Any Austrian/Sound Money Financial Advisers?

[Zippyjuan]

The entire purpose of exporting is so that a country can import. Thus benefitting both parties. If one country simply chooses to export without importing, all they get is inflation while importing country get all the benefits. This is really no different then a subject country paying tribute to its ruling country.

We do export to China- we just buy more from them than they buy from us. Why do you think they would release the peg on their currency if the dollar became devalued? It would harm themselves and not offer them any benefits.

Exports to China have been soaring.
http://www.businessinsider.com/chart...o-china-2011-2

[low preference guy]

Not saying inflation won't happen but not hyperinflation.

Quoted for the record

[Zippyjuan]

Quoted for the record

Cool. Do you have a time frame for when you think "hyperinflation" may happen? People have been saying that ever since the start of the economic crisis (that I noticed- it may have been going on long before that).

[Mark37snj]

The Russians spent their economy into oblivian, the same will happen to the US if Ron Paul doesn't get elected President. It may happen before the 2012 election if Congress does not put a halt to all this spending, and it's not looking good right now. I believe I have settled on converting my US currency to Canadian currency. Their currency should remain relatively stable when the dollar tanks and if for some reason I have to make a run for their border to cash in it is not that far away. I don't want to deal with commidity brokers/dealers, stock markets, etc. Its too easy for the goverment to intervene and screw people. My goal is not to hold onto gold, its to cash in, convert when the dollar hits its low mark. Remember just because the dollar tanks and everything gets more expensive it will not effect your car loan or mortgage. They will be the same and some prudent moves and timing could drastically improve ones financial situaition.

[sam9657]

We do export to China- we just buy more from them than they buy from us. Why do you think they would release the peg on their currency if the dollar became devalued? It would harm themselves and not offer them any benefits.

Exports to China have been soaring.
http://www.businessinsider.com/chart...o-china-2011-2

Of course we do export to China. That is not the point, the point is that we import a lot more from China than we we export to China. Given this imbalance this is what we get vs. what China gets.

US - cheap goods and in general a higher standard of living
China - Inflation, loss of capital and resources. Also the jobs that are "created" are not real jobs in terms of creating economic benefit for the Chinese people, they need to be subsidized by the rest of the economy. IE like a lot of our government jobs.

Also once China de-pegs from the dollar they will be able to import more and consume more. Leading to a higher standard of living while at the same time lowering American's standard of living.

[Zippyjuan]

Of course we do export to China. That is not the point, the point is that we import a lot more from China than we we export to China. Given this imbalance this is what we get vs. what China gets.

US - cheap goods and in general a higher standard of living
China - Inflation, loss of capital and resources. Also the jobs that are "created" are not real jobs in terms of creating economic benefit for the Chinese people, they need to be subsidized by the rest of the economy. IE like a lot of our government jobs.

Also once China de-pegs from the dollar they will be able to import more and consume more. Leading to a higher standard of living while at the same time lowering American's standard of living.

Actually if China depegs it will HELP the US in the long run. That is why we have been trying to get them to do so. As I mentioned, their exports to us get more expensive and our exports to them become cheaper- this is how free trade is suppposed to work. The currency is supposed to be allowed to fluxuate and that helps balance trade. Then our exports would rise (helping create more jobs here) and imports decline. China would then be importing more goods from the US and exporting fewer items to us. China is not losing capital or resources. Their trade surplus is providing them with capital they are using to aquire more resources and increase production. They have been experiencing some inflation but that is due to their economic growth. Demand for things are increasing.

[low preference guy]

Cool. Do you have a time frame for when you think "hyperinflation" may happen? People have been saying that ever since the start of the economic crisis (that I noticed- it may have been going on long before that).

Sure. 10 years to be safe. Most goods cost double what they cost now in 5 years, not including computers and such products for which technology is advancing rapidly.

[sam9657]

Actually if China depegs it will HELP the US in the long run. That is why we have been trying to get them to do so. As I mentioned, their exports to us get more expensive and our exports to them become cheaper- this is how free trade is suppposed to work. The currency is supposed to be allowed to fluxuate and that helps balance trade. Then our exports would rise (helping create more jobs here) and imports decline. China would then be importing more goods from the US and exporting fewer items to us.

