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What’s Next for China’s Political Economy?

Aug 2, 2019 Kevin Rudd

Slowing growth and the ongoing trade and technology war with the United States have forced China’s leaders to address a fundamental dilemma at the core of the Chinese political economy. Can the Communist Party of China both deliver on the “Chinese Dream” and maintain absolute control over the country?

LONDON – To understand where the Chinese economy is headed, it is important to understand the wider context surrounding Chinese debates about what the future holds under President Xi Jinping. The centenary of the Communist Party of China (CPC) in 2021 is the first weigh station for evaluating the progress made toward realizing Xi’s “Chinese Dream.” In 2013, the year after he became China’s paramount leader, Xi promised that by the centenary, poverty would be eliminated and the country would achieve “moderate prosperity,” which is usually interpreted in official Chinese outlets as middle-income status.

Whatever the actual numbers, the CPC will undoubtedly proclaim that both benchmarks were achieved with flying colors. It is central to Xi’s legitimacy that this be the case. Yet in the meantime, the 2021 target will add to the pressure on China’s economic managers, who must not allow the country’s growth rate to slow too much, regardless of the downside risks, foreign or domestic.

There has been much discussion about why US President Donald Trump needs to temper his trade war with China and secure accommodating monetary conditions to support his re-election bid in 2020. But Xi, too, will face a “re-election” challenge at the 20th CPC Congress in 2022. Despite having abolished term limits for the Chinese presidency, he will be feeling significant political pressures of his own.

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China’s Quiet Central Banking Revolution
Sonny Tumbelaka/AFP/Getty Images

China’s Quiet Central Banking Revolution

Miao Yanliang welcomes the Chinese central bank's more open communication and increasingly flexible exchange-rate regime.

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0 Comments on this paragraph, 36 in all 36 Comments on this article

Elizabeth Pula Aug 6, 2019

Yes, the sino-american decoupling is a matter that concern all of us. I am adding this link to this talking point RE:"significance of its(China's) market....."

https://www.theautomaticearth.com/2019/08/will-china-retreat-into-itself/
Meijer explains, in a nice "put". But, the retreat is an internal path that will have significant impact within the US also. And, there are quite a few variables that really aren't under the control, perceived or not by either of those two nations.

The biggest problem is their warring bubble isn't being popped by North Korea, but being burst by another bouncing bubble over in Kashmir, because of a lot of gooey stuff that is really affecting the internal aerodynamics making all the bubbles really lose their rainbow glitter, and sink really quick into the real yucky mucky stuff. A few little boys really didn't read the label very carefully on the bottle of blow. They must've grabbed it from the wrong shelf, from the wrong store, and definitely from the wrong manufacturer. Trial and error sure has it's weak points.
- 眼光 Canadian / China Oct 6, 2019
  
  China doesn't need the USA to be number one economy in the world . It all ready has pasted the USA as number one . China is not going away . The USA is an over inflated market .
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j. von Hettlingen Aug 5, 2019

In his long essay, Kevin Rudd sheds light on China’s economic future and how domestic politics could complicate concrete solutions to its problems. Sluggish growth and the ongoing tensions with the US have forced the leadership “to address a fundamental dilemma at the core of the Chinese political economy.” Xi Jinping will have to make pivotal decisions between ruling with an iron fist, and the need for economic success, to legitimise the Communist Party rule, while allowing “some role for free markets.”
The author offers an insight into China’s authoritarian capitalism, and seeks to advise foreign investors who want to navigate treacherous waters there. This begins with understanding why growth has lost its momentum and what options Xi has to ensure the party’s survival, while securing sustainable growth. Reforming the state-owned companies (SOEs) while maintaining absolute control over the market would be incompatible goals. A more pluralistic China would be better prepared to handle the ups and downs of the economic development model the country has chosen.
The events of 2015 enraged the leadership and should serve as a wake-up call. Stock markets tumbled. A three-week plunge knocked about 30% off Chinese shares. China’s securities regulator warned of widespread panic among millions of small retail investors who had borrowed heavily to buy shares. They blamed the government for their lost savings. Companies suspended dealings in their shares to arrest a frenzy of selling. The authorities stepped in with various measures, including a surprise interest rate cut. But their efforts failed to calm the markets.
The author says the “political appetite for further market reforms abated considerably. The pace of reform ground to a virtual halt, and tight controls were implemented to prevent capital flight, making it even more difficult for Chinese firms to expand abroad.” Growth slowed – “largely owing to faltering private-sector business confidence.” China seeks to move away from its previous model that featured “labor-intensive, low-wage manufacturing for export, high levels of state investment in public infrastructure, and a significant (albeit reduced) role for SOEs,” into a service economy, which grows very fast in recent years.
As part of Xi’s “Chinese Dream” would be to see China becoming a world superpower, overtaking the US as the world’s largest economy and leading the way in technology. China would be “a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious and beautiful” and a “global leader in terms of composite national strength and international influence” by 2049, in time to celebrate the centenary of the People’s Republic. But it also aims to complete and build a “moderately prosperous society “when the party celebrates its 100th birthday in 2021.
Since coming to office in 2012, Xi has meticulously strengthened and extended his power. He is now China’s most authoritarian and powerful leader since Mao Zedong, who ruled the country with absolute power and an iron fist from 1949 to 1976. The manner, extent and purpose of Xi’s power consolidation has certainly caused disquiet, discontent and dissent among critics and many citizens, as he intends to rule China for a long period, even for life.
Xi and his country are now faced with major challenges, some of which were unforeseen, and even unthinkable, when he reached the pantheon in October 2017. His political doctrine, “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,” was enshrined in both the party’s charter and the country’s constitution. Also, the National People’s Congress removed the presidential term limits. The question is how he is tackling the external pressures from a trade war with the US, and the urgency to speed up economic liberalisation.
The author says, the “world has changed China” over the last 40 years, as much as “China has changed the world, through the sheer size of its economy, its impact on global consumer prices, and the significance of its markets. Whatever happens in the near term, the global strategic and economic landscape is undergoing a fundamental change. How China responds to its own domestic growth challenges and the real or perceived Sino-American decoupling is a matter that concerns us all.”
An “economic decoupling,” favoured by the China hawks in the Trump administration will damage America’s international role and reputation, and undermine the economic interests of all nations. It will be a zero-sum game that neither China nor the US win.
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Elizabeth Pula Aug 3, 2019

The real question is what is next for the US political economy. Admittedly, your article definitely addresses many of the talking points for both US and Chinese, actually other nation's political economies. It is not an issue of one or the other, or the rest. However, in the US, please note the following link:
https://www.zerohedge.com/news/2019-08-02/ocasio-cortez-chief-staff-and-comms-director-abruptly-quit

What kind of conclusions can you reach after acknowledging much of the behind-the-scenes political gamesmanship of all that are involved? Do note this sentence in that link, "In April, he came under fire for reportedly funneling over $1 million in political donations from two political action committees he founded into two of his own private companies. The allegation earned a campaign finance violation complaint with the Federal Election Commission, according to the Washington Examiner."

