U.S. Designates China as Currency Manipulator | Hacker News Reader

U.S. Designates China as Currency Manipulator

wsj.com

357 pointsanilshanbhag333 comments

One thing that I think is getting lost in this discussion is the role of intent on currency manipulation.

Switzerland has the strongest currency in the world due to the country's reputation for governmental and financial stability. This makes Swiss labor extremely expensive for reasons mostly outside of their control, and the Swiss government has tried (and largely failed) to remedy this. Technically, this is devaluation but given the circumstances and Switzerland's relatively small footprint in the labor market, it's understandable and fairly benign.

The Fed cutting interest rates in 2009 had the effect of weakening the USD relative to what it would have been. But the intent of the policy was not to steal a share of the export market, but rather to provide stimulus during a deep recession.

Japan has been in ultra-low growth and ultra-low inflation for decades. To fend off the threat of deflation and economic contraction, it ran the printing press and cut interest rates. Which, again, devalue the currency but stealing export share is not a major intent.

I'm not sure what the appropriate definition of "currency manipulator" should be but, while China's currency policy history is a strange and variable beast, yesterday's devaluation was clearly a different case than those above. And depending on how far you want to go back in history, there's an argument that the intent of some previous Chinese devaluations were aimed primarily at increasing its relative attractiveness as an exporter.

Its most recent history until yesterday was to prop up the RMB, so it may be fair to argue that now is a strange time to label them a currency manipulator. Given yesterday's events and their history in this area though, it's hard to make the claim that their currency policy is altogether ordinary either.

Monetary policy has many, unrelated effects on the economy. Even if China were able to point to obvious, incontrovertible humanitarian reasons for its currency decision I’m sure the US would still be unkind. It seems that at the end of the day only realpolitik prevails.

Just saw from Bloomberg that China responded by strengthening the RMB to under 7. Futures seem to be responding positively...

Note, they acted to make the RMB stronger than the markets were pushing it.

Dollars to donuts they get the “currency manipulator” label removed for that action...

If having two different exchange rates -- "offshore" and "onshore" -- doesn't say currency manipulator, I don't know what does.

Every currency has onshore and offshore rates. For example, you can buy dollars or Eurodollars, which is simple US currency kept offshore.

Eurodollars have different exchange rates because they don't have the reserve requirements from the Fed. i.e: it's less regulated.

The RMB has a heavier regulation whereby the exchange rate isn't allowed to fluctuate. This does increase the difference in value for the onshore and offshore currencies.

But having that distinction does not by itself make it a currency manipulator.

Where can i buy eurodollars?

I didn't know much about eurodollars until I used google and read this article, which seems quite good.

https://www.investopedia.com/articles/active-trading/012214/...

In terms of financial products, you can « buy » it through futures contracts (or options on futures). It's a pretty common product AFAIK, at least as far as FOREX goes.

For any other currency arbitrage keeps them the same.

The main point behind the two currency system is to prevent money laundering. You can only convert offshore to onshore via state run banks. This also has the side effect of making it easier to control import and export flow thereby inflation.

The comment below about separate interest rates has nothing to do with this discussion.

Symbolic moving, and possible stepping stone to other actions. Technicalities don't matter.

One pulls levers on the market, the other sets the market.

So, really, is there any doubt that this is true? China's currency exchange rate has been abnormally stable for a long time, and the Obama, Bush, Clinton, Bush, and Reagan administrations all knew it was the result of currency manipuliation. They just found it politically unpalatable to admit it out loud.

The real question would be, why is the U.S. finally admitting this out loud? 1) amping up a trade war 2) decoupling U.S. economy from China 3) trying to leverage China into doing something differently, perhaps regarding North Korea

Some of these, of course, would interfere with others, for example you can't use it as leverage in #3 if China thinks you'll keep pursuing it anyway no matter what, due to #1 or #2.

US decoupling itself from China would have an avalanche of effects, including huge inflation on most consumer goods, and outright product shortages. China is also a huge foreign debt holder, and if presumably no longer a buyer due to decoupling, will send US interest rates skyrocketing.

The fed has unlimited control over the rates. They could literally just buy out every bond in existence.

I don't see how that works. If the US Government has to sell bonds to borrow money to finance the deficit, and buyers start disappearing, they have to raise interest rates to make the bonds more attractive to the remaining buyers, don't they?

Nope because the Federal Reserve can issue new Federal Reserve notes (aka money) to the US Government to buy their bonds at any price point. As the other commenter pointed out this would cause inflation (as it increases the money supply)

I see. Printing money to buy new financial assets would also cause greater wealth inequality and populism, although maybe those are seen as benefits to the current administration.

I could be wrong but I don't think buying US treasuries would directly increase wealth inequality, since the money is being used to fund the US government. If the Fed bought other more private assets off the market (which I believe it does) then yes it could increase wealth inequality

Possibly, I may be confused between simply buying treasuries, and quantitative easing. Still learning!

To broadly simplify:

Buying treasuries = the Fed giving money to the US government

Quantitative easing = the Fed giving money to banks

In the case of the US, the entire game is also complicated by the fact that the US dollar has insinuated itself into the global economy. Most critically in oil markets.

Because of this, there are some things the Fed can do (mostly) without the consequences other countries would face.

This would increase wealth inequality because it’s mostly well-off Americans that own financial assets.

Look at the wealth inequality increase since 2008. It can mostly be attributed to federal reserve QE policy.

Products don't grow on trees.

If the fed buys every USD bond in existence ( aka monetize the debt ) - it would lead to a good amount of inflation.

Inflation isn't global, it can easily happen in economic sectors that exclude the vast majority of the population.

Yes, but the pressure to pay off those bonds would be deflationary, so in order to sustain the inflation next the Fed would have to do something even more extraordinary! AFAIK this policy pathway leads ultimately to bond forgivenesses (or funky bankruptcies) that eliminate deflationary pressure but may well have the unpleasant side effect of radically adjusting the fiat currency system.

> Pay off those bonds

I don't think that would happen. They will just borrow ever more. Which if debt increases slowly enough, is sustainable but causes inflation.

How do you mean? If the Fed creates new money and buys bonds with it, the Fed can continue to hold them forever (really just until they mature) if it wants to. Then the Fed is more or less part of the government, so when the bond matures the Fed takes the bond to the treasury which gives it cash, then it gives the cash back to the treasury. It's like the bond evaporates into nothing when it matures while the Fed is holding it.

If the Fed theoretically bought all the bonds then it could obviously no longer increase the money supply by buying bonds, but we're a long way from that, and even then the Fed could still create new money and give it directly to the treasury to spend in lieu of collecting taxes. Or in the utopia where buying all outstanding government debt and funding the entire federal budget out of new money still hasn't caused the desired amount of inflation, to use to enact a negative income tax.

Yes and no. Let me give you an example: if 70% of Americans get $40K bonus per annum from the fed, it will lead to inflation. However, if the same amount of money (70% of 300M times $40K =8.4T) is given to ten billionaires, it won't lead to inflation.

Only if the billionaires don't spend, invest or hold it in a bank.

Any of the three, it will go back to the market and result in inflation.

You are describing inflation caused by consumption (i.e. high demand driving up prices).

The inflation the OP was describing is the massive inflation caused by printing money.

The US bond is effectively an IOU representing US dollars the USA owes the bond holder.

For the USA to buy back those bonds they only have two choices:

1. Run an strong economy earning lots of US dollars (i.e. a trade surplus) and use that USD income to buy back those bonds.

2. Turn on the printing press and print lots of USD to buy back the bonds.

That later option would render the USD worthless and since most commodities are priced in USD that would also lead to hyper inflation.

Options you missed:

3) sell more reserves (gold, currency)

4) bond swap with other countries

There are second order effects: if billionaires start buying stocks, thereby increasing the value of RSUs that tech employees hold, this can cause inflation in housing prices.

> China is also a huge foreign debt holder, and if presumably no longer a buyer due to decoupling, will send US interest rates skyrocketing.

Before that happens, the capital exodus demanding to liquidate their Yuan for USD would have burned through the country's USD reserves and they would be insolvent. This is quite similar to what happened in South Korea in 1997 and it took IMF intervention to stabilize the country. The PBOC could limit how much a person can sell, but this would crash their currency (e.g. Venezuela) almost instantly.

As much as people want to hate on Trump and/or the US, China is in a weaker position here. Don't get me wrong, both countries suffer, but only one of them would see its financial system collapse.

> "...but only one of them would see its financial system collapse."

Unless that is an absolute certainty then and this is a game of high stakes chicken, then I would say the USA has more to lose.

While China has certainly developed in the last couple decades they are still relatively used to living with less. On the other hand, Ameicans lose their minds when Facebook goes down for an hour.

That is, there would be bedlam in the USA. China much less so.

>Unless that is an absolute certainty then and this is a game of high stakes chicken, then I would say the USA has more to lose.

Nothing is ever certain and that's not how people make decisions. What are you waiting for Chinese to use manipulated currency to buy local factories all over the world? It's already nearly too late.

> Nothing is ever certain.

That's exactly my point. I was pointing out that unless the previous comment was absolutely true (i.e., China would be wrecked and the USA would not be) then even if both fare badly the USA would __relatively__ be hurt more.

I disagree and I don't think that conclusion logically follows from what you said.

America has free markets and a decentralized, bottom-up system that results in entrepreneurs and private entities deciding how to allocate capital. There may be temporary pain but wherever there is opportunity an entrepreneur will step in.

China has zombie enterprises, their financial statements are lies, and cities built by bureaucratic maneuvering over market need.

I will always bet on the American private sector over the government-run towers of lies.

And of course all the product you bought that were made in China are lies, they don't exist at all. And obviously America will be able to make these products despite having about 0 unemployment, but hey, magic happens here amiright?