US been able to import less at higher prices is good for us? No, this is bad for us and good for China.
US having to export more to China and consuming less is good for us? Another no, this is bad for us and good for China.
Also the main causes of our high unemployment is not because are currency is "too strong". Just look at Zimbabwe or any S America country that has experienced high inflation. The main causes of our high unemployment is the fact that we have the highest corporate tax rate in the world (we are pretty much neck and neck with Japan), high litigation costs of doing business, over-regulation and that the fact that we pay people to not work (unemployment insurance, welfare, food stamps, etc.)

China is not losing capital or resources.

Then please explain to me why China holds almost a trillion dollars of our debt.

They have been experiencing some inflation but that is due to their economic growth. Demand for things are increasing.

If you have read any Austrian economics you should know that economic growth does not cause inflation, increase of the money supply is the main driver of inflation. In fact economic growth means things get cheaper as people's productivity increases. Just look at the price of LCD TVs over the last 10 years.

[Zippyjuan]

Doubling in five years is not hyperinflation. In Zimbabwe prices were doubing on average about every 17 days- peaking at about every 24 hours. At the worst in Germany it was every two days.

Longer time frame, eh? A bit less confident about it "coming soon?" No worries. John Williams of Shadowstats said it could begin this year. You can search for his video if you want to see what he has to say.

[low preference guy]

Doubling in five years is not hyperinflation.

Of course. I didn't say that. There are two different predictions. Can you read? You attack positions I didn't argue for often.

[sam9657]

Of course. I didn't say that. There are two different predictions. Can you read?

Or reason? All Zippyjuan does is regurgitate what he hears on the MSM. Pretty sad.

[Zippyjuan]

Then please explain to me why China holds almost a trillion dollars of our debt.

That is because they have excess capital - not a shortage- and need to do something with it. Keeping it in dollars is how they keep their currency exchange rate pegged.

[Zippyjuan]

Of course. I didn't say that. There are two different predictions. Can you read? You attack positions I didn't argue for often.

Agreed. Sorry. Just took the opportunity to further indicate how sever hyperinflation is compared to more "normal" inflation. Doubling in five years is a more "normal" rate of inflation (though it is a bit high).

[sam9657]

That is because they have excess capital - not a shortage- and need to do something with it. Keeping it in dollars is how they keep their currency exchange rate pegged.

So why don't they just use that excessive capital to to buy resources and store them? or better yet buy up American companies? The fact that they lend the money back to us, which obviously will never be paid back means that they have waited labor and resources exporting to us. Thus we have benefited from the Chinese labor without giving them anything in return.

[Seraphim]

Very good advice. A big part of fiscal success.

4 words to live by: Live Within Your Means

[Zippyjuan]

So why don't they just use that excessive capital to to buy resources and store them? or better yet buy up American companies? The fact that they lend the money back to us, which obviously will never be paid back means that they have waited labor and resources exporting to us. Thus we have benefited from the Chinese labor without giving them anything in return.

They are using their capital to purchase resources. They are buying up resources and making investments all over the world.

http://economictimes.indiatimes.com/...ow/7155406.cms

BEIJING: Chinese investment abroad is expected to top 50 billion dollars this year as the country pumps more money into overseas energy , mining and agricultural projects , state media reported on Friday.

China -- which is expected to receive 100 billion dollars in foreign direct investment this year, up 11 percent on year -- wants domestic companies to spend more money overseas to help reduce trade frictions, the China Daily said.

That goal also fits with Beijing's stated aim of reducing the country's heavy reliance on investment within its borders to drive its economy, now the second-largest in the world.

Non-financial outward direct investment -- not including investment by banks, insurers and securities firms -- is likely to exceed 50 billion dollars compared with 43.3 billion dollars last year, Commerce Minister Chen Deming was quoted as saying.

China was the world's fifth-largest investor in terms of outward direct investment in 2009, the report said.

Investment overseas is expected to grow 10 percent year-on-year in 2011, the report said.

The gap between inward and outward investment is likely to close over the next five years as authorities make it easier for Chinese companies to invest abroad, vice commerce minister Yi Xiaozhun was quoted as saying.

The commerce ministry is expected to release guidelines next year that will help Chinese companies make the right investment choices abroad, it said.