That sentence catches the latest and newest member from India, no less, that caught on real quick on how to funnel money to his own pocket, by suckering in segments of the reactionary public, that "DONATED" to a political cause under the flag, this time for the Dems. HOWEVER, this "funneling of funds" is occurring on both sides and in-between of the political party hierarchies. This is the real glaring RED FLAG that indicates one, but not the only one aspect of the glaring problem that is occurring right now in the US political economy!

Depending on which conservatives, which media group, and which already positioned political leader is REALLY coming from a perspective of true responsible leadership is the big, humungous question for this century! Emmanuel knows what he attempted to stop at least on certain levels. Now, it depends if he is putting a stop to the exploitation within the Democratic party, for higher reasoning and strategies for a "good" purpose remains to be seen. Presently, from another perspective, and this is my opinion only, these women have been "too conveniently" supported, promoted, and their "talking points" strategized to actually create negativity within every major democratic party "demographic groups" that I question WHO is behind the real promoting of these women. That little group is too strategized too quickly to have developed from a grass-roots participative base. They have been promoted by promoters. And just who are the real promoters who want to destabilize the entire voting population in the US and for what ultimate purpose? Who has the most to gain by creating, promoting and spreading fractioning of the especially the democratic party, as a political party? Who has the most to gain by creating, promoting and spreading fractioning within especially the republican party?

Presently, the "fractioning fulcrum" may be the jolly group of the 4 musk-a-tiers. They're really pawns, convenient players that get to skim some profits. However, who and what is at risk here?

Start putting your thinking caps on, instead of beating around in the bush.
The same political economy tactics have been quite effective in South America and Africa for how long now?
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David Punabantu Aug 3, 2019

There is a difference between China's economic policies and those of the West. This is well illustrated by former editor of the Financial Times Mr Crowther wrote in his book"An outline of money" he wrote , " “if a purchaser is someone who want D-marks in order to pay for German exports, the fact that he can get his marks cheap is equivalent to a reduction in the price of exports; it will stimulate sale in exactly the same way as an ordinary depreciation of the exchange rate” (Crowther (1951) p.260).
China has depreciated the price of its products to stimulate inflows, while western economic philosophy has been depreciate currencies to stimulate inflows as echoed by the IMF. China follows "who want D-marks in order to pay for German exports" ..by having "who wants Chinese Yuan in order to pay for Chinese exports" ...Although Chinese firms quote their exports in US dollars payments are settled in Chinese Yuan to the firms as a result of Chinese foreign currency regulations.The US dollars pass through the State that settles payment with Chinese firms in Chinese Yuan. If a Chinese firm earns US dollars it surrenders them to the Chinese government to get Chinese Yuan. Thus if US$150 million inflows occur on the London money markets worth US$1.5 trillion a day, the inflows would have a 10 percent impact. But if the Chinese government restricted its money markets to US$150 million the US$150 million it would be a 100 percent impact in the Chinese Yuan. As it would gain value making exports expensive, in line with Mr Crowther the Chinese reduce the price of their exported commodities to again stimulate higher US dollar inflows which inturn allows them to build huge US dollar reserves. This creates the credit China dishes out. These reserves have been loaned out on conditions that are far cheaper than the conditions of similar loans in the western world. This in effect creates a cheaper US dollar than the real US dollar.
All in all China is closer to the market system than western economic systems. This is clearly seen in Adam Smith's market doctrine. Economics 101 Adam Smith's Supply and Demand doctrine talks of Country X with Commodity X with Currency X. It is the supply of Commodity X and it's demand bought by Currency X that creates a price. If Country Y wanted Commodity X then Country Y would have to change its Currency Y into Currency X to buy Commodity X.
But with the US dollar and its "exorbitant privilege" in which its "shared use" globally in trade, its economic nature is more communist than capitalist.
- Elizabeth Pula Aug 11, 2019
  
  An important working paper for understanding real or perceived Sino-American and global decoupling that concerns us all.
  https://www.imf.org/en/Publications/WP/Issues/2019/04/29/Enabling-Deep-Negative-Rates-A-Guide-46598
  
  And, a very important one liner on page 32 in the text, although there's a whole lot more important lines in the 89 pages: "Shielding retail depositors from negative rates may hurt banks' profitability". Doesn't really matter what country the banks are in globally either.....
  A new reply to this comment has been posted.
- Elizabeth Pula Aug 11, 2019
  
  https://www.imf.org/en/Publications/WP/Issues/2019/04/29/Enabling-Deep-Negative-Rates-A-Guide-46598
  