> And obviously America will be able to make these products despite having about 0 unemployment

That's what's called entrepreneurship. People will get rich making these products that are in sudden demand.

> obviously America will be able to make these products

American entrepreneurship doesn't mean all the manufacturing would take place in America. Entrepreneurial people are already moving to build more manufacturing in other countries where labor is less expensive and more plentiful than America. I don't think anyone was arguing that America would manufacture everything they currently import from China.

Even if the companies laterally move overseas manufacturing to other Asian countries, the end result is still China losing economic control over the United States.

Can't those other countries start behaving like China? Sure, but doubtful it would go anywhere.

And this happened instantaneously with a wave of magic wand and no costs, right?

The cost to the USA would make the recent debt crisis look like a picnic.

There are lots of countries that are neither the US, China, or in Europe.

If China decides it doesn't want to trade with the US, there are plenty of places that will.

And honestly, China had already reached the limit of an export-based economy. Growing your national economy on labor arbitrage only works up to a certain level of per capita wealth.

Production is already moving to other places in SE Asia. Vietnam is one of the big winners. So I wouldn't worry too much. It would only make things more flexibile as moving production/capital out of a smaller country has less of an impact.

America’s cities are based on zoning laws designed to do racism in 1900, and the rest is based on the federal highway system. Not very free market either way.

> America’s cities are based on zoning laws

These can and do change, with a single city council meeting. There's nothing impregnable about existing zoning. As usual, the dollar dictates the rules (having been party to 2! eminent domain proceedings in Southern California).

> As usual, the dollar dictates the rules

People really seem to believe this, but it always takes them to wrong conclusions here. For instance, everyone thinks California esp. SF is expensive because of "rich developers" but it's not. It's expensive because armies of retired people come to city council meetings and shut down any development because it'll hurt their 60s nostalgia.

Now, those people are acting to raise their own property values, but that's not why they're doing it. They genuinely just hate people taking their parking spots and think cell phone towers will give them cancer.

I believe it because it's demonstrably true.

> It's expensive because armies of retired people come to city council meetings and shut down any development because it'll hurt their 60s nostalgia.

Maybe in some areas, but in Southern California this is fantasy.

(California) Brea's mall expansion forced eminent domain on founding neighborhoods for commercial development. That never came and was sold back to new developers for gentrification. I had a property that I was paid well for, but I did not want to sell. So I bought into Santa Ana.

In 2009 The Irvine Company put out magazine that detailed the commercial expansion to the adjacent 2525 N. Main Street and eventually the Park Santiago neighborhood. That has been in progress for 2 years, after the necessary city council members were termed out of course. The NIMBYs there are of the aforementioned demographic, alongside their descendants. It's as ineffective. I have pre-emptively sold, but you can still attend the futile meetings if you like (https://park-santiago.com/)

Maybe the city is lacking a tax base. That tends to happen, since another thing the retired crowd did was vote themselves out of paying property taxes. When they do lose a battle, it can be because the city needs some sales tax and commercial property to keep the schools open. (See Cupertino - they can lock out apartments for a decade but can't stop Apple from doing anything.)

The US can import stuff from any number of other countries at higher prices. Who is China going to send its manufactured goods to?

The US accounts for just under the 19% of Chinese exports. That is not trivial, but the domestic (and non-US international) market is growing fast enough that it can absorb that hit faster than it would take other countries to develop capacity to make those goods at the standard that American buyers demand.

Sure, it would mean lost economical potential for China, but by no means would it leave China with no place to send its manufactured goods.

Really? Seems obvious to me that its the opposite.

The US can always find other countries that manufacture things for cheap. China can't find other customers. The domestic demand isn't remotely high enough to propel their mercantilist economy, ironically due to the fact that the currency manipulation of the yuan has suppressed the wealth of Chinese citizens by devaluing their savings.

The idea that Americans are too weak and whiny to tolerate inconveniences can be refuted by every natural disaster here. People band together, and grin and bear it. Just like every other nation.

How a nation where most of the older generation have only 1 child to support them will fare with an economic crash is uncertain, because the one-child policy was an experiment that's never been attempted before. I think it certainly boosted wealth, but I suspect it created a society that is less resilient.

China already has other customers and a big and growing internal market. Of course, USA is one of the bigger customers but not the only.

On the other hand, USA cannot import enough copper, aluminium and iron... (It's mined in China and Chinese controlled territories...) And create and staff factories out of thin air.

I'm sure those minerals are mined elsewhere.

In copper, top 3 are: Chile, (one fifth) China, Peru (similar to China).

In iron: Australia, Brazil (half of former), China (similar to Brazil).

In aluminium: China, Russia (similar to China), Canada (tenth of former).

So except for aluminium, this would be very problematic but not insurmountable. I bet Russians won't sell their aluminium to US without many strings attached.

Australia and Guinea both have more bauxite than China, it's just that China currently refines more bauxite into aluminium than the former.

Iron is incredibly abundant in the USA, and regarding copper, see here:

https://www.usgs.gov/faqs/how-much-copper-has-been-found-wor...

"Of the identified copper that has yet to be taken out of the ground, about 65% is found in just five countries on Earth -- Chile, Australia, Peru, Mexico, and the United States. "

Who exactly will be demanding to liquidate their yuan? Offshore yuan deposits amount to under ¥2tn. China has foreign exchange reserves worth $3.1tn (¥21.8tn). Enough to buy back all offshore yuan deposits ten times over, and still have more reserves than all but eleven countries.

China has enforced strict capital and currency controls over decades to protect its currency from external shocks like an attempted run on the yuan. There may be lots of vulnerabilities in the Chinese financial system, but currency is not one.

The us decoupling itself from China would be an unmitigated disaster for the us as China would align itself with Russia.

Russia has the population of Nigeria and the GDP of Italy.

The cold war ended a while ago. Worrying about them today makes about as much sense as worrying about Autria in 1930 because Austrohungaria used to be a world power.

They have a large nuclear arsenal.

And a large military, are actively involved in cyberwarfare and psychological warfare, hacking US elections, and veto rights on the UN Security Council. Plus a history of getting many countries into its sphere of influence.

It’s foolish to discount them.

Which might not mean as much as you think, thanks to the doctrine of Mutual Assured Destruction (https://en.wikipedia.org/wiki/Mutual_assured_destruction)

That only works as long as you have targets worth destroying. China has a lot. US, fewer... Russia, we do not even know the targets.

They can't use that arsenal to buy Chinese stuff.

> Worrying about them today ...

And yet, still the west endlessly obsesses about Russia, for some reason.

>Worrying about them today makes about as much sense as worrying about Autria in 1930 because Austrohungaria used to be a world power.

And nothing bad came out of Austria in the 1930s.

Well, our Austrian friend had long moved to Germany by 1930.

Firstly, Nigerian population is much larger than Russian (190 vs 146). And secondly, what's wrong with population of Nigeria? It's 60% of population of USA and will probably be equal in 30 years.

> And secondly, what's wrong with population of Nigeria?

I don't think it was a sleight on Nigeria. Just a poetic way to emphasize the weakness of the Russian economy by highlighting the disparity between its population and its GDP. And while the population of Nigeria is is larger it's in the right ballpark for the argument being made. They could have said Pakistan, Bangladesh or Indonesia. Although I suspect those nations have even larger populations but not by an order of magnitude.

Yeah, I didn't mean anything about questioning if it was a sleight etc, just talking about size of population. The comment was talking about Russia being substitution for USA in coupling with China, and that Russia has too low population. So it's actually about comparing size of population of USA and Russia, then Nigeria looked as an example of a country with small population compared to USA. Which is far from true.

I mean they sorta already are? Xi Jinpeng was calling Vladimir Putin his "closest, most dearest friend" just a month or two ago. They already oppose the US (along with Russia) on every major international issue.

> Xi Jinpeng was calling Vladimir Putin his "closest, most dearest friend"

Why would anyone care what state heads say (this includes Trump and his comments about NK)? It means nothing and has no consequence...except maybe preventing fickle market fluctuation. You never hear "I hate this guy" because it's just pablum. Convince me otherwise.

I really don't understand why you would cite that as something meaningful.

I couldn't agree with you more ;-)

Well, it cannot be taken at face value, but it can mean something. It means that there is an understanding by Russian and Chinese heads of state that they could have a common interest in keeping the U.S. from acting as a world despot.

Of course, Russia and China have attempted to unite vs. U.S. interests before, and it always turns out that they have more to disagree/argue about than they have to agree on. But it doesn't mean that it's not worth mentioning.

you are aware that USSR annexed parts of China? Whatever the lang Xi uses they will never be allies.

We are not aware because it didn't happen. Having said that, among Chinese hardcore nationalists there are historic dreams of owning Siberia.

Russia is an irrelevant economic factor in the 21st century. Their export is fossil fuels, and that's about it.

Ice/water will be a major export very soon. Countries will go to war over it.

Nope. Drought is usually local and water shortages are often from the breakdown of regional infrastructure. There are recently discovered truly massive water lakes in the earth's mantle.

https://www.livescience.com/46292-hidden-ocean-locked-in-ear...

Northeast passage in a couple of decades might be a big boom for Russia and China.

They're already aligning with Russia through SCO (https://en.wikipedia.org/wiki/Shanghai_Cooperation_Organisat...) and there's already been talk of merging with the CSTO (https://en.wikipedia.org/wiki/Collective_Security_Treaty_Org...) which would be a full on defensive alliance.

China holds only 5% of US federal government debt, down from a peak of 11%. If they stop buying it won't cause interest rates to skyrocket. The impact would be a few basis points at most.

That is presuming private ownership effects won't be big. And they will be. China owns more corporate debt in the US than anywhere else and it is a high percentage.

