“The Greenland Norse lived on an island that was surrounded by fish … oceans of fish … but they refused to eat fish. Fish was taboo for the Greenland Norse. The winters got colder and colder, killing the crops and livestock in Greenland until the remaining Norse starved … even though fish were packed gill to gill off their shores.
There were other people in Greenland during those cold winters — the Inuit. They had no problem eating fish. They lived while the Norse died.” – from 5 Fixes America Needs Right Now by Sean Brodrick on uncommonwisdomdaily.com.
I think it is important for Americans to realize that things need to be changed.
I am listing this article under “Immigration Reform” because illegal immigration is mostly about unauthorized employments, which is one kind of underground economy. I don’t know why the author did not mention it.
Answer this question first: “Is the Dollar undervalued compared to the Pound?” Whatever is true about the Dollar and the Pound is also true about the Yuan and the Dollar, except that the Yuan is pegged to the Dollar. Things are more expensive in England, where the Pound is used. Does it mean that the Dollar is undervalued? As we all know, the Pound and the Dollar can be exchanged freely. So nobody complains that the Dollar is undervalued compared to the Pound. Are people complaining that the Yuan is undervalued compared to the Dollar simply because the Yuan is pegged to the Dollar?
I am very sure that after the Yuan is de-pegged from the Dollar, everything will still be cheaper in China than in the US. Prices are decided by the size of the market. The bigger a market is, the lower the prices are, and so the higher the value of the currency being used in that market is. The value of a currency is not decided by the exchange rates or whether it can be freely traded or not.
China has been helping keep the Dollar from depreciating by pegging the Yuan to the Dollar. If the Yuan is de-pegged from the Dollar, the Dollar will depreciate. That means that US companies will earn less with exports to China, and their cost of production will increase if they have to rely on imports from China, which means less profits for them. Since profits are what drive businesses operating in the first place, the reduction of profits will cause the reduction of businesses, which may result in job reduction rather than job creation.
Also, as I have said before, an economy grows when productivity goes up, not when prices go up. If the Yuan is de-pegged from the Dollar, prices will go up in the US, which will not result in an expansion of the US economy or the US job market.
The only hope for the de-peg of the Yuan to help create jobs in the US is the potential increase in US exports to China assuming that China will not do anything to protect Chinese businesses from being hit by imports from the US. I hope that this alone can offset the other negative effects brought about by the de-peg of the Yuan.
“Given what you may have heard about Chinese property values in recent months, it may surprise you to learn that Chinese real estate investors are extremely value oriented.
And so are the institutional investors I’ve run into during my latest investment-research visit to this country. These institutional players want to lock up some valuable land parcels before 2020. That’s the date by which 500 million Chinese citizens are expected to have moved into China’s cities as part of the greatest urban migration ever recorded.
You can do the math: We’re talking about a group that’s 1.6 times the entire U.S. population … moving from China’s countryside to its cities in the next 10 years.”
From this article, I see that migration brings the increase in the values of local properties. So why are people so much against migration? Part of the reason is that they are stressed out over the increase in rents and property prices that results from migration.
Let’s look at how New York City has been handling the expansion of the city’s population. Rents in New York City have been going up fast during economic boom time, when many people from all over the US and the world move over here. And New Yorkers have been having a hard time with their rents because of that. The city government dealt with this issue by offering rent-control apartments and offering affordable housing to people with low incomes.
So in order to benefit from migration, local government has to come up with good strategies to help local residents deal with problems brought about by migration. I guess this is what the US government has failed to do. And this is the reason why the US government can not reform immigration.
The Yuan peg to the Dollar makes the Dollar increases in value along side with the Yuan. And US budget deficit is funded by foreign governments. So the value of the Dollar has not declined, yet. It will decline if most other countries sell US debts or the Yuan is de-pegged from the Dollar.
Because China is holding massive amount of US debts, China is reluctant to de-peg the Yuan from the Dollar and decrease the value of their holding. But China can certainly let the Yuan appreciate to some degree after selling a certain amount of US debts.
When the US government asks China to de-peg the Yuan from the Dollar, they are basically asking China to sell US debts. But since the US government still wants China to buy more US debts, they can not afford to push China hard on this issue.
The effect of an increase in the supply of labors is the decrease in prices, which is a good thing, especially for the value of the currency. It increases the value of the currency.
Americans have been complaining mightily against the potential decline of the value of the US Dollar. So why can’t we welcome the fact that our dollars can buy more and more stuff and pay for more and more services with cheaper and cheaper labors?
