(email exchange)
Seems none of them have any clue that they are better off doing it unilaterally and hoping the other don’t follow.
That would maximize their real terms of trade/standard of living.
This is our big chance for the us to act first, aggressively, and alone to absorb the entire world’s excess capacity rather than just our own.
We can have a payroll tax holiday and start up our infrastructure projects, etc. while encouraging others to hang tough on fiscal policy and sit back and watch their exports to the US skyrocket as they both build FX reserves (yes, encourage ‘currency manipulation’) and work to balance their budgets.
With economics, unlike most religion, it’s better to receive (real goods and services) than to give, and if others don’t know that it’s not our problem- it’s our opportunity!
>
> In purely economic terms you are correct, insofar as it is better to
> receive a bushel of wheat than to export mounds of coffee. The first is
> clearly a benefit and the 2nd a cost. But when you’re exporting
> something further up the value chain, there do seem to be some good
> multiplier effects which have a positive impact on domestic demand.
>
Any nation can set aggregate demand at any level it wants independently of external forces.
>
> I’d also like to see the Chinese embark on a serious infrastructure
> build for their interior, and encourage their population to become a
> nation of rampant consumers.
>
I’d like to see them continue to send all their stuff to us and accumulate $US financial assets.
But seems they may be too smart for that, as per their new stimulus program.
>
> I have no problem with everybody doing fiscal aggressively.
>
As above.
>
> I also want a weaker dollar so that the cost of servicing these dollar
> denominated debts declines in real terms.
>
I’d rather see them servicing their USD debt by net exporting to us to get the needed USD.
But seems our leaders are not going to happen either.
They are killing the biggest goose of all time.
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“watch their exports to the US skyrocket”
I agree Warren. Why wouldn’t Obama want to sit down with a bunch of GM LS Engine builders up in kentucky and michigan and say guys I know Warren wants you to make engines for his cars, but lets sit down and let China make all our engines and he can use chinese engines and we will just take it easy for a few decades. Who has taught Obama to keep US workers employed when they can sit down and do nothing and live an easy relaxed non workplace lifestyle?
You know I can get a new corvette zr1 that is all of an MT900 for about 100K, but if we let china build a ZR1 we can probably get that down to 20K, who would buy your car anymore at it’s current price Warren? I watched this movie called “used cars” and they shot the warren mosler super car and said it’s too fugging high! 😉 Why aren’t you using chinese engines and why is your supercar factory in florida and not in China? Your actions speak louder than your words daddy.
“and encourage their population to become a nation of rampant consumers.”
Who taught this person to think like this? I just read where there are asphalt shortages, the water is all polluted with anti-depressants that the filters don’t fix and this guy is talking MORE MORE FASTER FASTER. I think we have too many joneses engaging in consumer warfare as it is, pathetic, that makes me want to puke. Moderation in all things is what my bible says. What is beneficial about turning chinese youth into shopping machine wannabes who are gonna go to nieman marcus with sole and mia “hit em up style?”
Warren please have your friend watch this movie with the Governator and Sinbad called “Jingle all the way” about american consumerism and explain to me why turning little kids in china into this is good for our future. Or he could watch “death of a salesman” for another take of our sad reality.
http://www.youtube.com/watch?v=h6t3lSlMHkQ