Not necessarily. If the Chinese yuan is devaluing, Chinese investors want very much to hold US dollar denominated debt.

Yes, and so they would want to hold the federal debt. And also find ways to increase it. The GP post relates to China selling the debt to disentangle from USD.

Luckily there is massive domestic demand for US corporate debt.

> The impact would be a few basis points at most.

After a decade of rock bottom rates, even few basis points will sound big

Actually China was designated currency manipulators by Clinton from 1992 to 1994

Interesting. What changed in 1994?

China reformed their currency. See the historical exchange rate for RMB: https://www.macrotrends.net/2575/us-dollar-yuan-exchange-rat...

It went from 6 RMB/dollar to just less than 9 overnight. It was basically a crazy rate (no one would use that rate unless forced) before the reform.

Before that there was even a dual system of foreigner money and local money, only foreigner yuan could be used at the friendship department store...it would have been cool to visit China before 1994.

I visited in 1991 for three months as a 14 year old. I don't recall a dual system (unless it was voucher based?), but I remember the friendship department stores and loads of other interesting things - Russian-styled hotels in Xian, Pudong being basically farmland, snakeboats on the Huangpu, etc. It had changed a lot by the time I next visited in late 2003. I don't think they yet had a McDonalds, but there was a three-storey KFC on Tiananmen that was popular. Yangshuo at the time was a very basic village which made it very charming. I remember staying at a guesthouse used for diplomats near Beidaihe - the mattresses we kids slept on were about half an inch thick. At the end of the trip, we left on a slow-boat from Shanghai to Hong Kong, and the elderly Chinese in the gaming room taught us Mahjong on the multi-day trip.

McDonald’s has been in China since the late 90s, there was even a couple of Starbucks when I visited in late 1999! 94 is sort of what I see as the cutoff between old and new China.

What’s funny is Starbucks in China is considered high end coffee shop (it literally cost $8 for an ice latte). So you can even see “influencers” bragging themselves there

If you think that's funny, you should see the Pizza Huts.

That’s true. To be fair though, Chinese version of Pizza Huts & KFC is whole another level better

Pizza Hut sure, but KFC is similar to its American fast food incarnation. Starbucks serves as the consistently nice place to hang out, in both the USA and China, so no surprise there. Interesting aspect that in China there are many less TOGO orders, people are really paying for the nice place to hang out part.

Is Pizza Hut still considered fine dining these days?

In China it is more on par with TGIF and such chain restaurants.

They're trying to upscale it even more [1], and when they first entered the China market, they were considered upscale relative to other options [2], and were far more sit-down oriented than their US branches during that long-ago time period. Since then, options have proliferated, and competition has heated up to the point that such low-level differentiation is no longer sufficient, hence their current even greater upscaling efforts.

I'd like to hear from Chinese HN readers who grew up remembering Pizza Hut arriving in their locale, and how it was viewed then versus now with the greater competition. With innovations like Haidilao's highly-automated (not fully-automated) robotic restaurant [3] for locals, and even Tier 2 cities with business class Western hotel chains like Sheraton boasting every day dinner buffets that put US Sunday brunch at Four Seasons to shame, I think Chinese citizens in most metro areas have an embarrassment of culinary riches in options now. The local hole in the wall restaurants in the more rural areas that I tried were also a delight. To stay at the top of the game, Western restaurant chains have a high bar to clear, especially as many home-grown Chinese restauranteurs have cottoned onto how dining out is not about food, it is about entertainment.

[1] https://www.reuters.com/article/us-yum-china-hldg-pizzahut-f...

[2] https://www.quora.com/Why-is-Pizza-Hut-so-much-better-in-Chi...

[3] https://www.youtube.com/watch?v=61y2nAE8GsI

> $8 for an ice latte

You have not been to their "reserve" stores where they sell noname American whiskey for $20 a cup

This is a funny things that happened with many American brands in China.

McDonalds has desk service, and actually quite satiating meals

Wallmart turned into a somewhat upscale store

KFC - Same story as Mac

Pizza hut... Ever seen a $50 pizza hut pizza meal?

Wendy's? Probably along same lines

Buick!!!!!! Pffffffff!!!!! - China is the one of a kind country where people will buys a car falling apart as you drive just because it is American.

Other GM brands, Ford, Lincoln - more or less the same on a lesser scale. Ford was a latecomer to selling "Americanness," but I think they just got it right now. https://www.reuters.com/article/us-ford-motor-china-lincoln/...

GE appliances (actually Haier now) - same story

I even recall stories of some "made in USA" clothing and apparel going big

I personally saw a very plain looking black plastic sunglasses going for $100+ with "Made in USA" and your flag boldly silkscreened on it.

How did I miss that? Interesting. So, that makes today's announcement still significant, but not unprecedented. We will see if the response is similar to last time.

There is a general theory that the current US administration's foreign policy, from Russia, to North Korea, to Iran, is all primarily geared to checking China. It's a bit tinfoil hat, I admit, but it's not implausible.

One person’s ‘currency manipulation’ is another person’s ‘monetary management’. https://en.wikipedia.org/wiki/Bretton_Woods_system:

”The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained its external exchange rates within 1 percent by tying its currency to gold and the ability of the IMF to bridge temporary imbalances of payments”

(See also https://en.wikipedia.org/wiki/Fixed_exchange-rate_system, which lists many examples of ‘pegging’)

Tying the currency to the price of Gold is the opposite of manipulation. That was the point.

1) and 3) to a lesser extent.

China's currency has been pegged to the USD for some time now. This is actually a common arrangement. A currency peg is basically a commitment by a government to keep its exchange rate with another country at a certain value, mostly to aid exports. It does this by buying and selling currencies, usually leveraging very large reserves.

There are several reasons why the past few Admin. have tolerated the currency peg. A cheaper Yuan means that US consumers get better prices. Also, China buys a lot of Treasuries as part of their sovereign wealth fund. It's still a bitter pill to swallow if you're a US manufacturer or exporter, though. The currency peg also puts downward pressure on real wages for Chinese workers, since it devalues the currency in which they get paid.

What happened in the past few days was that the Chinese central bank decided to push the value of the currency down even further, prompting a symbolic US response.

> prompting a symbolic US response.

What makes it symbolic?

So far, it's just words, really. If it results in a WTO finding against China, we could expect it to be followed up by something non-symbolic.

Well, so far the US only designated China as a currency manipulator. No actual action followed about that designation.

My take is that is just a way to pressure China to accept other measures (like increased tariffs) for now.

> why is the U.S. finally admitting this out loud?

4) The US President is not well. He saw that the stock market went down, so he tweeted a thing. This then became policy simply because he tweeted a thing. As the US lurches from crisis to crisis, this will be forgotten, as many things have before [0,1,2], and there is not a good chance that the thing will be enacted.

[0] https://www.washingtonexaminer.com/opinion/trump-keeps-makin...

[1] https://time.com/5175729/donald-trump-broken-promises/

[2] https://www.washingtonpost.com/business/2019/08/06/trump-is-...

Perhaps this is the first US President in decades, who either out of raw courage, sheer necessity or personal (so far undetected) corruption, called out what has been known for the entire time:

1. That China manipulates its currency to improve its economic competitiveness

2. Restricts access to its domestic markets

3. Uses North Korea in negotiation leverage

4. Uses trade deals to capture foreign territory (e.g. the Sri Lankan port project)

Using an ad hominem (“not well”) to discount the democratically elected, leading political actor of a country, seems to be a uniquely American trait (I grew up in India, where we know our politicians are corrupt, but highly intelligent rational actors).

Ad hominems are not a useful tool to try and understand motivations of political actors. It’s ok to say ‘I don’t know why’ when the reasons for an action seem opaque.

China have been manipulating their currency before this week's drop. They use USD to buy CNY to prop up CNY exchange rate. If they stop buying CNY using USD, the value of CNY would fall (happening now). So China is technically no longer manipulating their currency.

Why are they doing this? My guess is to respond to trade war tariff. The US is manipulating USD through Fed interest rate. The Fed lowers interest rate to prop up borrowing and economic growth. I think China has figured out a way to deal with the situation. They will adjust the USD-CNY exchange to prop up their own economy.

This trade war is turning into a silly cat and mouse game. China is not making a deal. They have ways to get around tariff and TPP. War is about deception. The US needs some sneaky attack if it wants to win.

(Don’t reply to temp comments because then I can’t delete them!)

Corrected.

I have no idea what all this means so tried to read https://en.wikipedia.org/wiki/Currency_manipulator.

Found it interesting that "Switzerland have been manipulating their currency more than China since 2009 and Germany and South Korea since 2014"

Still it is not clear what that means in terms next steps. Will there be more tariff increases or sanctions? And then China will devalue their currency even more. So where does it end?

This is US Treasury report from 2017 I started looking through: https://www.treasury.gov/resource-center/international/excha...

The last paragraph explained the logic a bit more:

> The United States cannot and will not bear the burden of an international trading system that unfairly disadvantages our exports and unfairly advantages the exports of our trading partners through artificially distorted exchange rates. Treasury is committed to aggressively and vigilantly monitoring and combatting unfair currency practices.

Granted it's published by US Treasury. I imagine the Chinese government sees the picture very much differently.

Okay, no, Germany can't manipulate its currency as they don't have their own, they use the Euro. Germany does have large influence over Brussels being the economic powerhouse of the Eurozone currency union, and the European Central Bank is in Frankfurt but really accountable to no-one, being led by an Italian man from Goldman Sachs.

And yes, these 'currency manipulator' designations are a point of political convenience and are not evenly applied.

Monetary policy for the last decade worldwide has been outright currency manipulation and market interventions using devalued currency.

This excess currency has fueled bubbles in all markets: Rental, housing, stocks, venture capital, startups, art, crypto, government bonds, corporate bonds, junk bonds, collectibles, you name it.

