Death of the petrodollar?

Not sure if this is politics. If it is, then please lock this, Daynab.

Hello there. I'm sure that some of you have already heard that China has announced last month that they plan to trade in oil using the yuan and bypass the dollar altogether, having set up the banking system to do so. (googling 'China sells oil with yuan' should bring up a goodly number of hits) Russia has also reportedly struck an agreement with China to sell them all the oil they need.

Everyone's predicting that this is IT for the US dollar, that it's going to bring its tumble to a clear deadfall and the US economy is going to tank shortly after. Being on the other side of the world, I'm just wondering what you guys actually living on the ground there think.

What are you guys' opnion?

 

Martha, pass the potatoes and the ammunition!

 

Politics or not, this is important for everyone to be aware of.

However this is not really important. China is a big nation, and has in the past fucked up the economies of the whole world by insisting on "Silver" as the only form of currency they would accept for trades.
(That backfired on them when England made the "East India Trading Company" to illegally trade Opium to the Chinese for silver so they could actually trade though.)

China does not want our currency? No problem. We will trade with the rest of the world until they relent.

If we absolutely require something China makes and no-one else can provide, then we will buy it from Russia or another nation.

In short, nothing about this changes even one singular thing about what we will do.

*Edit* I wanted to push the post out before the topic gets locked if Daynab decides to be paranoid, so I will now amend what I said.

China is not unlike any other nation on this Earth. They want to strengthen their currency. America has done almost the exact same thing with dozens of nations in the past.

I do not anticipate more than a few % price increase on Chinese products due to this. Any more than that and I would suspect the middlemen were lying about expenses to make themselves rich.

 

A weakened dollar and a stronger yuan would only help the US economy right now as it tries to embark on its own brand of industrial policy. With the elections going on here, I doubt many people here have noticed.

 

A stronger yuan would help us, a weaker dollar not so much. A weak dollar is great for exports. It's terrible for everything else. On the whole, it's a net negative.

 

It'll also decrease the value of US debt, and a lot of people here are in debt, particularly student loans.

I am not going to blame those people for this really. The aristocratic (clarification; I do not mean this pejoratively, aristocracies can do a lot of good) US leadership has been extremely irresponsible and amoral over the past few decades. When you get into how the student debt crisis came about, you hit some very dirty laundry especially with private colleges like Phoenix and ITT.

It is true, however, that the inflation hurts the quality of living of the poor the most, and erases their savings. This may carry the virtue of triggering more investment. The US has been putting off inflation for a long time now, and it is better to start preparing for it because it is going to happen. Blame the wars.

 

Just remember, someone loaned that money to the person in debt and that someone is probably a part of that debtor's grandmother's retirement portfolio. Additionally, if inflation goes up the prime rate goes up and people have a harder time getting a loan.

Also, a currency that is devaluing benefits the people who get their hands on it first the most. Everyone else sees the price of commodities go up faster than their wages.

It's better to live in a society where people honor debts and we have a stable currency. Stability is the key to long term growth. At least that's my understanding of it all.

 

Maybe not always -- I remember reading several economists claiming that when we went into a recession, that we actually needed to spend more money, and increase our debt, at least temporarily, in order to jump-start the recovery.

To me, macroeconomics sometimes seems more like magical thinking. The problem is that you expect 'A' to happen, and when 'A' doesn't happen, you come up with an explanation of why. So then you think you've accounted for all the variables, and then 'B' happens and you didn't quite expect that either. At least with microeconomics, you can set up experiments to test your theories (I actually participated in several different experiments when I was in college -- my school had a pretty good reputation for experimental economics). In Macroeconomics, you simply cross your fingers and hope you are right, with the world as your test subject. That's why everyone has a theory about how to fix the economy, and yet no one can quite figure out how to fix the economy. When it starts 'working' again, or more likely, when it at least, you can convince others that it's not as bad as it used to be, then someone will inevitably claim credit, though credit and cause may be totally unrelated.

 

Right, it is all very painful, and it disproportionately would impact the boomers. It is also largely their fault, even if you can't blame any one individual (not that I'd rule it out). What do you propose as an alternative to inflation as the logical future of the economy here given the sheer amount of underinvestment we have made in the generation of people who are working age now?

Again, I'm not saying inflation is a good thing, but that it is unavoidable at this point due to past mistakes. The 90s technology bubble isn't likely to repeat itself and we squandered its chance to rescue us from this on two needless and very expensive foreign wars.

 

Lets avoid politics. Daynab has a nasty habit of closing threads when that happens.

I would however offer my own unique prospective.

I do not use or even care for the "Credit" system in any way. I have no debts I could have opted out of. My only existing debts are to a variety of healthcare junk that I had no choice about. Understand that I do have not only Medicare, but also the paid "Medicare Advantage" plan stuff too. Yet I probably owe 100K or more to a bunch of Hospitals for services I was unable to refuse. They then compound the problem by selling those debts to third parties who hound me forever about unspecified debts. Those third parties are the bulk of the actual problem.

They do not know what the debt is even for, so even if I had the money, I would rather give it to a competent Attorney to rebuke them for billing me for stuff they cannot itemize. And as a rule, if someone sends me a bill that is not itemized and does not have the date and time of purchases/services, then I tear it up and forget it was ever received.

But back to the hospitals and their bills... Half the bills they give me are plain and simple errors in their billing. The last time I was hospitalized for a week I was billed for more than two weeks worth of meals. I know for a fact that I only ate three round meals daily, and the Dietician that talked with me while I was awake on the second to last day of my stay confirmed that I was on a special diet since I am a Diabetic and my Hemoglobin A1C was way too high.

I could go on for days about the errors in the bills, but there is no point. They did *NOT* bill my insurance for certain things that are covered and I believe it was intentional since the insurance pays them a negotiated amount that is far less than what they billed me for while pretending that I had no coverage for those items/services.

This is the decay of our economy. It involves greed, insurance, and capitalism without reasonable boundaries. They knew in advance they would not get a dime from me, but they billed an outrageous amount anyway since they would declare it a loss and cook the books to their advantage.

Debt is the new slavery. Wage Slaves are those who do not make enough to live, but also make just enough to not qualify for help from our largely socialist government. (Here in the USA, we are more Socialist that most countries that are actually considered Socialist and/or Communist. More of our GDP goes to welfare/aid for the poor than any nation that actually acknowledges they are Socialist/Communist. But that is something I should not go into depth on since I am really trying not to get the thread closed.)

If you live alone and make "Minimum Wage" you are a wage slave. Sorry to break it to you. You will almost certainly have to use the "Credit" system to make ends meet from time to time, and the interest rate you will pay is exorbitant. As things are now, using a single credit card will eventually lead you to relying on it for the occasional large bill/expense you cannot afford. Then in time you will need two of them. And at that point you are beyond the point of no return.

The solution is actually to never use credit for anything and totally ignore it. But the corruption of our society is complicit and employers will do a "Credit Check" on applicants and likely reject you if you do not have a "Good" credit score.

I cannot fathom a solution for the modern slaves with shackles of credit debt. Not individually, and certainly not for our Nation.