China has an almost unlimited supply of labors. That is why the Chinese economy can still grow after its exports have been hit by the worldwide economic downturn. And the Chinese currency’s value keeps rising. Why do Americans keep complaining about the potential decline of the value of the Dollar and keep trying to limit the supply of labors at the same time?
Concerning the war in Afghanistan, the former Republican Senator said, “Force feeding democracy for eight years in Afghanistan, we are really trying to force a change in culture. When we are done and gone, President Karzai has got to live with the Afghans, and his antics against the United States are for survival. We ought to realize after eight years that we are creating more terrorism than democracy. The war in Afghanistan is not necessary.” This is a surprise to me. I thought that Republicans are all for wars.
Concerning the economy, he said, “But the CEOs of Corporate America are not interested in coming back from China and producing domestically for less profits. Wall Street, the big banks, Corporate America, and their entities, like the Business Roundtable and the U. S. Chamber of Commerce, will fight the President and Congress to keep their off-shored profits flowing. This business crowd furnishes the contributions for campaigns.” This is another surprise to me. I thought Republicans are pro business and so would side with “this business crowd”.
“President Obama can’t get by four years keeping the country AWOL in the trade war. He can’t keep the government on a credit card for $1 trillion a year. President Obama has met his Rubicon. Is he serious as a candidate for contributions or is he serious about being President of the country? Time is of the essence.”
First and foremost, it is because most things are not produced in the US any more. Innovation happens in the process of producing things and for the people who will consume them. Our economy is shrinking compared to other economies. So it is not surprising that our innovation level compared to the rest of the world is not what it used to be.
Secondly, it is because most investment goes to corporations who then use investment capital to drive start-ups who may post a challenge to them out of business. It is the desire for profit from the whole population that kills innovation. If you have invested in a company, you don’t want to invest in another company who may compete with the company that you have invested in, if by not investing in a second company, you can make more profit with the first company.
Thirdly, investors have the wrong investment criteria. They mostly invest in businesses that are owned by people who seem to know business and have been able to make money in the past. They don’t know what is true innovation that is worth investing in. I have seen so many investment deals that should not have happened and so many inventions that have been wasted because of the lack of investment.
Many people seem to think that we can keep high paying jobs in the US while outsourcing low paying jobs to other countries. But low paying jobs are both the foundation and the driver for high paying jobs. Low paying jobs and high paying jobs are not separable. Most high tech jobs and research and development jobs are created where there is a need for new technologies for work being done with low tech jobs or things being made with low tech jobs. Management jobs always stay with workers who need to be managed. Entertainment jobs are created among people who are entertained, who tend to be workers who take low paying jobs since they tend to be in much larger numbers.
In a job pyramid, low paying jobs are at the bottom of the pyramid. The smaller the bottom is, the smaller the top is. There can not be a lot of high paying jobs in a society where there are few low paying jobs. Each high paying job needs to be supported by a certain amount of low paying jobs. This is because every business needs customers. The more customers to serve, the bigger a business can be, thus the more high paying jobs that business provides. That is also why a bigger consumer base creates and supports a bigger economy.
Outsourcing low paying jobs will reduce the number of high paying jobs at the same time. People in countries where low paying jobs have been outsourced don’t always find high paying jobs. Many of them become unemployed and have to move to other countries to look for work instead.
The more serious problem with outsourcing low paying jobs is that it reduces the size of an economy and so reduces the influences of the culture of the society that is supported by that economy. A culture can not flourish without the support of a bigger economy. But I guess if an economy of a society becomes comparatively smaller over a long period of time, it means that the culture of that society is not that superior.
“One QUARTER OF A TRILLION DOLLARS is what the US is spending on two nations, Iraq and Afghanistan that together have a COMBINED GDP of just $23 billion.
That is lunacy. Americans have a US President who is going to say tonight — we cannot afford our future, we cannot afford investment in ourselves, but we can afford to bail out Wall Street financiers, and we can afford to pump $250 billion into two small countries abroad, but we can’t afford to do the right things by American working families — who deserve far better.
There are parts of what the President’s team is doing — particularly what Jared Bernstein, Paul Volcker and Austan Goolsbee have been working on — that I do support.
But the broader issue that we are going to cease deep investment in the US in a way that is big, significant and consequential — while China does everything the reverse that we are doing and reaps the rewards is a sign of America’s collapse, not America rebuilding itself.” – Read the whole article here.