Well, I guess that's true. Nearly everyone is a currency manipulator. But also, as you yourself said, it's more of a point of political convenience right? If it serves our purposes to designate china as a manipulator, then who cares if everyone else manipulates too?

Serious question.

I mean, would it matter?

It helps certain export business interests and generally hurts domestic consumers. It is in US consumer's interest to not devalue our currency. If china does it, it means we buy their stuff cheaper, but our stuff is more expensive to them and also in relatigve terms. Just more government, corporatist cheating and cronyism which has come to define modern politics but not modern political awareness. Also, think about this long enough and you realize how abusive the Federal Reserve is to the average US consumer. I mean, the Fed in the last 10 years ran up a 4 trillion balance sheet of fresh free money, at least go buy healthcare or something good with it and not this circle jerk of lending it to Wall St and buying US debt with it.

Are you referring to the printing of more money? Is that the only way countries devalue their currency?

> Okay, no, Germany can't manipulate its currency as they don't have their own, they use the Euro.

But they use the Euro as an umbrella that doesn't behave like a single currency for Germany would. While implementing the Euro they put massive pressure on wages while other EU countries kept increasing wages. Germany is violating export-surplus rules of the EU, but no one seems to care.

https://upload.wikimedia.org/wikipedia/commons/e/ef/Balance_...

Actually the German surplus has been brought up for discussion many times in the EU parliament. A trade surplus of over 6% triggers a so called IDR, one EU acronym among many, which means (Macroeconomic) In-Depth Review. If the review shows an excessive balance, that triggers the EIP. Excessive Imbalance Procedure!. If a country fails to follow the recommendations coming out of the EIP, that can in theory lead to sanctions, including fines. You can read the last IDR on Germany here: https://ec.europa.eu/info/sites/info/files/2018-european-sem... This IDR concluded that a EIP was not necessary. So far an EIP has never been launched by the commission.

Whether this system was designed to ensure Germany is never sanctioned, or if it is simply a huge slow-moving bureaucracy, I leave as an open research question ;)

> Actually the German surplus has been brought up for discussion many times in the EU parliament.

Has it? I don't follow that clown show. Looks like Germany has the power within the EU to ignore such issues while bullying other countries into following the rules "we all agreed on". Naturally this topic is a total taboo in Germany. The worst excuse I heard so far was: "Yes, we profit the most and other countries may suffer in economic terms. BUT the EU as a whole brought so much more to these countries!"

> This IDR concluded that a EIP was not necessary

I know that the rule itself is 6% for surplus and 4% for deficit (?!)... So thanks for the link but I won't read it, I don't care why EIP was not necessary for whatever opinion. I just don't take the EU serious.

> we all agreed on

I have a German boss who uses this rhetoric frequently, which is usually code for 'shut up and do what I say'

Given the amount of control Germany has over who becomes part of the European Commission, I think it's unlikely Germany would ever be sanctioned for this. The European Parliament have no say here so it doesn't particularly matter what they think.

I don't know how much influence Germany really has with the negative interest rate that's screwing them more than anyone else in EU.

> Will there be more tariff increases or sanctions? And then China will devalue their currency even more. So where does it end?

Currency devaluation is, among other things, effectively a subsidy for exports, a little bit like the opposite of a tariff.

But it's not exactly the opposite, which makes doing it in response to tariffs a bit desperate. If you're selling something for $100 and someone sticks a $10 tariff on it, and that makes you uncompetitive, you can devalue your currency so that it gets back to $100, because now the same amount of yuan is US$90 instead of US$100. But there is still a $10 tariff, so then you only get $90 instead of $100. If the cycle repeats you have to take $80, then $70, with the balance of the total $100 going to the US treasury. And it makes it easier for the US to maintain or raise the tariffs because China is de facto paying them through currency devaluation rather than the cost falling on US consumers.

It doesn't really work as a long-term strategy. It could be more of a short-term political play to try to damage Trump's reelection prospects. But that's a dangerous game in a lot of ways. It may actually help him if he takes advantage of it well (and even if he does nothing it takes the bite out of the tariffs for US voters). And even if it hurts him he could still be reelected if the Democrats choose a bad candidate, and then China has put itself in a weaker long-term position. Then even if Trump loses, it's basically assuming that a Democrat wouldn't be smart enough to take advantage of the dynamic, which some of them could be.

Or it could be an act of desperation to keep their factories running at full capacity. They have a large segment of the population that is only tolerant of the authoritarian regime while their economic prospects are improving.

That's pretty much true for every country.

I had a boss who used to say, "Civilization is only three meals deep."

> They have a large segment of the population that is only tolerant of the authoritarian regime while their economic prospects are improving.

I'm not doubting this claim, but is there any evidence that this is the case? (A credible news source, perhaps?)

Hong Kong has had enough. A dictatorship and a successful economy are the antithesis of each other.

That's a great explanation. It makes more sense to me now.

IIRC Japan does this as well

Germany, Italy and Ireland are on this list separately. How? They have the same currency together with a lot of other countries in Europe. How could these three countries alone be on the list, but all the other countries from the Euro-zone are missing? That's like saying Texas and Nevada are currency manipulator for the US Dollar, but not the other US states.

Isn't being able to manipulate their currencies exactly the reason countries maintain currencies of their own? Don't other countries like Japan and the USA manipulate their currencies routinely?

They also do it to have currencies better reflecting their economical state, with it's own advantages and disadvantages.

I'd say a developing country with a small internal market typically wouldn't have a strong currency, which would be great for their exports, thus supposedly boosting their economic growth. Without any manipulation.

But maybe I'm getting it wrong

Generally by "currency manipulation" people don't mean manipulation of the value of the currency in general but manipulation of its value with respect to foreign currencies in particular. So if the US just prints money to combat deflation that isn't currency manipulation but if it used all the money it printed to buy Yuan that would be. But really the whole public discourse around the topic is pretty confused. In the long run trade balances are governed by savings rates and its hard to keep things out of equilibrium in the long run.

>Treasury uses three criteria to apply the designation: actively intervening in their currency markets, having large trade surpluses with the U.S., and having large overall current-account surpluses.

Monday’s action by Treasury is mostly symbolic, requiring the U.S. administration to consult with the International Monetary Fund to try to eliminate the unfair advantage the currency measures have given a country.

Does that mean it is only "unfair" if it negatively affects the US? such a definition of "fair" means that no country should be allowed to do better than US

Is there a country of comparable heft that is allowed? Do you remember when Japan was rising? There was definitely a lot of anxiety on the American side.

As the reserve currency, the USD has some weight on it due to that position, can't just manipulate it like others can as easily except printing more [1].

Being the reserve currency, it was more fair when everyone was pegged to the dollar so at least manipulation was in check a bit. Both the unpegging and the free trade agreements put more pressure on the US for being a reserve currency.

Ultimately, the USD is too high and it is the root of lots of the problems with jobs, exports/imports and the trade imbalance, national debt as the reserve currency is a safer investment due to it not being as easy to manipulate due to the sheer size of the supply. Now that we are a debtor nation rather than a creditor nation, the problems are more evident [1].

[1] https://www.forbes.com/sites/bobmcteer/2013/09/05/reserve-cu...

What about quantitative easing via banking regulations?

The best part of this is that they are being called a manipulator for not shoring up their currency artificially.

It's manipulation. The RMB has been artificially fixed for decades for targetted economic/political reasons. It's being adjusted now not so that it can seek to a market value but to target another specific value for political/economic reasons. No one argues this. The PRC manipulates it's currency. It always has. It certainly doesn't seem likely to stop.

That said: this is what trade wars look like, folks. If we didn't want to fight in one we shouldn't have started it. The currency-manipulated status quo of the past two decades or so has lifted hundreds of millions of people out of poverty and made the world richer than it ever has been.

But no, someone's gotta score domestic political points based on a poor understanding of economics and some intuition about how to make a good populist argument.

If the RMB was left to find a market value, it would fall way below 7 to probably 7.5 or even 8 something. Yes, it is being manipulated, but in the other way that Trump says it is. The Chinese are simply running out of the dollars needed to keep manipulating it so that it stays stronger than 7!

The simple irony is that if the Chinese were just to give up manipulating the RMB all together, Trump would be even more angry.

Everyone manipulated, the Japanese and Koreans do it, even the Swiss do it. The only thing that the Chinese do differently is have non market exchanges and currency controls on convertibility. (And their central bank is much less independent than the fed).

There is a certain criteria, and neither Swiss, Koreans, or Japanese meet that criteria.

Yes, but the “criteria” are vague and arbitrary, so there might as well be none at all. This is purely a political decision, not an empirical one.

Could you be more specific?

And, did China meet the criteria before this latest move?

(And, minor nit: criterion is singular. Criteria are plural.)

Oh, that China engages in currency manipulation is not really up for debate.

What I find humorous is that this particular move seems to be driving the currency closer to the consensus opinion on where it should be.

That's reversed. They artificially weaken their currency, and recently weakened it even more.

Your sentence assumes their currency should be low, and they raise it, but evidence is the other way around.

No, it’s the reverse of that: they’ve been artificially strengthening their currency, and are simply slipping to a more reasonable market based value ATM. The CNH exchange provides evidence that the currency should be weaker, it has been that way for a very long time!

Not lately. They’ve been propping it up.

https://www.bloomberg.com/news/articles/2019-08-05/u-s-treas...

Check the June quote from Mnuchin where he promises to do this if they stop propping their currency up.

3% stock market movements set in motion by the US president alone. "Great" insider trading potential. Have someone set up the right derivatives strategy and bam: instant millions.

I couldn't convince myself to immediately write that idea off as utter nonsense.

Anyone with more relevant financial experience? Can you reassure me this would be difficult to pull off? Or would you have to confirm this would be difficult to catch?

