Comments on Market Skeptics: *****Trade Imbalances, The Great Depression, And T...

I admire the people who design this system so many...

2009-01-08T10:11:00.000-08:00

I admire the people who design this system so many years ago in US.

First you sell you stuff to US and later you buy back some T-Bills Papers so you get more orders.

Its like giving loan to your customer to buy your stuff and staying happy that your earned a profit. How stupid!

I think its the viscous cycle of economy that leads to death.

I guess any country with Gold backing currency will win in END.

No wonder $2500/oz by 2010 seem so true after reading your article.

This article is very interesting. It closes the lo...

2009-01-08T09:21:00.000-08:00

This article is very interesting. It closes the loop of the whole inflationist story. The question now is: How long is all this process going to take? Months or years?

It's funny, but I always assumed our trading partn...

2009-01-08T04:48:00.000-08:00

It's funny, but I always assumed our trading partners must be printing money to "sterilize" their dollar accumulations. Their soaring inflation rates testify to that practice.

Dave
http://daveeriqat.wordpress.com/

Do you mean business men pay cash dollars for good...

2009-01-08T04:40:00.000-08:00

Do you mean business men pay cash dollars for goods in China?

Do they travel there with cash filled suitcases?

"People think that the excess dollars that go over...

2009-01-08T03:28:00.000-08:00

"People think that the excess dollars that go overseas due to the U.S. trade deficit are being loaned back to us. This is not entirely true. To be sure, there is a lot of real foreign investment happening in the United States, but it’s not nearly to the extend reported."

Buying US T-Bills *is* investment in the US.

"So where does all that extra currency that purchases all those U.S. Treasury Bills to fund a large part of the deficit come from?

The countries that are the U.S.’s major trading partners create it."

No they don't. The US creates it and uses it to pay for goods and services. China is buying T-Bills with the US dollars that they get from their exporters converting their US dollars into local currency.

Japan's central bank on the other hand *is* printing large amounts of Yen and does use them to buy US dollars and then treasuries.

There is a subtle difference between these two activities. China's RMB printing activity is constrained by the activity of their exporters whereas Japan's is not. Admittedly China does export a lot of stuff.

Many other countries have also recently been printing their own currencies in order to participate in socalled swap agreements with the US fed whereby they swap freshly printed JPY, CAD, AUD, GBP for freshly printed USD.