  pretty important working paper
  - David Punabantu Aug 11, 2019
    
    Thank you for the information. It is an interesting read. Some of the proposals or scenarios have been implemented in developing countries. Restriction of hard cash withdraws, etc pushing people into electronic payments basically created a credit squeeze and slowed down business activity. Yet this shifted the cash transactions to activities outside the jurisdiction of the central bank mainly in cross boarder money changers. This inturn accelerates the Triffin Dilemma. Added to this the informal sector become more cash orientated and mobile money transactions and banking offered by telecommunication firms heavily eroded traditional banks. At one point banks have to settle in hard cash either with their clients or amongst themselves. There are cracks in the system. Sometimes "the float" is not available to dispense cash or receive it. Interest rates become a function of choice. Do high interest rates cause you to save and postpone that purchase? If that purchase is postponed then how do company balance sheets look like? How are the factors of production kept viable in this case considering the "imperfect competition" definition. How then does money behave and its functionality in such circumstances? Is it a "commodity" or "means of transaction". The other question is how do commodities and goods behave? Do they switch roles with the function of money? Is this the juxtaposition between formal and informal? When you do hit zero interest rates is that an attempt to deal with a productivity crisis, more goods produced per unit time against falling demand, which means higher costs of the final product to remain viable? The question is "the missing demand" to keep firms viable. Is that "missing demand" "missing value" and is zero interest rates trying to create value? Say's law says "supply creates its own demand". It notion is that it is a closed system. We fall back to Economics 101. Adam Smith's market doctrine is based on supply and demand. The underlying axiom is country X produces good X and is bought by currency X belonging to country X. If country Y wanted good X it has to change its currency Y into currency X to buy good X. That is why a Euro cannot directly buy goods from the US until it is changed into a US dollar hence Exchange Rate.
    But if Currency X buys DIRECTLY goods from Country Y it is adding value to its economy. Yet to return that value flow cannot happen because Currency Y was not involved in that transaction. Currency Y may have been involved in the production of its goods but that value has not been accredited to Currency Y but to Currency X. There is an overload on value on Currency X manifesting in over production. The clients for the "over production" is Currency Y but as Currency Y was never accredited to the value of that production it can never buy back its value. The end result is Country X produces goods and has shops full of goods but not enough clients. Each additional unit sold pays for the unsold items on the shelves. Stimulating "maximum demand" to keep firms viable "zero interest rates" manifest. The other side of the coin Currency Y. It has lost value as its goods and services got purchased by Currency X. It cannot be the customer that Currency X needs to complete the value cycle. Currency Y losses value to purchase and what little is purchased faces a high demand hence a higher price, and higher interest rates.
    In a perfect situation if Currency X and Y followed the underlying axioms to the Supply and Demand theory then the need to buy domestically and internationally by both currencies should reach an equilibrium price to allow both activities to occur at the same time. Interest rates become a function of demand. If the availability of money is more with consumers, and industry needs imports against exports to attract money back into its operations interest rates can serve as a means to postpone domestic choices in favour of industrial needs. In this case the rise of electronic money helps domestic consumers to deal with transactions while firms use hard cash or vica versa but at the end of the day all settlements are paid in cash or the system crashes.It is here that the article anchors on. It originates from the Triffin Dilemma. As you well know, if countries ran a surplus the US ran a deficit. The question is what US dollars would run the US economy? In effect it was a credit squeeze that in the long run would undermine the value of the US dollar purchasing power. This has been witnessed from the Gold standard, fixed exchange rates to floating rates with an increasing float rate.
    After the Nixon Shock as a result of the Triffin Dilemma one way for the US economy to survive was to introduce debit cards, while at the same time to globalise in its "globalisation" agenda to get US firms in the world or their proxies selling goods goods to get back the US dollars lying in other countries as US dollar reserves.
    It was the Interim Committee of the Board of Governors of the IMF’s fifth meeting held in Jamaica in January 1976 that set to resolve the on going 1960 Bretton Wood crisis, which in the past also plagued the Gold Standard.
    The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold and the ability of the IMF to bridge temporary imbalances of payments.
    ‘In the face of increasing financial strain, the system collapsed in 1971, after the United States unilaterally terminated convertibility of the dollars to gold.
    It is here that the Jamaica meeting was set to reconstruct a new system of rules and management involving the future of global trade.
    Here the IMF Board of Governors’ fifth meeting “set the seal on the Second Amendment of the IMF articles that limited reforms to those areas on which consensus had been reached [in an attempt to correct the crisis.] But on the central aspect of reform-the exchange rate regime, convertibility of official balances and the reserve system-the Jamaica agreement virtually accepts the fait accompli that had followed the breakdown of the Bretton Wood system.”
    The Jamaica reforms basically outlined a believed path out of the Triffin Dilemma that was responsible for global crises.
    The answer to the Triffin Dilemma that the global economic and financial universe faced was, “continuing with the prevailing situation with the role of the US dollar reduced, with an increased role for other currencies and private financial markets, and with all governments trying to reduce their exposure to exogenous events; or moving in the direction of regional monetary blocs, which would each work out their own relations with other monetary areas; or advancing to a better-organized world system”.
    For Africa under the Jamaica reforms, the monetary blocs such as the African Union (AU) have been formed but its focus is on commodities, while the Europe has formed the European Union (EU).
    Yet with the EU hit by the 2008 crisis, huge geographical monetary blocs are not immune to the global melt down. Hence the interpretation of monetary blocs within the mandate of the Jamaica Reforms basically falls on each national currency participating in global trade and establishing exchange rates driven by currency markets and trade with its trading partners is paramount, rather than the geographical interpretation of monetary blocs being associated to continents.
    Alongside this, the Jamaica reforms encouraged the creation of super economic blocs so strong that they would withstand any economic or financial shocks experienced in the 1970s.
    Consequently, the move towards regional blocs saw the European Economic Community (EEC) accelerate its formation into the European Union and its Euro as a move away from the US dollar, and the US moved to create the North America Free Trade Area (NAFTA), while for Africa, the Organization for African Unity (OAU) was transformed into the African Union (AU).
    For the AU, the Fund prescribed that it would work it its own relations with other monetary blocs, which has seen Africa sign the Lome Convention and South Africa a trade deal with the EU.
    However, after the 2008 US Sub-prime crisis the financial collapse of the EU’s Euro and the US economy has brought into question the Jamaica reforms effectiveness.
    After 2008, stimulus measures taken to resuscitate major economies have disintegrated into Quantitative Easing Policies (QEP) marked with accelerated float rates and the printing of money which basically has brought back discarded and discredited economic management ideologies in the 1970s into the 22nd century lime light of economic management.
    Attitudes supporting such policies as QEP are historical as noted in the 29th Annual Report of the Bank of International Settlements (BIS), that
    “the fact that such a considerable proportion of the total volume of liquidity consists of liabilities of the United States and the United Kingdom implies that the working system of international payments depends at present to a large extent on the pursuit by those countries of economic and monetary policies aimed at maintaining the purchasing power of their monetary units, and so preserving confidence, both at home and abroad, in their currencies.
    If in the future-as is greatly hoped-further expansions of trade take place, the volume of international monetary reserves may have to be adjusted to the increasing need of means of payment. The problem then may arise on deciding what will be the best ways of effecting such an adjustment. This is a technical problem that monetary authorities will have to consider in good time.” (29th Annual Report of BIS pp.243-4 cited in Tew (1967) p.188)
    
    Currently, the best way of effecting the adjustment has witnessed the global exchange rate policy shift from; the Gold Standard, to fixed exchange rates, to a floating exchange rate in the 1970s, to after the 2008 US Sub-prime crisis to Quantitative Easing Policies (QEP).
    It is at this juncture that the supply and demand doctrine coupled with its free market forces appears to have failed, after so religiously being followed for over three decades, as the foundation of sound economic and financial management.
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- Elizabeth Pula Aug 3, 2019
  
  More USD is circulating outside of US borders, than within the national boundaries. The average Joe confined to US geographical boundaries are and have been dealing with fixed wages, inflation, and lack of access to ANY individual entrepreneurial, and sustainable living opportunities for how long??? Their only option is fix rate employment, with exactly one personal revenue stream if they are lucky to find that stream, and can keep it to the age of ???? In 2019, practically EVERY HOUSEHOLD member must be working 40 hours a week to begin to expect, and or begin to meet household lifestyle that for the prior 2-generations only had ONE WAGE EARNER up to the age of 50-60, with some expectation of keeping a roof over the heads of all members of the household.
  - David Punabantu Aug 3, 2019
    