EDIT: Let me try put this in an even more neutral way. Let's say one knew down to the minute when the entire US and EU stock markets were going to sustain substantial losses. How much value one could siphon off without triggering too much suspicion? Surely market depth and trade volume must offer at least order of magnitude hints about that?

Even IF this were the case, Insider trading has been allowed in congress for a long time. There was the STOCK act passed in 2012 to prevent it, the very next year it was amended to get rid of strict disclosure requirements.

Nancy Pelosi for example (speaker of the democrat majority house) is worth 140 million dollars. One has to wonder how a life time politician has managed to get that much wealth.

Speaker Pelosi married into money, so no need to "wonder" (or throw baseless allegations around)

She had some good book deals?

Chris Collins would have been a better example instead of Pelosi.

Why?

Chris is listed at 23.83 million whereas Pelosi is at 140 million.

https://www.msn.com/en-us/money/markets/the-25-richest-membe...

Collins was arrested and charged with insider trading in 2018: https://en.wikipedia.org/wiki/Chris_Collins_(American_politi...

And many members of Trump's cabinet.

I remember something like six ex- Goldman-Sachs partners? Multiple billionaires and corruption incidents at a breath taking frequency...

I really don't like to blame rich people for their wealth. But boy, the people around Trump really make an effort to promote the image of rich people feeling entitled to more than they are legally allowed.

You could have just googled this years ago

There's a GitHub project called trump2cash[1] or something that already does this

[1] https://github.com/maxbbraun/trump2cash

Interesting. Is any analysis of its performance available?

I can remember this issue having been raised a lot of times before.

The main issue is not so much about Trump himself, because he isn't sophisticated enough to profit of virtually anything more complicated than a licensing deal with money launderers, but rather the billionaire "friends" he talks to on the phone all the time.

If you know the market is going to move in either direction, you can get at least 20x leverage to SPX using futures.

You could get substantially more leverage using options, but that is more sensitive to knowing how large and fast the reaction will be.

I'm not an economist, but my impression is that if the Chinese currency is allowed to float, the major effect is that they would begin to import more goods from abroad and that their exports would be less competitive. But what would China import that they are not already importing?

Personally I would rather see the rules about local ownership of businesses open up so that foreign people can actually freely do business in China. Now that China is not a super poor country anymore, it seems fair. And this way they can keep their currency devalued as there is still a way for trading partners to use it to their advantage, while the majority of the advantage remains with China

The entire premise of the post-Bretton Woods neoliberal world US currency is based on an agreement with the Saudis to sell oil in US dollars for military support and on threats to bomb countries who sell oil in non-US denominations. And China is the currency manipulator.

And this is why we have Bitcoin.

Or if you don't like that, pick a different non government asset.

Well my point is essentially that unless Saudi Arabia is willing to sell you oil for Bitcoins or that Venezuela wouldn't get 'humanitarian regime changed' for selling oil in Bitcoins, it's all kinda moot.

>Mnuchin had warned in June that China could be designated a currency manipulator if it stopped intervening to prop up its currency.

https://www.bloomberg.com/amp/news/articles/2019-08-05/u-s-t...

That statement bears repeating with italics for emphasis:

"China could be designated a currency manipulator if it stopped intervening to prop up its currency."

In other words, if China stops manipulating its currency to tilt the table in favor of the US, the US will designate China a manipulator to reflect the fact that they are no longer manipulating it!

China burned through almost $1 trillion in US treasuries defending the peg when the Yuan depreciated last time[1]. They were "manipulating" the currency to make it stronger.

This time they did nothing, and they are being accused of being a currency manipulator. It is insane.

[1] https://www.scmp.com/business/banking-finance/article/207131...

Stock futures down another 2%.

Amazing how much money one can lose in a matter of days. Stomach churning.

Not even days. I lost $24k today, and $60k since last week.

The thing that keeps you calm though is that sometimes it’s amazing how much money you can actually make in a matter of days, or a single day.

This means you have about a million dollars in stock investments alone, which you put you in a different class.

That would keep me calm!

I'm pleased to report though that I lost nothing, since that's about how much I have.

Get something started ASAP.

I left a job when I was 28 with a depressing $21k in 401k. After sitting there for 16 years, it's now... big enough where it lost almost that much this last week.

Compounding... really... works...

Assuming the majority of their assets are in stocks, and they have around $1 million in stocks, they are around the 95th percentile of American households or slightly lower. Getting to the top 1% would require around $10 million.

I'm not sure why that should have anything to do with it. Like anyone else I still feel the pain of losing thousands of dollars, and I still get the dopamine rush from seeing the numbers going up and turning green. The only difference is that I have more of it.

I think the previous answer appeared to be investing in futures /warrants or some highly leveraged security.

Seeing my normal shares ISA drop £2.5k yesterday and £1.5k the day before as a bit sobering.

Nope, Squares big drop after earnings took a big chunk and then came the trade war.

The last couple months I’d been wondering whether I’d rebalanced way too early (in the spring) into defensive stocks and bonds, so this drop has been rather pleasant to me. I know one can’t time the market perfectly but I’d rather not miss out on a prolonged period of gains.

If the yield curve inversion didn't convince you to pull out, just leave everything parked and stop looking at it.

The curve inversion forecasts the hit to be a year or so from now, so if you really believed in the yeild curves you'd still be in.

Pretty sure it's within a year/year and a half. There isn't a safe run up where you should be in.

If an when things head south, it can get much worse than that.

In 1987 on Black Monday the DOW fell more than 20% in a single day:

https://en.wikipedia.org/wiki/Black_Monday_(1987)

If day to day fluctuations of just 5% or whatever get your stomach churning then you probably shouldn't be trading futures.

China has started invading Europe through Tsjechie also.

Just read a disturbing dutch article and Europe should join the US.

I wasn't sure before, but I'm sure now.

Here's a small report of the EU : https://www.europarl.europa.eu/thinktank/en/document.html?re...

Yeah, it's disturbing and it doesn't even contain all the info...

Seems like FUD without a credible source, can you link something? Plenty of dutch readers on HN.

The article linked is referencing the unfavorable economic terms of China's Silk Road project towards developing nations' economies, which has been written about and is plenty concerning on its own.

Honestly the whole belt and road thing has mostly just been a boondoggle for China.

https://www.nrc.nl/nieuws/2018/07/05/china-krijgt-meer-grip-...

This was the article I originally mentioned

When it comes to China, FUD is more akin to Fear of Unwarranted Death. hurdur

Well, that's rich. Especially since dollars (which the US has "license to print", manipulate, change interest rates, subsidize whole industries, etc.) have been forced as the world's trade currency for close to a century...

I was with you until the word "forced". Who forced anyone?

Α 10000ft gorilla of a superpower, meddling in foreign countries, toppling governments, spying, downright invading to "bring democracy", blackmailing, buying foreign politicians and influence, maintaining bases all over the world, playing one neighbor country against another for support, forced them.

It might not register that much on the giving end, but it's common knowledge on the receiving end...

All those actions you list are sadly true, but they don't really force anyone to use a specific currency. Now if a country was invaded, its government replaced, and its currency literally replaced, then that would be forcing.

you can call it whatever you want as long as we're on the same page

China can outlast the US on this one. Next up, let's crash the price of oil and flip off the Iran sanctions:

https://www.cnbc.com/2019/08/05/brent-and-wti-price-could-cr...

Any day, I will take the bet on USA.

China can outlast the US on this one.

I'd take that bet!

China would have a lot more room to move were the Hong Kong protests were not going on. The big problem they face is putting down the protests violently could lead towards pronouncements of them violating the agreement for it being held over. Which will lead toward countries people openly selling heavy weapons to Taiwan and maybe even building bases.

No one is going to build a base in Taiwan. This is not 1985. China is way too powerful and advanced militarily now for the US to provoke them so directly.

I really doubt China cares a bit about the agreement signed with the UK. They are more concerned alienating HK people which is hard not to do unless they put the integration with the mainland on hold for a few good years.

How much impact have the Hong Kong protest had on trade? If I had to my guess, exactly zero.

And more weapons to Taiwan because of that? What for?

Maybe I'm being cynic but I don't see the needle moving here.

Hong Kong is China's Crimea, nobody outside of China is going to go to war over it.

The entire European Union along with China ignoring US sanctions will make the US re-evaluate its hegemonic ideology and interests

To get to a more collaborative world, this would have to happen. The risk being that it could lead to a less collaborative world if the US is seen as a toothless world police.

With the EU coming into its own and willing to take a near term economic hit to advance its goals, and China being forced to consider taking an economic hit to maintain its goals, it seems like this is possible now and into 2020.

With the EU coming into its own

In what possible world is the EU 'coming into its own'? It's losing its second largest contributor and still relies on the US to defend its eastern states from Russia.

EDIT: to be clear I would love for the EU to provide a credible deterrence, its in the interest of global stability and peace. But the fact remains it can't.

Coming. Not “is already totally independent”

EU has its own issues such as Brexit, lack of fiscal union, Greece, Italy debt, unemployment, slow growth, no immigration policy, no common foreign policy etc. When you talk about EU you really talk about 27 member states not some kind of United States of Europe.

The EU it's not really in the mood of taking short term hits unless is threatened(i.e with tariffs).

Not to mention that it supports Trump stance on China as it suffers the same unfair treatment(i.e IP theft, closed markets, dumping etc). If US gets a good deal I'm pretty sure EU will ask and get a very similar one.

There is also the internal market and that China is threatening it's diplomacy with some eastern countries bribery.

Europe already benefits from lowered tariff and relaxed ownership rules that China made so far. The only thing that China seemed to be willing to entertain further is large purchase of US products, which means less purchase from everyone else. So Europe and other US allies like Canada and Australia should actually fear a US/China deal. There is a reason why this negotiation is bilateral -- in a multilateral setting you can not demand China to just buy US.