[Zippyjuan]

Back to the original question I asked if will China let their currency rise against the dollar and how would that impact them. The comments in this article are from Chinese officials who expressed concern about its impact on exports and their own economy.
http://www.reuters.com/article/2010/...6860MZ20100907

BEIJING | Tue Sep 7, 2010 12:43am EDT

BEIJING (Reuters) - China must resist external pressure for yuan appreciation because a stronger exchange rate would take a big bite out of economic growth, according to a pair of senior government researchers.

Writing in the latest issue of the Chinese-language Reform magazine, Li and Yu also said that Beijing should enhance the yuan's flexibility if the euro depreciates -- in effect, suggesting that the yuan should be allowed to fall against the dollar in those circumstances.

While their comments do not necessarily reflect official thinking, they do underscore how many high-level economists in the government think that a strong currency could deal a serious blow to China when the global economy is still on shaky ground.

"If imports by the United States, Europe and Japan slow sharply and the renminbi appreciates strongly at the same time, the concentration of these negative factors will lead to a steep correction for our economy," Li and Yu wrote.

China lifted the yuan, also known as the renminbi, from a nearly two-year de facto peg to the dollar on June 19 and vowed to steer its currency regime toward greater flexibility.

But nearly three months on, the promises appear to have amounted to little. The yuan has gained just 0.6 percent against the dollar since the depegging, even if the pace of appreciation has increased a touch in recent days. <CNY/>

They have been willing to have a slow change in the value of the yuan to try to fight domestic inflation which has been rising, but resist larger changes which would lead to economic shocks at home.

[efiniti]

Hmm, sounds like we'll still get cheap Chinese goods for a while. The Chinese are cracking down on their population early.

Now time to start watching Germany.

[realtonygoodwin]

What about http://www.europac.net/ ? Surprised no one has mentioned them in this thread (unless I missed it)

[efiniti]

What about http://www.europac.net/ ? Surprised no one has mentioned them in this thread (unless I missed it)

If you have $25k lying around and aren't sure where to invest it I envy you! :P

[realtonygoodwin]

Not yet, but I am following the Total Money Makeover (Dave Ramsey), so it shouldn't be terribly long!

[enoch150]

So the government will become the largest holders of PG, MSFT and AAPL over night? What good would that do them?

They might count on private investment in the stock market to continue being large enough to absorb the stocks that they sell off in chunks, as they need money to fund SS. The government just got some practice at this, most recently with GM. But the sales of so many stocks as this would be drawn out over decades. They might hold dividend payers a bit longer and collect some cash that way.

A half dozen countries in Europe have started messing around with private retirement funds over the last year or two, and I think Argentina did back in 2001.

[Mogambo Guru]

Given that it is currently loosly pegged to the dollar, do you think they will actually allow it to float? Otherwise it would move down with the dollar if the dollar were to fall. China does not want their currency to be stronger against the dollar- that would hurt their exports and in turn their economy.

I believe the Yuan has appreciated about 20% against the $$ over the last 5 years.. Not too bad for just saving(not speculating), considering our option of saving in $$'s robs you over time.

Zippy, how does a person today just go about saving his/her labor to be used at a future date, say like retirement..(or even a mid life vacation or whatever, saving now for future spending) without being robbed over time?
&
Is it different today than it was say from 1800 to 1900 whereby you could just save money for the future and in fact slightly increase your purchasing power, while at the same time be able to buy nicer things? Can this be said for the last 100 years or so?


*I would also note that currency does not play as big a role in imports/exports as most would have you think.. I think a better indicator is if you are underconsuming or overconsuming.. Inflation is just a way to artificially keep people underconsuming... the whole sympton and disease type arguement. It can look like inflation helps exports, and it may do so for a short period, but eventually input costs change. If your currency is weak, raw materials cost more = more dollars in the end product.. the one variable is how much you consume, or if our wages dont go up at the rate of inflation... Meaning we are poorer and in turn consuming less.
If we go through an inflationary period, it makes us poorer and consume less in a stealth manner. I would say people should understand better and be more open about what we need to do. And that is not to inlfate our currency, but to produce more and consume a little less. Pretty simple really, currencies and Inflation/Deflation are just stealth ways to accomplish this.