    Absolutely True. Working to get those US dollars back into the US is not easy, especially when there is more outside than inside. How I wish the US can take on China on the currency side to get back its US dollars. Just like China follows what former Financial Times editor Mr Crowther noted in his book "an outline of money “if a purchaser is someone who want D-marks in order to pay for German exports, the fact that he can get his marks cheap is equivalent to a reduction in the price of exports; it will stimulate sale in exactly the same way as an ordinary depreciation of the exchange rate” (Crowther (1951) p.260). The US has the best product in the world, the "US dollar". The only problem with this product is its fixed price as seen through the IMF fixed cross rates. For example On the 30th of March 2018, the Sterling pound value to the US dollar was £1 equal to US$1.404. The Euro value against the Sterling pound was £1 was equal to €1.140 while against the US dollar it stood at US$1 to €0.81169. By dividing €1.140 by €0.81169 it gives the cross rates of 1.404. When looking at the North Korean Won its Sterling pound value stood on the same day at KPW1,263 while its US dollar value at KPW900.69 giving a cross rate of 1.403. For the Japanese Yen on the same day the JPY149.067 for the Sterling pound manifested and JPY106.185 for the US dollar giving a cross rate of 1.404. The same picture is seen in the Indian Rupee INR65.06 per US dollar against INR91.36 per Sterling pound to give a 1.404 cross rate. The Canadian Dollar CAD1.288 per US dollar against CAD1.809 per Sterling pound to yield a cross rate of 1.404. The Ethiopian Birr ETB27.56 per US dollar against ETB38.69 per Sterling pound gives 1.404 as a cross rate. The Chinese Reminbi CNY6.272 per US dollar against CNY8.812 per Sterling pound gives a similar cross rate as all currencies across the world do. The question is do all money markets across the world have day in and day out the exact liquidity of Sterling pound and US dollars to reflect the exact exchange rate between the UK and US as reflected in the IMF fixed cross rate system. The IMF fixed cross rates act like a tariff on the US dollar. If the US is to take on China she has to move to free floating cross rates based on actually liquidities existing in each nation's money market. In case in point was noted by the IMF Managing Director “Mr. M. Gutt at his Harvard University address on “The Practical Problems of Exchange Rates” on the 13th February 1948, where the indirect exchange rate of the US dollar to the Sterling pound was £1 per US$2.6 as US$1 equaled 600 Lire and £1 equaled 1,560 Lire, while the direct Sterling-US dollar rate stood at £1 per US$4.” (The Practical Problems of Exchange Rates cited in Tew (1967) p.79)Americans found it cheaper to buy goods from the UK via Italy. Italy’s restricted money market liquidities against its traded goods with specific trading partners provided certain volumes of foreign currencies which did not duplicate the fixed cross rate position found in London’s money markets. Britain objected to Italy’s position as Italy was gaining US dollars at the expense of the Sterling Area gaining those US dollar inflows. This pushed the already delicate Sterling Area’s balance of payments with the US Dollar Area into a precarious condition.
    That means the value of the US dollar between markets will vary and currency arbitrage should equalise quotations between markets.
    What this also means is US products under a free floating cross rate system would equally compete with China at the price level, hence enhancing US production and capacity to get back her US dollars.
    For example The picture that emerges, in a free floating cross rate system for example, may see Country Z having trade surplus with Country J as it uses Yen to convert into Country Z’s currency the Kwachas to buy copper. This creates an exchange rate of ¥1,000 per K1 as Country J uses her Yen to purchase Kwachas, Country Z’s national currency. Country Z buys very little from Country J in relation to what Country Z exports to Country J. To this, Country J uses the purchased Country Z’s Kwachas to buy copper, against which Country Z accumulates Yen in its market as the Fund as noted in Article I of the Fund Agreement is, “to assist in the establishment of a [multilateral] system of payments in respect of current transactions between nations.” Although the exchange rate in Country Z for the US dollar, based on Country Z’s market liquidity may be K8 per US dollar, in Country J it may well be ¥200 per US dollar as Country J trades more with the United States than Country Z.
    If a citizen in Country Z wanted to import an iphone from the United States pegged at US$500, it would be cheaper to buy the iphone via Country J, but this would in turn affect market liquidities in both Country Z and Country J money markets and hence exchange rates as exchange arbitrage operations occur. The US$500 iphone in Country Z in Kwacha terms based on its K8 per US dollar rate would cost K4,000, but through Country J the cost of the iphone would be ¥100,000 at ¥200 per US dollar, being through Country Z’s Kwacha/Yen exchange rate at ¥1,000 per K1 be worth K100, which is equal in US dollars based on Country Z’s US dollar/Kwacha exchange rate at US$12.50. At US$12.50 per iphone the United States would be on an equal footing to deal with another country called China with its cheap exports unless China’s cross-rates are lower in the countries China/United States/Country Z’s exchange rate configurations.
    It would then be a question of quality and finding the best value in currency arbitrage operations.
    The United States would still get its US$500 disregardless of the value step up or step down and the problem of external disequilibrium is addressed provided each country settled its exports in its national currencies. The US can take on China.
    - Elizabeth Pula Aug 3, 2019
      
      RE: your-"The only problem with this product is its fixed price as seen through the IMF fixed cross rates." and your: "The United States would still get its US$500 disregardless of the value step up or step down and the problem of external disequilibrium is addressed provided each country settled its exports in its national currencies. The US can take on China."
      
      1. You sure explained the FX processing very astutely. I could never do that, as I don't have that skill level. AND, I sure appreciate the depth of your explanation. I do think there is a significant problem based on "TIME" factors that then affect the "VALUE step up or step down" etc.
      
      2. The "loss of VALUE" is the real issue, as is sustainable "parity of multiple currencies" not just for land-locked consumers in specific nations either. I'm working on writing up an explanation of sorts that I will continue as a reply to you here, later.....
      3. In the past, TIME factors were worked out sometimes with less, and sometimes more RISK factors for the citizen (I'm just going to refer to US citizen here, and just the initial effect on consumption by the citizen as a "consumer" and totally powerless to affect any time, value, or purchase-parity factors in the money exchange and flow process)-
      - David Punabantu Aug 3, 2019
        
        The question of value can be seen in the definition of imperfect competition. Look closely at the definition of Imperfect Competition. It assumes through Say's Law that "supply creates its own demand" that a firm produces 10 tins of fish a day at $10 each. The firm will expect through the Theory of Rationale Expectations $100 a day. Therefore the ten tins have to be sold per day to get $100. Thus $10 per day per tin out of 10 tins produced per day is the perfect price. But then the next day only five tins are sold. The firm expects $100 so the price of each tin now costs $20 meaning the five sold tins raises $100. The remaining five tins on the shelves are valued at $100 meaning a profit. So the $20 per tin is an imperfect price. Thus when you buy one tin of fish you are paying for the remaining ones on the shelves. The shop looks full of unsold tins but in reality they have already paid for. What does that mean? Human perception sees a "profit" but through economic perception that "profit" is the cost of uncollected yet sold goods. If prices rise too high and demand drops viability of a firm is threatened. Then you discount which means a tin may cost $1, a monopolistic price. This is seen on days like Black Friday meaning it is just to clear stocks and reset the price system while at the same time reigniting Say's Law. Firms have so much sales that they make enough money to be in the black in accounting terms for the whole year.
        
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      - David Punabantu Aug 3, 2019
        
        Time is important in describing economic system and thus the density of value. US$500 of today is not the same as yesteryear. But one approach is to look at budgets. It is always seen in budget days that a budget is always "X" amount of the GDP over a budget period usually one calender year. Let's put it at 40 percent. Therefore if 40 percent was to be extracted monthly over a year, you need a tax rate of 3.3 percent per month to collect 40 percent of the budget. If a budget was to to equal 100 percent of the GDP then the weighted tax is 8.3 percent per month to equal 100 per cent over a calender year.
        But if taxes are say 30 percent per month then in 3.6 month the entire GDP would be collected meaning the value of money would diminish. A calender year thus shrinks to 3.6 months or roughly 8 days being equal to one month. What this basically means is that over a calender year an economy will go through 3.3 budgets as government collects spends, recollects, re-spends, recollects the budget in a cyclical pattern. In effect government spends the value of your income before you earn it. When you do earn it, it buys next to nothing. In effect taxes above 8.3 percent monthly is much like Keynesian economics in which governments print money, except this time the printing is recycling. I hope this help from one point of view. Then the other side is in States that taxes are well above 8.3 percent but are ok brings in the issue of spending taxes in the right sectors at the right time and right way to maintain the link with the private sector production.
        