I really doubt that the US can say it got the deal of the century if China buys large quantities american beef or soybean. What everyone wants is open markets. No dumping sponsored by chinese government, enforcement of IP protection laws and many other things would ideally be part of the deal but I believe the market access is the primary issue and a deal could be stroke with that alone. The demand to make large purchase was to stop further tariffs and I'm not surprised China didn't fell for it.

It was using the Euro that really Hurt Greece and other poorer eu members

The same could be said that US dollar hurts the poorer US states. Truth is that you need fiscal union if you use a common currency otherwise you can't make everybody happy.

I think the trade balance is too skewed in favor of the US. It will be painful for both sides, but we have a lot more goods we can tariff than they can.

Of course, they could also dump their US treasuries, but it would be a pyrrhic victory for China. They would hurt themselves too much in the process.

The US Fed would simply buy the dumped treasuries as an emergency measure.

The Fed already owns twice as many treasuries as does China, so it could also just pause the balance sheet reduction program.

It wouldn't dramatically hurt the US long term.

That's a bold statement. We're talking about over $1tn in treasuries. While the US debt is already around $22tn, that's a pretty huge weight

But what happens to all that cash they would use to buy the treasuries with? Where is that $1.1 trillion going to flow into?

Whoever sells the treasuries gets the money. That's how buying and selling works.

You understand that China is unlikely to just leave the cash sitting around, aren't you? That money will probably end up being dumped on Forex crashing the US dollar.

Chinese currency is artificially valued and its foreign value depends on their forex exchange and large US dollar reserves. If china dumps us dollars it will devalue the dollar, and it will destroy the chinese currency beyond saving.

Thats not a one sided situation, that's a situation far more likely to destroy the chinese than the US.

They're using their USD to buoy their crashing currency, not to dump out of spite to try to crash the USD.

they can sell off more of the real estate they hoard and substantially effect that market again

I don't think that would work. There's a huge amount of pent-up demand in many markets for real estate, with buyers just waiting for prices to slightly drop. I'm pretty confident the amount of real estate held by China that they could force sale of would be snapped up by local markets without issue.

Would be funny to see Iran get really snug with China like Pakistan has... I don't think Iran would mind at all and neither would China... and would pretty much destroy the US's control over Iran's economy.

What do you think the result of that would be for Iran?

(not saying the result would be "right", just what it would be).

I don't know about that. What makes China's political situation difficult is that the control and censorship they impose on their people is easier to justify when the economic fortunes of the average Chinese person has risen for decades. "Why complain? Life is getting better!"

Authoritarianism is a lot less appealing when the ruling party doesn't deliver.

In the US there is a sense that the political system is certainly influenced by corporations, lobbying groups, HNI, foreign actors, etc. but generally we are to blame for electing idiots as president. We did this to ourselves.

> China can outlast the US on this one.

So let's get the story so far. The US put tariffs on China. People complain about this because it's "hurting US importers" and "costing more to American consumers" etc. But it also puts the hurt on China because now their goods are less competitive, and paying 5% more than China to buy manufactured goods from Latin America or some other part of Asia hurts the US a little but hurts China a lot.

So China responds by devaluing their currency. Now their prices are competitive again, even with the tariffs, but the result is that now the thing you used to buy from China for $100 that was momentarily $110 (so that you bought it from Mexico for $105) is now back to $100. That gets people buying from China again, and paying the original prices, only now of the $100 China used to get, they only get $90 and the US treasury gets $10.

Meanwhile this allows the US to raise the tariffs even more for the same cost to the American consumer. Or just leave them where they are forever and enjoy the 10% China has effectively volunteered to discount its goods by.

> Next up, let's crash the price of oil and flip off the Iran sanctions

Then OPEC cuts production because they're a cartel and all they need is to keep oil competitive with renewables, not have it cost significantly less than that. But it may come down some and then Trump gets voter support from lower gas prices. And the lower oil prices allow oil to better compete with the batteries and solar panels that are manufactured in China, causing China to lose business. And China is on the "climate change is especially bad for this country" list, so that's not great for them either. Meanwhile it gives more cover for Trump to escalate the trade war in retaliation for violating the Iran sanctions. Not really the biggest win for China.

How is Currency Manipulator different than quantitative easing which everyone does?

China sets the price of its currency directly.

QE indirectly affects the price of your currency by manipulating the price of your bonds.

That doesn't answer the question. No reasonably advanced manipulator of any system is content to operate only on the most visible level of influence.

So the question really is, how different is a direct manipulation from an ongoing secondary manipulation?

It's extremely different!

In a free market, no one truly knows how the market will respond to some signal (like the purchase of bonds). Although an unrestrained manipulator (The Fed) can get pretty close to setting the price of all bonds by buying huge quantities of certain bonds -- The Fed doesn't know with certainty how that will affect the price of the currency (USD). And they don't really care that much, to be honest. They don't measure inflation with respect to a basket of currencies. They measure inflation with respect only to the USD.

When China literally sets the price of the RMB, there's no question what will happen to the price of the RMB. It is whatever China says it is.

There's a huge difference between manipulating the price of your currency and your bonds. And it's because there's a huge difference between what bonds and currenies are, and how they're used.

Good news for the people of Hong Kong, since the Hong Kong Dollar is tied to the U.S. dollar, and not the Chinese currency.

Every country would prefer to devalue their currency relative to others in order to increase their trade surplus (or cut their deficit). Mathematically they cannot all succeed, so it ends up being a slow motion race to the bottom.

That’s really not true. Being able to buy up goods and assets abroad for cheap can also be highly desirable. The evils of foreigners despicably trying to sell you their goods at cut rate prices are often exaggerated.

But in this case China had been artificially propping up their currency against the dollar. What caused this manipulation was them stopping that.

I don't think that's the case at all.

1)Trade surpluses and deficits are an accounting measure that give a sense of the balance of your economy but cutting your trade deficit (or increasing a surplus) is not good or bad in itself. In spite of a lot of focus on these measures by the current US administration, economists as a whole (and therefore most non-US economic policymakers) take the view of Adam Smith, who said in "Wealth of Nations" Book IV, Chapter 3, that “Nothing, however, can be more absurd than this whole doctrine of the balance of trade.” ...and therefore don't target the balance of trade in their decision-making.

2)These days most high-value products have complex supply chains and therefore exports are for the most part made up of components which are themselves imports. So even if you want to affect the balance of trade just devaluing the currency would not work the way you seem to think.

3) It seems to me you would want your currency to be cheap relative to others if you had assets in foreign currencies and debts in your sovereign currency. However typically most countries run a budget deficit and therefore have to issue new debt. If your currency is depreciating, on an on-going basis you can buy less and less hard assets with the currency that comes from issuing new debt because your currency is devaluing relative to other currencies which are also chasing those same assets.

All Governments manipulate currencies...

China has a peg to the USD - they can peg at any given multiplier, no particular multiplier is any more valid than another, so how can they (or any other country with a peg) not be manipulating their currency?

It seems to me, the US gov't no longer cares much for the new multiplier, so this is just a cynical way to put negotiating pressure on them.

Pretty rich coming from the US, but I digress

Little outside of the topic but:

“We expect a quick—and possibly intemperate—response from the White House, and consequently expect a more rapid escalation of trade tensions.”

Haha, really? No one would expect a intemperate response out of this cool and collected admin.

US sad they can't set Fed rates like the People's Republic of China without incurring interest. Federalize the Federal reserve and we would be capable of doing similar.

Doesn’t China have the right to do whatever they want with their currency, as a sovereign country?

Yes, and every other country has the right to respond to what China does as they see fit, which is exactly what the US is doing.

why don't all countries let their currencies float?

Wouldn't a more effective US strategy against China been to get the EU, Japan, and South Korea in on the tarrifs as well? Might as well throw in Canada and Mexico as well on account of being NAFTA partners. That would account for all of Chinas major trading partners. Japan and SK might have been difficult, but a combined North America + EU might have done the trick.

Maybe the Trump Administration tried this, but I find it unlikely since this Administration opened up lambasting our traditional allies. This trade war as it stands is going nowhere. China won't budge.

The long story to this is that the Chinese dont like what Trump is doing, he is the first to stand up to their tactics. The thing is, if Trump doesn't get reelected, a democratic candidate will most likely not continue the trade war. China has every incentive to place pressure on the us stock market in the hope that it ruins Trumps chances at reelection. So they play this long waiting game, in the chance that Trump doesnt get elected.

From that perspective, what is arguably good about this trade war continuing?

Its a battle for who is the world economic power in 20 or 30 years. The american public doesn't understand what is at stake here. Unfortunately the media is calling Trump a buffoon, when the trade war, and possible subsequent economic hit to the USA, is vital to our long term economic future.

Well, that's what I'm asking - game this out. How is the trade war and economic hit vital (I take your meaning to be a "long term benefit") to our economic future? What's the hoped-for sequence of events?

I can infer a couple of predictions - maybe the thought is that since China has already been very active in monetary policy (printing money), that they will eventually hit upper limits in doing so and will start experiencing massive inflation and will have to slow down their growth considerably. And that this hit will hurt China far more than it will hurt the US, thereby serving as a net benefit to the US overall. Is that on the right track?

(To make it really confusing you could point out how slower growth from both countries means less carbon emissions.)

Yea but what about 50 years? 100? 300? I don’t see a world where the US can maintain hegemony forever, it’s going to be multilateral.

Why would we willingly give up this fight? Isnt that idea defeatist? "Well in 100 years, theres no way we can continue, so may as well give up now".

Well in 100 years do you want to be remembered as a partner who helped out or an archnemesis who tried everything to abort progress?

