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The Economy

Matt Bai got it all wrong on the housing market crash

by on Sep.29, 2016, under Posts>Opinions>Politics>Presidential Campaigns>Posts>Opinions>Politics>The Economy

Housing prices getting too high is the reason why many people can not afford any housing. So the housing market needs to follow the free market rules, be allowed to fall when it has to, and not be interfered with or propped up by the government.

By propping up housing prices, the government is helping out those who speculate in the housing market, letting them make a lot more money from their real estate investment than they should, and kill a lot of working people’s American dream in the mean time. This is the reason why the American dream has become impossible for a lot more working people. This is also the reason why the US economy is not growing much.

Donald Trump may not have liked the housing market crash for a noble reason. But he was with a lot of Americans in this matter. I find it regretful that he is not educated and articulate enough to offer an effective rebuttal in the debate. But being educated and articulate while being unintelligent and unthoughtful makes a presidential candidate even less qualified.

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The vicious cycle of currency devaluation and job loss

by on Jul.10, 2016, under Posts>Opinions>Politics>The Economy

When more people are out of work, the governments try to stimulate the economy using quantitative easing, which devalues the currencies. Devaluing a currency helps increase exports and thus create more jobs. But it also shrinks the domestic market and causes more job loss. In the end, the effect of the devaluation of currencies in many countries is more job loss around the world. That is why the world econnomy is in trouble.

All governments need to change their strategies to develop their economies, from relying heavily on export, to relying on domestic consumption. Stop all the quantitative easing and the world economy can grow again.

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Globalization

by on Nov.12, 2011, under Posts>Opinions>Politics>Immigration & Globalization>Posts>Opinions>Politics>The Economy

Globalization has brought about a lot of problems people have to face around the world. That is why there are worldwide protests going on.

Local economies are the first and biggest casualties. And local economies employ more people than global firms.

Globalization brings about concentration of wealth and loss of jobs. What is worse, it makes it difficult for new businesses to be built to compete against old businesses, and for small businesses to survive to compete against big businesses. So it stifles innovations and thus the creation of new jobs.

However, I think these are common problems with industrialization as well.

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5 Fixes America Needs Right Now

by on Jul.10, 2010, under Posts>Opinions>Politics>World Affairs>Wars>Afghan War>Posts>Opinions>Politics>Immigration & Globalization>Immigration>Immigration Reform>Posts>Opinions>Politics>World Affairs>Wars>Iraq War>Posts>Opinions>Politics>The Economy

“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.

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Is the Yuan undervalued compared to the Dollar?

by on Apr.19, 2010, under Posts>Opinions>Politics>The Economy

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.

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Will the depreciation of the Dollar help create jobs?

by on Apr.19, 2010, under Posts>Opinions>Politics>The Economy

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.

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Migration Impact: Benefits and Stress for Locals

by on Apr.18, 2010, under Posts>Opinions>Politics>Immigration & Globalization>Immigration>Immigration Reform>Posts>Opinions>Politics>The Economy

My attention was turned to the impact of migration after reading Chinese Real Estate: Four Ways to Profit From the Biggest Urban Migration in History on moneymorning.com. The following is from this article.

“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.

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The value of the Dollar and the Yuan peg to the Dollar

by on Apr.18, 2010, under Posts>Opinions>Politics>The Economy

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.

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The value of the Dollar and the supply of labors

by on Apr.18, 2010, under Posts>Opinions>Politics>Immigration & Globalization>Immigration>Posts>Opinions>Politics>The Economy

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?

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Time Is of the Essence – by Fritz Hollings

by on Apr.11, 2010, under Posts>Opinions>Politics>World Affairs>Wars>Afghan War>Posts>Opinions>Politics>The Economy

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.”

Read more here: Time Is of the Essence by Sen. Fritz Hollings.

Maybe he represents a different kind of Republicans that are less beholden by special interests, even compared to Democrats.

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