        Elizabeth Pula Aug 3, 2019
        
        David, I sure will review Imperfect competition, and Say's law. Thanks, especially for your comments on "density of value"- great context.
        
        Here's what I have been able to work up to further discuss your first comment: " IMF fixed cross rates etc..."
        
        I finally conclude with a philosophical problem for political economic dynamics.
        
        Here goes:
        
        Money flows are a dynamic process, and I really emphasize the "dynamic" aspect of the process. In the past, time factors were more gradual, the effects of exchange rates were only immediate, based on specific large trade shipments, supply and demand effects in REAL time. If there were imbalances, yes it took extended time for the (I'll use the word "comptrollers") to react and implement changes, whether to change interest rates or political leaders at the national levels to then negotiate trade "deals". etc etc. The biggest asset for the comptrollers was the "float" in the time that it took to handle the recording and confirming of the monetary effects based on banking reports, time intervals which gradually shortened as more computer based data systems were utilized. "Float" and the time spans to confirm transactions allowed a lot of (here I will use a colorful label intentionally-) "slop" that benefitted specific banks, companies, groups, investors, etc. etc. However, the benefits and incremental losses were still in the realm of "real time" activities. Today "float" and "slop" really is being compressed out of the dynamics of all the systemic operational activities for monies flowing on all the hierarchical banking transactions levels.
        
        There are a number of systemic issues in the dynamics of the financial activities realm that are dangerous factors for the global political economy from the U.S. human perspective, (and perhaps our real physical environment too).
        
        1.The advent of HFT up to probably over 70% of
        trade actions on the US stock exchanges.
        
        2. The undocumented BLACK MARKETS globally.
        
        3. The documented loss of essentially 50% of public owned corporate entities, no longer traded on the Financial Exchanges in the US.
        
        4. Monetary transaction is rooted in only one of two actions:
        
        either
        
        a. individual exchange activity with good intent- of a tangible or non-tangible product/commodity/service that represents publicly recognized and acknowledged good or “value”, to varying degrees of enhancement.
        
        or
        
        b. individual exchange activity with bad intent- a tangible or non-tangible product/commodity/service that negates publicly recognized and acknowledged good or “value”, to varying degrees of destruction.
        
        A human being can not create anything from nothing. Neither can any AI operating system. Both can examine black holes to infinity, with specific man-made tools.
        
        For the financial activity realm to be a positive dynamic, or approach a positive dynamic function, a tangible measurement of good must be a measurable positive result regardless of any specific time constraints, of any functional activities within any specific financial realm.
        
        David Punabantu Aug 4, 2019
        
        Yes you are absolutely correct and on the right path. The same is seen with Albert Einstein's work in looking for a set of properties that remain valid disregardless of the situation. Economist's prior reason is subject. Take a car moving at 4 miles per hour. You notice the grass, an ant on the side walk etc and what you see is what you base your economic policy on. Next you travel at 500 miles per hour. You will no longer be able to see the ant but the huge billboard sign and that what determines your economic policy. In both cases the policy is subjective. What you need is a policy that remains valid at 4 or 500 miles per hour. You are definitely right on the "dynamics" part. Even Albert Einstein who ushered in quantum mechanics in the end complained that it was not the real thing. Experimentation proved it correct but he just did not feel it was real although main stream science accepted it as absolute. Einstein's main complaint was that he did not have the available maths to sort out the problem. A book "Mathematics and the search for Knowledge" by Kline Morris explains this well. What I believe is that the "dynamics" have more to do with the mathematical systems that set up the casual statistical laws which are expressed in data. We express most economic data in a decimal system, but does data count in a decimal frame work? If it counted in binary but was expressed in a decimal system it would appear to rise rapidly. Even time has its own counting system. 60 minutes make a hour, 24 hours make a day and not 10 hours.
        What I have learnt is that in statistical data there are only two active variables. These interact to produce the first generation of data. This first generation interacts to produce the next generation even greater in number and so on. These generational figures are ghost variables only becoming real at one point in time. There arw characteristics of systems and not the properties of systems. There are about 9 set equations that determine the casual laws of statistical data but all data can be generated from the "adam and eve" variable. Understanding the dynamics of numbers is important in which the signature and manifestations of economic and financial phenomena can be understood. Time displacement of economic phenomena is common depending on the size and sensitivity of an economy to certain variables. In one case an event in one economic system appeared 15 days later in another economic system. The event was still the same event. In another economic system it took two and a half years to appear and its manifeststion had changed but the margins were the same. This event then reinfected the 15 day affected economic system. You are absolutely right "dynamics" is important if economics is to evolve. Remember there was a time people believed the earth was flat and if you went far enough you might fall off, or the sun went round the earth. As long as we express data in a decimal system the sun will in economics always go round the earth. That is why it can be understood why Albert Einstein said if he was not a physicist what profession would he have chosen. He said a "watch maker" refering to the many gears with different time counting systems inside a watch on which just one aspect is the face of the watch, while the inside is his famous saying "ghost in the machine" refering to a multiple system of counting all interacting. Remember these counting sysyems are not fix they do change from one counting system to another at certain times.
        
        Elizabeth Pula Aug 4, 2019
        
        Very nice and thoughtful explanation on the time issue. Today I happened to notice this little article:
        https://www.investmentmagazine.com.au/2019/07/iif-investors-exposed-to-leveraged-loans-and-clos/
        
        here's the ending quote from it:" Estimates by the National Association of Insurance Commissioners suggest that over US$120 billion of CLOs are held by US insurers, with life insurers accounting for 77 per cent of that. Similarly, a new US Federal Reserve Bank study suggests most Cayman-issued US CLOs (over 75 per cent of the US CLO market) are held by US investors, with holdings concentrated in insurers, mutual funds, and banks."
        
        I think that "re-infection" is gonna be a big problem, regardless of ebola anywhere.
        The seminar that is going to be at the end of August will address issues of "ratings" and "junk-bonds status" "corporate debt". Those aspects are the slightly hidden, and only part of the on-the-books, and somewhat accessible off-the-books data. When you acknowledge the unknowns based on the real black-market, based on the off-the-books financial maneuvering it could get pretty scary for maintaining USD stability at all.
        
        I really like Bill Blain's "the fifth horseman..." excerpt that I read on ZH. It's hilarious. AND sums up the scenario in a very appropriate manner, which unfortunately for the common citizen sure really ain't. (https://www.zerohedge.com/news/2019-08-03/hells-top-banker-explains-how-destroy-global-economy)
        
        Roubini has warned about CLO's and other aspects that will probably get addressed in that meeting, which of course I can't attend. He cautioned about systemic problems quite a number of years ago. They have not magically disappeared into smoke, or into the wild blue yonder either.
        
        I hope I'm not just witnessing a real death wish in action.
        
        Remember: over 75% of US CLO market is Cayman issued CLO's and who holds investments backed only by those CLO's. 25% of US investments consists of what? How many businesses has the S&P decreased by? What is the increase in US exports, trade deficits? Over 50% of US GDP is based in military industry spend, as US severs alliances, what happens? As Russia, European Union, China circumvent using dollar what happens? It ain't fun and games for those caught in the net.
        