Lee Kwan Yew has a pretty good book on the subject, it's worth considering.

I'm going to die in 50 years, why get out of bed?

Get out of bed, don't drink immortality potions you buy on the internet made from the suffering of others ;)

To that end, live a life in accordance with death, an event which you expect, don't try to deny it.

If it is indeed a battle, like you say, infrastructure investment in wind + solar, reliable public transportation, a public health system, and free public education would do us 100x more than playing silly games with China.

Clean energy will never beat oil, its a pipe dream. Oil packs too much energy per barrel, its not even worth discussing. Reliable public transportation has nothing to do with competing for industries on a mass scale, it helps but I really dont see how it could cause a categorical change. Education does nothing if you have no good jobs to employ people with, education reform is largely a myth, hundreds of millions have been pored into education by Bill Gates and Mark Zuckerberg, ZERO positive results have been shown. Bill Gates has said this himself. Education is a filtering mechanism, it doesn't upgrade people. The longer we continue with these pipe dreams the more jobs we lose.

1) Energy density matters. You cite no data to back your claims up, in fact the opposite is true. Lithium batteries pack just as much energy per kg. Lithium is at 41.7 kJ per gram [0], Oil is at 45 kJ per gram [1]

Battery tech has more room for improvement than the hard chemical/physical limits of oil.

2) Job creation is a farce. We don't more oil riggers any more than we need more lamplighters and switchboard operators. If you want to ensure everyone has a good quality of life - a basic income looks more promising.[2]

[0]: https://en.wikipedia.org/wiki/Lithium-ion_battery

[1]: https://hypertextbook.com/facts/2003/ArthurGolnik.shtml

[2]: https://tcf.org/content/commentary/universal-basic-income-ve...

1.) By cost per barrel and energy provided, oil is impossible to beat. If there was something cheaper, it would have mass adoption.

2.) Job creation is a farce? So lets just give everyone money? We passed NAFTA and destroyed the mid west, 15 years later everyone in those states realized what happened and then voted for Trump. The whole nation was caught off guard by something that was hiding in plan sight. Government policy directly affects where companies put jobs. Ignoring and completely arguing against this is a really radical position.

1.) Environmental externalities are not included in the full cost of oil and now we have a classic tragedy of the commons problem.[0] It's not just the CO2 emitted in the burning of oil, it's also the energy loss in distribution, the energy + environmental cost or resource extraction, etc. [1]

2.) Yes! Precisely. If you're paying people to dig a hole, then some one else to fill it, why not skip the meaningless labor and just give people the money? It wastes less energy/labor. Obviously we need some people to do important jobs for society, but this is a driving principle behind a universal basic income. It's not about entitlements or free money, it's about what's most efficient for our country. While I'm undecided whether I'd vote for him in the primaries, Andrew Yang is actually doing a great job of educating people on this, I suggest you take a look at his website if this is new to you: https://www.yang2020.com/what-is-freedom-dividend-faq/. A really good alternative to this would be reducing the hours in the work week.

[0] https://en.wikipedia.org/wiki/Tragedy_of_the_commons [1] https://www.smartcitiesdive.com/ex/sustainablecitiescollecti...

So far it has worked pretty well for the US and China has been suffering. 6 million jobs with 2 million manufacturing jobs alone created since his election. China has lost a lot of manufacturing jobs and a lot of manufacturers are moving away from China and either coming back to US or moving to places like India where IP theft isn't a huge problem.

Not sure there will still be a trade war during the election. The world is no longer composed of warehouse economies that can hold out indefinitely in the face of war, disease, sanctions, etc, come what may. Either China will give, we will give, or China and the US will go their separate ways. Way too risky for the Chinese to try to bank on a new president, or a new president after that, or etc etc etc. See sawing back and forth between normal trade and no trade and never knowing where you're gonna stand in 4 years.

Better for them, game theoretically, to do exactly what they're doing. Either bring Trump to the table, or fail and look to their own markets.

Hmm

At first that sounds like a weird theory to me, but on second thought it’s quite reasonable. China has some long term goals, for which a more divided and more poorly controlled US would benefit them. But Trump is a strong immediate threat to their economy so it’s probably better to have him removed for China.

However the more ammo Trump has to vilify China, the more virtuous he appears. If this were really china’s aim, they should be playing the victim. So I think the us presidential race is not their top concern.

I'm not so sure. The democrats have been largely silent about the trade war (beyond using it as ammo against Trump).

I think no matter the administration, a lot of the existing executive branch would like to see this through.

Democrats have been silent because its a positive thing, but if they come out and agree with Trump it looks bad

so what? surely it is their freedom to do with their currency as they please

It means the Trump family will make a bunch of money on the volatility, and the US will capitulate in a few months.

> Trump family will make a bunch of money on the volatility,

Why not just set up a foundation and request all the governments who want arm deals or other favors to donate it. Forcing China do devalue its currency seems like a very complicated way of going about it.

They do that too.

https://www.propublica.org/article/trump-inc-podcast-donald-...

It ends with China being cut off from SWIFT and correspondent banking.

That would probably make them re-think their approach to economic warfare.

Considering how much stuff they produce I don't think that would end with them rethinking anything but rather establishing a different financial order with anyone who was willing to trade with them. And I think a lot of Europe and Asia would be on board for steep discounts.

The US would just need to cut off a few banks to trigger a credit crisis in China, they are already bailing out banks.

Who knows how this all will play out, won't be pretty either way.

I bet this is all empty brinkmanship.

That would also do crippling damage to US and other foreign companies doing business with China. Even the current tariffs and counter-tariffs have cost US companies many billions. Qualcomm alone is estimated to have lost about a billion dollars in sales.

Boohoo, poor corps. Should we sell ourselves out entirely to China to satisfy the corporate profit motive?

Personally, I rather Qualcomm goes bankrupt entirely than see Chinese global hegemony.

Abusing our current structural position in the international monetary system is the surest way to hasten the end of our own hegemony and the beginning of Chinese hegemony--if that ever comes.

Huh?? Isn't setting up the structure and abusing the US position what has been happening for the past half century?

It actually seems like the recent change has been to let china get away with whatever they want with no struggle and simply accept a nice slow bleed out.

> Chinese global hegemony.

Where on earth is this coming from? What does this even mean?

You do know those companies employ workers, right? And pay taxes, and buy goods and services in the US?

Please don't use HN for nationalistic battle.

Would you mind reviewing the site guidelines? They include: "Comments should get more thoughtful and substantive, not less, as a topic gets more divisive."

https://news.ycombinator.com/newsguidelines.html

The chances of that happening are really close to zero though. The world economy (and specially US economy) badly relies on Chinese.

The chances are not close to zero, they are much higher. The trade war with China is one of the very few topics where many Democrats support the administration. If the US caves now China will have won an enormous victory and will be able to dictate any further terms of trade with the US, which is a really bad outcome. There is very little chance that the current administration will accept a loss here on a fight they started or that Trump cares about how much every day people will be hurt by the trade war.

In fact further US economic decline plays to his advantage because he can clearly blame China and blaming foreigners is something that works with his base.

US can barely put sanctions on Iran as of now and the rest of the world is hesitant to follow. It took ~8 years to get the sanctions on Iran to that point.

Even if US wanted to go nuclear and push for China being cut from SWIFT:

1. It will be suicide. Cutting China from SWIFT will have very very big impact in the US.

2. US corporations have too much interest to lose in here. No way corporate America allows that to happen.

3. The rest of the world is already pissed at US for pulling out from Iran deal. They are not following US regarding Iran. How do you propose they would follow US' lead to put such sanctions on China and suffocate themselves?

Again, the chances of China being cut from SWIFT are close to zero.

> US can barely put sanctions on Iran as of now and the rest of the world is hesitant to follow.

The US has crushed the Iranian economy. What are you talking about? Have you seen the collapse of their economy since the US left the nuclear deal and began pursuing sanctions? Have you seen the extreme inflation rate, the plunge in their currency, the plunge in their oil exports, and their increasingly wild behavior?

If entirely crushing their economy equates to barely, what would be a successful version of sanctioning Iran?

Apr 2019 "Iran inflation could reach 40 percent this year as economy shrinks further"

https://www.reuters.com/article/us-iran-economy-imf/iran-inf...

Apr 2019 "Trump's maximum pressure campaign hammers Iranian economy"

"The World Bank predicted in an April report that the Iranian economy would "contract sharply," and it expects GDP to shrink by 3.8% in 2019 on the back of U.S. sanctions."

"Iran's currency, the rial, lost more than 60% of its value compared to the U.S. dollar last year, and inflation surged fourfold to an estimated rate of more than 40% by the end of 2018. (In 2019, the Central Bank of Iran has stopped publishing inflation data, leading some analysts to believe that the rate has kept rising beyond 40%.)"

https://www.axios.com/iran-economy-trump-sanctions-irgcc-0a8...

Apr 2019 "Iran's Latest Inflation Figure Tops 50 Percent - Food Prices Jump 85 Percent"

https://en.radiofarda.com/a/iran-s-latest-monthly-inflation-...

I am Iranian and I follow the news very very closely. I have family and friends in Iran.

You are right. The Iranian economy is crushed and basically the country is starving.

Here's what happened (oversimplified of course):

1. US has had sanctions on Iran for a long time (> 3 decades). No US entity can deal with Iran.

2. Obama extended these sanctions to the world: No entity form any country is allowed to work with Iran. If they do, they cannot work with the U.S.

3. Europe was happy with those sanctions and pushed for it.

4. JCPOA (Iran Deal) was signed.

5. Iran stopped nuclear activities.

6. US got out of the deal and push-forced everyone else out

7. The rest of the world, being powerless and bullied, bowed to it, but Europe, UK, China, Turkey and Japan have all been vocal in supporting Iran now. They even have exemptions from the sanctions to work with Iran.