[Zippyjuan]

I have not checked the historical value of the yuan- you may be right on that. How much has the dollar depreciated against other currencies? Although it has not been stated as such, I think that one of the Fed's goals of QE2 is to lower the value of the dollar to help stimulate imports to help the economy (problem is that it takes time - months or even a couple years or so- for imports or exports to adjust to changing exchange rates). You are right that I probably made the impact on imports/ exports sound more significant than it actually is- but I was talking longer term, not short term. The announced goal is lower long-term interest rates but why? If US interest rates are lower than other countries, then investors will be more likely to want to invest in those countries- lowering demand for US dollars and in turn lowering the international value of the dollar. This makes US exports cheaper which will hopefully lead to increased exports and more US productivity. But that also means more expensive imports. When that applies to goods competing against US made goods, that is good for US producers. When that applies to resources that producers need, like oil, that is not such a good thing and that can be a negative for the economy.

Zippy, how does a person today just go about saving his/her labor to be used at a future date, say like retirement..(or even a mid life vacation or whatever, saving now for future spending) without being robbed over time?
&
Is it different today than it was say from 1800 to 1900 whereby you could just save money for the future and in fact slightly increase your purchasing power, while at the same time be able to buy nicer things? Can this be said for the last 100 years or so?

We have never been free of inflation anywhere and people have always struggled with it. Putting money in a coffee can or under the mattress is not a solution. The best one can hope for is to try to find some investment (gold, stocks, bonds, etc) which will hopefully at least keep you even or better yet grow at a rate higher than the inflation rate. There has been no monetary system which has managed to avoid inflation. Nor should one. Prices should be free to change to reflect relative scarcity. Fixing prices leads to undesirable production levels (either too high or too low). Changing prices allows the supplies and demands to adjust to their proper levels.

Historic US Inflation:

http://en.wikipedia.org/wiki/File:US...on_Ancient.svg

[enoch150]

I have not checked the historical value of the yuan- you may be right on that. How much has the dollar depreciated against other currencies? Although it has not been stated as such, I think that one of the Fed's goals of QE2 is to lower the value of the dollar to help stimulate imports to help the economy (problem is that it takes time - months or even a couple years or so- for imports or exports to adjust to changing exchange rates). You are right that I probably made the impact on imports/ exports sound more significant than it actually is- but I was talking longer term, not short term. The announced goal is lower long-term interest rates but why? If US interest rates are lower than other countries, then investors will be more likely to want to invest in those countries- lowering demand for US dollars and in turn lowering the international value of the dollar. This makes US exports cheaper which will hopefully lead to increased exports and more US productivity. But that also means more expensive imports. When that applies to goods competing against US made goods, that is good for US producers. When that applies to resources that producers need, like oil, that is not such a good thing and that can be a negative for the economy.



We have never been free of inflation anywhere and people have always struggled with it. Putting money in a coffee can or under the mattress is not a solution. The best one can hope for is to try to find some investment (gold, stocks, bonds, etc) which will hopefully at least keep you even or better yet grow at a rate higher than the inflation rate. There has been no monetary system which has managed to avoid inflation. Nor should one. Prices should be free to change to reflect relative scarcity. Fixing prices leads to undesirable production levels (either too high or too low). Changing prices allows the supplies and demands to adjust to their proper levels.

Fluctuations in supply and demand can cause changes in prices, but changes in prices are not the definition of inflation typically used in this forum. Inflation is defined as an increase in the money supply. The result of that can be a general rise in prices, but not necessarily so. If the inflation of the money supply is kept inline with economic growth and advancements in productivity, there would be no noticeable change in prices. But even if that were the case, that would still constitute theft, since it robs savers of the value of their stored wealth. Prices that would have otherwise declined, increasing the purchasing power of money saved, instead would be kept constant by increasing the money supply.

[Mogambo Guru]

^exactly, $1 in 1800 saved until 1900 would buy you a better product in 1900 because of our increased productivity and advancement in technology.

Not to mention that if you had it in the bank, you would gain a %... over time that % cancelled out inflation.. now that % on savings is a net loss. I dont think its the right direction...
What if you were born in 1945, and your parents gave you $100 as a gift to start your savings account for the future.. what is that worth today in purchasing power?? squat even after interest if you were to compare that same $ amount and put it in the bank from 1835-1900.