money they said. Well 20% of $20M is only $4M, we need $1T. What about Michael Jordan, they said. Ok, we are at $8M, we need $1T. Wouldn't they just move if we taxed them too much, they asked (a key observation!). Finally the youngest had a solution..... Make more money, he said. What do you mean, I asked, we just talked about how there may not be enough people to tax. No, PRINT more money, he said........

When my boys were young I was in the army and a high school drop-out with more than a few lessons to learn - I think that it is so COOOL that you are teaching your kids things like this - the things they don't teach them in school - things that are so valuable in making those long term life decisions - If you can instill the things from MJ's book as well what a generation of champions you will raise!
L

 

[GlobalWealth]

@GlobalWealth what is your read on the implications for worldwide cash markets and the impact on the United States economy?

Sorry for the slow reply. Lots going on here and haven't been on the forum lately.

China devaluing is just a reaction to massive money printing by the Fed, ECB anf JCB.

They have no choice but to 1- print money; or 2- devalue. China has done both.

They rely on exporting "stuff" globally and if the yuan gets too valuable relative to USD, EUR, and YEN, then its game over for their economy.

Long term I'm a bull on China. They have a huge population and a growing middle class. They are also very well educated and innovative.

In order for an economy to grow it must grow its population or increase productivity.

China does both. And with a growing middle class they can also increase their domestic consumption to increase their gdp.

On the surface ot seems devaluing the currency can hurt the domestic economy but I seriously doubt it will have dramtic long term affects. Its hard to stop a 1B+ population and rapidly growing middle class. That snowball has too much momentum already.

China has already surpased the US economy in many measurements. Just not nominal gdp.

If I were a kid today I'd study Mandarin.

Sent from my SM-G900FD using Tapatalk

 

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[Bellini]

What do you guys think about the China - Russia currency swap agreement that transpired.

News articles said they are both trying to phase out the U.S. dollar as their trade currency.

How does that affect us?

Was that mainly for energy reasons?

 

[Bellini]

I recommend Martin Armstrong's blog to everyone in order to gain understanding about currency flows and economics in general.

I've been watching a lot of his stuff lately (videos). Interesting guy. Seems to know his stuff.

I can't believe his backstory. Have you seen his movie "The Forecaster" yet?

 

[GlobalWealth]

What do you guys think about the China - Russia currency agreement swap that transpired.

News articles said they are both trying to phase out the U.S. dollar as their trade currency.

How does that affect us?

Was that mainly for energy reasons?

There are a lot of those agreements taking place over the past year or so. Russia is doing them frequently because of their sanctions. That means less incoming usd for Russia these less ability to trade in usd.

Iran is doing a lot of non-usd trade agreements. China. Turkey. Many others.

Its a slow downward spiral for usd.

Sent from my SM-G900FD using Tapatalk

 

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[Ezio]

Few notes on China.
http://davidstockmanscontracorner.c...ncial-trainwreck-which-will-rattle-the-world/
http://davidstockmanscontracorner.c...s-struggle-with-the-deluge-of-flight-capital/
http://davidstockmanscontracorner.c...avalry-goldman-says-load-up-the-trucks-again/

On USA.
http://davidstockmanscontracorner.com/the-central-bankers-malodorous-war-on-savers/
http://davidstockmanscontracorner.com/the-us-economy-is-not-awesome-and-no-its-not-decoupled/

s: http://www.zerohedge.com/news/2015-09-16/obamas-recovery-just-9-charts

 

[bboyu]

Seen as the seniors are on this thread im going to ask you guys a question as im not understanding this.

Central banks print money which become reserves for commercial banks who then lend according to reserve ratios under the fractional banking system.

Now how do they decide how much and when to print. What is the business' effect on money supply?

I buy something off you in the secondary market which isn't included in gdp, money exchanges hands, the same money, you then pay in wages etc, circulae flow of the economy, if its always the same money circulating how does the money supply increase?

Is it true then that all growth is based on borrowing money from banks? All businesses who flourish borrow? What if you grow organically gow will the money supply ahift to include you as a business in the economy - does more moneybget printed according to the amount of business, products or services available?

Aside from money, businesses exist due to specialisation and for the betterment of humans to solve needs, no one does this for free, money is accumulated as youre rewarded for your effort whrn prople part with money to buy your good for consumption, so how the money supply increase if no one borrows, because lets face it there are businesses out there who dont have bank loans but have xxxxx in cash sitting on balance sheet which is not being circulated in the economy - what happens to the money supply in terms of business?