        Bill Blain mentions in that segment on ZH: "Effectively we’ve split the world into two economies. A real economy which is sad, miserable and deflating, and a financial economy that’s insanely optimistic, massively inflated and ripe to pop on the back of free money."
        I see that decoupling. The data based financialization has created an independent and artificially moated self-serving economy. This independent economy has no access by the human beings not able to engage in the financialization process, as a "stakeholder" directing the actions.
        A person, such as my self, a retiree, and in fact any "employee" still working is only an onlooker and is totally powerless to affect any action or activity to change the dynamics of the financialization process.
        
        The only options left are to circumvent or attack. Cooperation has so proven to be just a "blind" based on untruths of the "stakeholders". Those options are further mired with the scaling factors of politics and power, especially on the state levels.
        
        The labeling of "populism" is causing significant mis-messaging, which opens many doors to the problems due to propagandizing different strategies to control populations. Without control of populations, a state cannot maintain any level of social contract and fight failure as a state.
        
        Timing is very critical right now, to maintain even the semblance of balance within a deteriorating political economic system, that is perhaps corrupted by not even real deliberate intent. The functional activities that have been corrupted need to be corrected as soon as possible, by focused, knowledgeable leadership. My opinion is we don't even have 5 years to elicit significant changes to eliminate the 2 major divisional economic operational systems.
        
        Presently, my opinion is that the Market indexes are only reflective of pricing strategies. And that is it. There is absolutely no valid reflection to global business values or activities in the real economies globally, and perhaps nationally.
        
        David Punabantu Aug 11, 2019
        
        Spot on!
        
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        David Punabantu Aug 5, 2019
        
        It has been very rewarding discussion. Thank you for all the insight. Arbitrage operations can be very complex. The US dollar has been abused and it must be remembered that money can act as both-money and a commodity. Take a Chinese firm operating in the US. If it is to remit profits to China, Chinese firms should first take their US dollar profits in the US and convert them to Chinese Yuan, and then remit (Chinese Yuan) to avoid the Triffin Dilemma. If British firms operate in the US they remit the Sterling pound and so on. The supply and demand of both currencies within each corresponding money market in the respective countries sets up a price. This price can be neutralized through currency arbitrage operations directly between the nations or proxy nations in trade which finally pass through China/US through a series of national currencies to get the highest return as was the case with the "US$500" example. Within all this is the price of actual commodities in trade. You may find the Yuan/US dollar rate so high that it prohibits the purchase of Chinese goods. In effect this makes US goods cheaper until the FX rate changes.
        In this we arrive back to the basic fundamentals of a market system. Economics 101 and the underlying axioms as I have stated earlier. That axiom remains in tact as Country X has Currency X that is solely used to purchase Commodity X. It is not under the market doctrine Commodity X being purchased by Currency Z. If Currency Z wanted Commodity X it has to convert to Currency X first hence an exchange rate price emerges. It is within this frame work we get back to what the former editor of the Financial Times Mr Crowther wrote in his book " An Outline of Money" “if a purchaser is someone who want D-marks in order to pay for German exports, the fact that he can get his marks cheap is equivalent to a reduction in the price of exports; it will stimulate sale in exactly the same way as an ordinary depreciation of the exchange rate” (Crowther (1951) p.260).
        The key here is the same D marks for German goods. US dollars for American goods, South African Rands for South African goods, Chinese Yuan for Chinese goods, Russia roubles for Russian goods and not US dollars as the US dollar belongs to the US. In other words the country of origin of the goods must be paid for in the same currency in which the goods origin and let price determine the degree of convertability and thus the flow of value through money. Then the flow of value against the arbitrage potential becomes reflect both as money and it as a commodity against the final purchase of the product in the national currency in which the goods originate.
        
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        David Punabantu Aug 4, 2019
        
        The situation looks bleak. But one thing that has to be realised is that the USD economy is beyond the geographical confines of the US. Good "states" and bad "states" exist simultaneously. US dollar deficits and US dollar surpluses across the US dollar economic universe exist simultaneously as manifesting in countries. Under Tensor Analysis "up" or "down" , "good" or "bad" are human notions. Tensor Analysis only sees movement. The question is do we push the deficits to other geographical regions while allowing the surpluses to manifest and accumulate geographical in the US? Remember the "US$500" disregard less of the exchange rate operation. If they are millions of these "US$500" acting on China's reserves, and Japan's all leading to purchases from the US what then of US dollar stability. Stability must be redefined as a free floating cross rate system. You are absolutely right on the dark economy and it is the manifestation in the hindrance of the flow of value creating growing negative regions. For example, take the London Metal Exchange (LME) that handles 90 percent of the world's base metals. The LME in one day can sell 100,000 tons of copper at say US$1000 per ton. Hence the price of US$1000 per ton is based on a supply of 100,000 tons of copper. Yet Country Q may have only contributed 1,000 tons to the 100,000 tons of copper. Thus the US$1,000 per ton is an aggregate price of many copper producers who produce copper at different rates and at different costs and have different ore concentrations. The copper producers have different national currency liquidities hence different values can be assigned to the copper based on each nation's value profile. These national currencies are all ignored. This means the underlying axioms to the supply and demand doctrine are ignored, hence value flows will be hindered. As noted, Adam Smith's Supply and Demand doctrine talks of Country X with Commodity X with Currency X. It is the supply of Commodity X and it's demand bought by Currency X that creates a price. If Country Y wanted Commodity X then Country Y would have to change its Currency Y into Currency X to buy Commodity X. That is why a Euro cannot buy anything directly from the US until it is changed into a US dollar. A US dollar cannot buy anything from the EU until it is changed into a Euro. But on the LME for Africa, Latin America, Asia minus China and Japan the US dollar buys directly their commodities by passing national currencies and thus violating Adam Smith's market doctrine. This value is directly added to the US dollar universe and not the currency of Country Q. As Country Q demands US$1,000 per ton of copper it is stating it produced 100,000 tons which is -99,000 tons (MINUS 99,000 TONS being MINUS US$99,000,000 and physically US$1,000,000 whose value is also is minus US$99,000,000. The gap is the manifestation of the crisis in value. How can value flow back to its source through currencies or any other financial product? The same crisis applies to the IMF fixed cross rates. So value does not flow according to market dynamics thus it is creating a growing dysfunctional system. Stability may well manifest for the US dollar as it enters the US economy. Outside that its value would still be "stable" but vary from place to place and time to time in a free floating cross rate system depending on each countries money market dynamics. Everything exists simultaneously but value must be allowed to flow to restore the equilibrium. The greater the potential difference between market values the faster arbitrage operations occur.
        