8. Europe even has been working on a back-channel [0] (with no success though) to trade with Iran.

It is true that sanctions are crushing Iran but that's due to years of pressure that was already built-up during Obama era where the Europe and rest of the world did agree upon that.

US cannot cut China from world trade overnight without the support from rest of the world.

[0] https://en.wikipedia.org/wiki/Instrument_in_Support_of_Trade...

Why would Europe or the rest of the world go along with this?

SWIFT becomes irrelevant if this happens, not China.

The EU is looking to build alternative currency mechanisms for Iran.

If China is cut off from any global trade structures, I can’t imagine any non US countries would go along with it.

The other reason for this is that all the US allies that could possibly have worked with the US on this are all under threats of tariffs from the US themselves.

It's true that Trump is strategically blundering by being overly aggressive with the Europeans, however their economic system is under greater threat from China than the US is. The EU and Eurozone countries openly support what the US is doing in confronting China, even if they have their own disputes with the US on trade.

Most of Europe plainly has even more at stake in dealing with China than the US does. The greater European region is far weaker than the US as a whole (half the GDP per capita, far less wealth, less economic growth, greater economic stagnation the past 10-20 years), both economically and militarily. China has in recent years demonstrated its ability to directly purchase votes and influence among weaker European nations. China is an advancing superpower that is pursuing both tech and industrial dominance. Europe has no tech dominance for China to plunder or compete with, however it does have a large amount of high-skill, advanced manufacturing in Western Europe. China wants to own that. What's left of Western Europe's economy if they do?

Most of Germany's economy is built on advanced manufacturing and an extreme level of exports (~32% of its economy is exports), resulting in the world's largest national trade surplus. China's goal is to move up the development ladder and to own advanced manufacturing. If China has its way, Germany will be gutted. Most of Europe's interests on China are aligned with the US. The two can likely manage to keep US-Europe trade issues separate from the need to also deal with China.

Isn't Chinese Yuan depreciation caused by Trump's relentless tariff, just like Mexican Peso's depreciation when Trump threatened tariff early this year?

I'm confused who is manipulating the market & currency.

No. It's caused by China's central bank printing currency in response to tariffs, essentially using currency as a weapon.

It’s caused by the Chinese not having enough dollars to prop up the yuan. There is no evidence that they are running the printing presses.

OK. tariffs => printing money, so tariff is the root cause, no?

There are plenty of good reasons why China deserves tariffs, why not start there as the root cause?

Protectionism, IP theft, banning or heavily restricting US tech firms from operating in (aka exporting to) China, the list goes on.

And if that was the real reason, you’d expect the US to be coordinating with other countries that have the same beef with China. Instead, the US is antagonising them as well.

Trump has been very clear the tariffs are mainly about boosting US manufacturing. It’s not going to work, but that’s what he keeps saying. If it really was about the issues you list, there are plenty of ways to address them in a much more coordinated and effective manner with like minded allies. Instead the US keeps their demands very vague and keeps changing the criteria, to avoid the chance of an actual agreement.

Contrast with the renegotiation of NAFTA. Clear, specific demands in areas they knew would be open to negotiation. In the end, fairly minor updates and a workable deal.

> It’s not going to work, but that’s what he keeps saying.

So far it has worked very well for the US and China has been suffering. US has been able to create 6 million jobs with 2 million manufacturing jobs alone created since his election. China has lost a lot of manufacturing jobs and a lot of manufacturers are moving away from China and either coming back to US or moving to places like India where IP theft isn't a huge problem.

US economy is also doing very well, GDP growth has beaten all expectations and what not.

> So far it has worked very well for the US and China has been suffering. US has been able to create 6 million jobs with 2 million manufacturing jobs alone created since his election.

this is nonsense. in what sectors?

Why would you call a stat nonsense?

Here's sources. Note that they are from few months ago and the number has been growing since then:

> The Trump Scoreboard shows that 5.4 million new jobs have been created under the 45th president.

https://www.marketwatch.com/story/trump-scoreboard-shows-acc...

https://www.forbes.com/sites/chuckdevore/2019/02/01/manufact...

https://www.forbes.com/sites/chuckdevore/2019/03/11/trumps-p...

https://www.wsj.com/articles/u-s-december-nonfarm-payrolls-g...

https://www.wsj.com/articles/u-s-july-nonfarm-payrolls-grew-...

https://www.cnsnews.com/news/article/terence-p-jeffrey/47900...

https://www.investors.com/politics/commentary/trumps-economy...

The main countries that the US would want to coordinate this with are the EU ones, and that's pretty much a hopeless cause. EU rules mean that any action has to be taken by the EU as a whole and they just can't agree on this because the different countries' interests diverge too much.

It should not be forgotten who initiated the tariff wars! It was Trump’s administration.

Now what?

Is there a legal designation or meaning to currency-manipulator I'm unaware of, or is this basically like the Chinese designating Trump a "name-caller."

"The three assessment criteria are: “(1) a significant bilateral trade surplus with the United States is one that is at least $20 billion; (2) a material current account surplus is one that is at least 3 percent of gross domestic product (GDP); and (3) persistent, one-sided intervention occurs when net purchases of foreign currency are conducted repeatedly and total at least 2 percent of an economy’s GDP over a 12-month period.”[1]

https://en.wikipedia.org/wiki/Currency_manipulator

Thanks. TIL this is a real thing. Let the bilateral negotiations begin!

That seems pretty arbitrary to me.

How so? It's just a way to ban competitive devaluations.

This is just nonsense. All central banks "manipulate" their currencies. The FED did that by printing trillions in QE. The FED did that in 1973 when they went off the gold standard. The FED did that in 1935 when they changed the value of the dollar.

Funnily enough, the only way other major currencies can stop depreciation is by having more dollars. The way to do that would be more exports. But trade-warrer-in-chief just slapped 10% tariff on Chinese exports. If their exports go down, their currency will go down.

So, in effect, Trump caused the Yuan to devalue? So Trump is the manipulator, not China?

> So Trump is the manipulator, not China?

"currency manipulator" is a legal designation, not just an insult. It has 3 requirements (someone linked to the Wiki in another thread).

I'm pretty sure Trump wants to weaken the USD to increase US manufacturing and make our exports more competitive with the world, but I don't see that he has a plan to do it. He seems to be grabbing for any kind of leverage he can get to bully other economies into making promises to increase their imports of US exports.

It's just giving false hope to US industries which no longer have a competitive advantage in the world market... long enough to last through the next presidential election.

> It's just giving false hope to US industries which no longer have a competitive advantage in the world market... long enough to last through the next presidential election.

I can see that. He doesn't care what really happens in the world as long as he can win the election.

Yes considering the US prints hand over fists amounts of money to deal with its economic woes, it's sort of a joke where the emperor wears no clothes, but no one says anything because he's the emperor.

https://www.investopedia.com/articles/investing/090915/quant...

> "In theory, currency manipulation and a monetary policy like quantitative easing aren't the same thing. One is interest rate policy based and the other currency focused. However, as central banks began their QE programs, one result was the weakening of its currency.

> Intentional or not, it can be argued that QE is, in some way, a form of currency engineering. Whether its manipulation that will always be up for debate."

That's the funny part to me. Currencies don't exist in a vacuum. There's no way NOT to manipulate your own currency. Even in countries that don't directly control monetary policy can still change the value of their currencies indirectly (via taxes for example).

Currencies do exist in a vacuum. Which is why currency manipulation is international and national fraud; your laborers and trading partners lose. It's also why we have a purchasing power parity.

Managing a currency through the control of interest rates, taxes, employment etc. are the legal ways of the game to manipulate your currency.

Centralized clandestine devaluation of ones currency while government sponsored companies buy real estate worth trillions all over the world, as well as commodities and rare resources, not to mention the jobs it's created and among local populations and the access to foreign citizens data, is an outright slap in the face to any sort of partnership.

Printing alone is not manipulation.

Now, if the US were to print a quadrillion USD, and then flood the Yuan-USD market with printed USDs...

The USD has risen against pretty much every major currency in the past several years. Its status as the world reserve currency keeps its value artificially high despite running the printing press.

Whether this is good or bad for the US economy is debatable (and unclear), but it's not really a recipe for currency manipulation at all. I have no idea what you're talking about.

is it really debatable? how could giving China printed paper for their goods be bad for US economy?

I don’t understand this argument. Can’t the Chinese buy a LOT of influence, real estate, and US properties with all the dollars? Why is printing money “free”? How is this not either hyperinflation on one end or just regular currency value on the other. On one end it hurts the issuing country, on the other it’s mutually beneficial. How does printed-paper for goods fit into that spectrum.

I truly can’t wrap my head around this argument: been on the back of my head since I heard I think Peter Thiel say it (iirc.)

> The USD has risen against pretty much every major currency in the past several years.

And would have risen more without QE.

> And would have risen more without QE.

And risen even more than that if they had started destroying currency. But the usual target for a currency is value stability with other major currencies, and "devaluation" means that its value goes down compared to most other currencies.

It's completely normal (and basically required to prevent deflation) to create some new currency during normal (i.e. growth) times to provide more currency to use for the increasing number of transactions.

Well, America’s QE caused everyone else to do QE as well. The RMB because stronger in that period because China was less interested in doing QE at the time.

There is a spectrum from the likes of Venezuela and previously Zimbabwe (who manipulated currency at will and let’s say Gold on the other hand. Manipulator depends on how far down the spectrum you operate in compared to others.

Bush intentionally weakened the dollar in 2001 to boost export sales. Nobody batted an eye then.

Yeah you have manipulated a made up thing that we control and you are not playing by the rules where we put sanctions on you and then you become f*ed.

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