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        David Punabantu Aug 4, 2019
        
        Time isn't on our side. USD stability is based on the notion of one value. The USD economy is not confined to the US geographical. In certain areas it appears as deficits and other areas as surpluses. It is in both states at the same time. When assessed through Tensor Analysis, good or bad, deficits or surpluses are irrelevant but just a change has been recorded. Surpluses and deficits, good value or bad value are human notions. Remember the "US$500" disregardless of the country of origin. Imagine now thousands of those interacts chipping away at China's US$1 trillion plus reserves and Japan's US dollar reserves buying US dollar goods instead of ending up in US dollar treasury bills. All that value returning geographically to the US would have a definite impact. Thus the black economy boils down to as your so rightly put it price. The doctrine of supply and demand is straight forward. But it has underlying axioms. Country X with Commodity X with Currency X. It is the supply of Commodity X and it's demand bought by Currency X that creates a price. If Country Y wanted Commodity X then Country Y would have to change its Currency Y into Currency X to buy Commodity X. That is why a Euro cannot buy anything directly from the US until it is changed into a US dollar. A US dollar cannot buy anything from the EU until it is changed into a Euro.
        
        Elizabeth Pula Aug 4, 2019
        
        Thanks for the book suggestion and your analysis. RE:"The greater the potential difference between market values the faster arbitrage operations occur." I'm just going to run a few lines on "arbitrage". The word makes me think of German-"Arbeit" VS rage. And that's pretty much the platform that all the scenarios from one extreme to other are playing from. Now, triangulated arbitrage really reveals more of the imbalances that are also at play with the international currencies. Especially with Russia, China, and Iran moving to take-away payments in the USD.....Hopefully the negatives for the USD won't zoom up to fast.
        
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Robert Wolff Aug 3, 2019

Not complicated at all. The Chinese People are advancing towards equal economic status to the West, and we have now entered a Win-Lose game.

I.e. the Chinese People cannot advance socially and economically without denigrating the status of Western individualism.

So this struggle is not just economic (ability to buy goods and services by an individual and his family, to please them) but lends towards a horrific future in which the economic success of China can actually demand the economic failure of the Western family, and cause its demise as the power of the Eastern family experiences its power to dominate and survive, politically, within its own State.

The destruction of the West by the East, or the East by the West, reminds me of the errant absolutism of power.

I.e. in the Vietnam War, peasants were not concerned with which side won, only that the conflict over which faction ruled would end, and they could go back to life as usual.

When will this end? That will be determined by the "Heads of State", subordinate to national institutional economic interests.

YGIAGAM
- Elizabeth Pula Aug 3, 2019
  
  Balance of power VS control. Balance of state power VS individual power. The historic dynamic of societies. What kind of social contracted societies do we want? Do we even have any rights to choose what, where and how? AND how do we get what, where and how?
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Jay Kay Aug 3, 2019

Kevin 007,

Dude!

Mate!

You were set up and stabbed in the back by a cabal of Fabian Globalist-Communist operators hiding in the innermost sanctum of your cabinet. You were fixed up from day one... How did you not see that coming? Really? Did you not know who these people were when you appointed them? A background check might gave been a good idea...?

As for China, the fact is that as the parasitic Chinese economy accelerates it's collapse, power in the CCP will be redistributed at the point of a knife or out of the barrel of a gun... At some point China will fracture or shatter politically, or the Communists will launch yet another slaughter where they murder tens of millions of their own people - this time probably using nukes rather than bullets.
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Godfree Roberts Aug 2, 2019

"Can the Communist Party of China both deliver on the “Chinese Dream” and maintain absolute control over the country?" Since surveys show that 88% of Chinese trust the CCP and 95% of them support its policies, the answer would have to be, "Why, yes."

Can the Capitalist Party of America both deliver on the “American Dream” and maintain absolute control over the country? Since surveys show that 38% of Americans trust their government and 32% of them support its policies, the answer would have to be, "Why, no."
- Jay Kay Aug 3, 2019
  
  US prosperity flows from the ingenuity, drive and resilience of its people, not the machinations of the government.
  
  Government is a necessary cost of a large democracy coordinating it's disparate and far flung peoples. Elections are a democracy's every so civil means of fighting a flat out proxy civil way, and the essentially peaceful conduct of Western elections is a testament to the common sense of the people that live in Western democracies.
  
  Modern China is an invention of traitor Globalist-Communists who sold out the West, it's people, it's technology, it's manufacturing base, it's markets, its finances, and it's security - to their CCP Mates in China. Even the US Navy was used to ensure that Chinese trade had freedom of the oceans.
  
  That game is over.
  
  The US traitor Globalist-Communist Deep State stands exposed. Arrests and executions for treason will follow in good time.
  
  As for a China, it's parasitic links to the lifeblood of he West are being broken down on a daily basis. The army of Chinese spies in the West are being very closely monitored. Smile!
  
  The parasitic China economy is going down. Nothing can stop that.
  
  The CCP, instead of holding elections to allow the peaceful expression of political forces building up in China, will do everything to hold onto power. The nation of China, like china ceramic, will resist the application of force without bending - until the moment it snaps or shatters.
  - Elizabeth Pula Aug 3, 2019
    
    I like your:"Modern China is an invention of traitor Globalist-Communists who sold out the West, it's people, it's technology, it's manufacturing base, it's markets, its finances, and it's security - to their CCP Mates in China."
    BUT, I think it's more like modern China is a really dynamic and strong autocratic, Communist state, with some corruption problems. The US traitor Globalist- elite opportunists, with a little bit of help from their also elite opportunists contrary to the real CCP dogma- have allied and sold out the majority of citizens in the West, it's people, it's technology, it's manufacturing base, it's markets, it's finances, and it's security- AND now the Russian, Indian, South American, and other worldwide US traitor Globally elite opportunists are shoving, not just pushing for more of the take from the really big and mean dogs. So, unfortunately, the hive gets pulled down from the tree, a lot of all those mean dogs get stung, and all the members of the hive fly off, or collapse, and maybe devour what's left for a short interval. Then the workers start working all over again to build a new hive, usually pretty much like the old one.
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Elizabeth Pula Aug 2, 2019

I think you are perhaps referring to the wrong country:"now the country must worry about being gradually cut off from all these sources of growth if decoupling becomes a reality". The country that must worry about being immediately cut off, even quicker than it already has been for over a year rather effectively, from all these sources of growth in CHINA, INDIA, and a few other nations globally, AS decoupling becomes a more evidential reality is ????? And it sure ain't China.
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Elizabeth Pula Aug 2, 2019

"There has been much discussion about why US President Donald Trump needs to temper his trade war with China and secure accommodating monetary conditions to support his re-election bid in 2020."

Hey, there's a few more, MORE IMPORTANT reasons why he needs to temper his trade war with China and secure accommodating monetary conditions MOST SIGNIFICANTLY that have absolutely nothing to do about supporting any one's re-election bid in 2020. So far, the only activity that the US Federal administration has been focussed on is USING and MANIPULATING public emotional reactive behavior to win an election at the total risk of the entire US economy.

I forget who said or wrote the following, but I sure know it ain't any of the guys throwing the power punts right now. Somebody needs to start wandering a bit more on task:
"When wandering, leaders establish a climate of trust by modeling and facilitating interdependence of others. This is done by nurturing openness, involvement with others, establishing personal satisfaction to reach high levels of commitment to excellence. Sometimes it is necessary to make yourself vulnerable. Leaders create conditions of interactions where people can count on one another. They develop cooperative goals and role so joint efforts can be acknowledged. It is necessary to support face-to-face interactions, and sustain and build situations for interaction so relationships can be established to link the human network. It is necessary to develop the social awareness and social skills of the group so there is mutual success."

China is maneuvering those talking points a whole lot more skillfully to at least their benefit.
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Elizabeth Pula Aug 2, 2019

And just who's really getting what on the back end? It sure isn't the US as a nation is it???

"I believe in being paid on the back end and getting a lot if it sells a lot," he said. "I believe in compensation for success, not just gauging some company up front." a quote by Donald Trump - Cincinatti Enquirer, 1/31/2004 In reference to negotiating the deal for his book. He is more concerned about future royalties and licensing rights in the future than just the money he gets up front for first sells of the book.

How does that strategy transition into any strategic plays on a national level?
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Elizabeth Pula Aug 2, 2019

It sure does, and do remember that a China man wrote the Art of War, not some mouthy bully that doesn't know the difference between a hole in the ground and .....
- Jay Kay Aug 3, 2019
  
  The mouthy man wrote a best selling book called, The Art of The Deal, which was based on his exceedingly successful application of the principles taught by Art of War...
  
  Traitor Globalists and Chinese spies in the West would do well to study the Western classic literature of Bugs Bunny, to whom President Trump bears a strong spiritual resemblance.
  
  Example:
  
  'I know this breaks the laws of physics, but I never studied law...'
  
  [Bugs Bunny]
  - Elizabeth Pula Aug 3, 2019
    
    This comment was removed by a moderator. Replies to this comment may also be deleted. Please note that we moderate comments to ensure the conversation remains topically relevant. We appreciate well-informed comments and welcome your criticism and insight. Please be civil and avoid name-calling and ad hominem remarks.
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Elizabeth Pula Aug 2, 2019

That's not too bad. The high road with the paths of least resistance.
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Elizabeth Pula Aug 2, 2019

Do pray that China' economic model for the future beats this one:
https://www.nytimes.com/2006/02/06/technology/now-for-sale-online-the-art-of-the-vacation.html

Yes, you kind'a have'ta read a bit between the lines, and I don't want to make myself perfectly clear, cuz then it wouldn't be much fun at all.

That old article from the NYT should be a little bit revealing about who's not the least bit concerned about high level of state investment in public infrastructure and a few other national goals either.
- David Punabantu Aug 11, 2019
  
  The IMF executive has its own agenda. When examining the Jamaica Accord it was the Interim Committee of the Board of Governors of the IMF’s fifth meeting held in Jamaica in January 1976 that set to resolve the on going 1960 Bretton Wood crisis. Here the IMF Board of Governors’ fifth meeting “set the seal on the Second Amendment of the IMF articles that limited reforms to those areas on which consensus had been reached [in an attempt to correct the crisis.] But on the central aspect of reform-the exchange rate regime, convertibility of official balances and the reserve system-the Jamaica agreement virtually accepts the fait accompli that had followed the breakdown of the Bretton Wood system.”
  The Jamaica reforms basically outlined a believed path out of the Triffin Dilemma that was responsible for global crises.
  The answer to the Triffin Dilemma that the global economic and financial universe faced was, “continuing with the prevailing situation with the role of the US dollar reduced, with an increased role for other currencies and private financial markets, and with all governments trying to reduce their exposure to exogenous events; or moving in the direction of regional monetary blocs, which would each work out their own relations with other monetary areas; or advancing to a better-organized world system”. The IMF board made certain recommendations to get away from the Triffin Dilemma. Here the US economy ran into a deficit as nations held US dollar reserves, meaning less cash to run the US economy. In effect a credit squeeze which inturn affected the purchasing power of the US dollar negatively. This in turn caused the US dollar to devalue affecting the real purchasing power of US dollar reserves of other countries. Thus the US dollar moved from a fixed exchange rate to a floating system which is a continuous depreciation. As noted in 1993 as seen in the EU, an expected ten percent devaluation in five days has an expected return of 5.5 percent or more than 5,000 percent at an annual rate.
  It is this depletion in value of the US dollar that the IMF board wanted to stem termed as "exogenous effects" as a result of the Triffin Dilemma. The IMF board proposed the "the role of the US dollar reduced, with an increased role for other currencies and private financial markets, and with all governments trying to reduce their exposure to exogenous events", hence the Euro was envisaged. But for Africa and other developing countries the IMF executive implemented Structural Adjustment Programmes (SAP) which was to liberalise foreign currency policies to allow the free flow of US dollar reserves held in developing countries back to the US to reduce the Triffin Dilemma effects. This in turn made followed policies to open markets to foreign goods so that profits could be externalised back to the US. This consequently meant US firms going all over the world selling goods to get their US dollars back. Hence the term "globalisation". Thus the IMF executive did not want to de-dollarise the global economy to preserve the interests of those who lent them the same US dollars. For Africa under the Jamaica reforms, the monetary blocs such as the African Union (AU) have been formed but its focus is on commodities, while the Europe has formed the European Union (EU).
  These BEST LAID PLANS assumed that the US dollar would end up in the US. Unfortunately they did not envisage China's rise and the US dollars ended up in China. And the problem persisted.
  Yet with the EU hit by the 2008 crisis, huge geographical monetary blocs are not immune to the global melt down. Hence the interpretation of monetary blocs within the mandate of the Jamaica Reforms basically falls on each national currency participating in global trade and establishing exchange rates driven by currency markets and trade with its trading partners is paramount, rather than the geographical interpretation of monetary blocs being associated to continents.
  - Elizabeth Pula Aug 11, 2019
    
    Those historical decisions that you have referenced have been so important in the effects for the balancing of Power VS Value, and real Understanding VS Myths.
    Understanding just what the best plan for the future may be is the real battle globally. My opinion is that: The political focus in the US is distorting conceptual understanding with strategic political intent to deliberately create more distortion of understanding, especially for understanding of real economy, and financial issues.
    
    That paper from the IMF does present certain aspects of activities of financialization, the whys, the goals, results with expected results and problems from differing strategies.
    
    Money is really just the exchange medium, that reflects what is valued or needed, based on sourcing, and development from one form to another. However, the global strategic and economic landscape is undergoing a fundamental change because of the tolerance of global business platforms that are rooted in theft and unprincipled dishonesty, which is destroying any social contracts that nation's have established in their differing constitutions, and laws. The decoupling is more fundamental than any secondary military or political conflicts between any of the nations. All nations have some sort of acknowledged principled constitutional agreements that allow human beings to interact and exchange goods. The fundamental change is the change to no longer exchanging good, but based in telecommunication platforms that were designed to never exchange any goods what so ever. The change is based on the fundamental conflict that there is no balance for operational business systems rooted only in activities based on "no production" of any material goods, and "no exchange" of any material goods. The conflict is really based in "Access" versus "No Access" to only strategized information obtain primarily by theft, and deceit. The fundamental change is contrary to every principled action of human contractual societies with all their diversities of applied concepts and interpretation of what can be understood as GOOD, and GOODWILL.
    
    The concept of "good" is fundamental to all national groups within all of their diversities. The concept of "good" is being challenged by the applications of "bad", with deliberate strategies based in "bad action" rather than any concept of "good action". That is the critical decoupling for political leaders to examine and effectively change within their legal processes to allow "good" business transacting to occur.
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