Spiers on money and trade

Heard quite some time ago:

Yes... all true! But the Chinese already have discovered USA financial instruments... and that is the problem. China is the #2 foreign holder of US Treasuries behind Japan, as well as stocks, dollars, etc. If the crybaby millionaires in USA get their way and we slap a 27% duty on things Chinese, we risk their goods stop coming in, and our dollars making the round trip back to finance our govt activity. The problem is not whether China will discover investing in usa... the problem is if they decide to stop.

The problem is China has refused to import inflation from USA, or more precisely, import the effects of printing too many dollars. When the plan of the bad guys in our govt & big biz does not work, they want to go to "war" to change the subject.

Milton Friedman recently said "The use of quantity of money as a target has not been a success, I'm not sure I would as of today push it as hard as I once did." Greenspan recently admitted the Fed theories are wrong, and now they are working on hunches.

At least they are willing to admit they are wrong, and no one can say they did not give fair warning. If they are wrong, who is right? Those "austrians" have proven pretty reliable in their analysis. (and as a side note, see how all this managed trade obliterates any "comparative advantage"? Comparative advantage is only a theory, and only applicable in free trade scenarios. In managed trade, obviously, matters having nothing to do with trade cause distortions.

And more recently (Spiers'comments double-indented):

A second Issue that I ran into was that the Letter of Credit is a "Credit Application", meaning it has to go through a credit approval process that could take a week or more. I guess, I always thought that the L/C was a simple application that you pre-paid. So at this point, I am stalling the manufacturer, while I hope to recieve an answer from customs and wait for the "Credit Application" to be processed.

Yes, homeland security/patriot act. This ticks me off... You cannot get a mortgage without reports to homeland security. The process for determining if you are a terrorist is similar to checking credit, so they just say they are checking your credit. Since we are moving to a secret police state (it is easier to track you than Osama) and your banker can go to prison for revealing you are the subject of a secret police investigation, everyone just says "credit check". Sadly, if you are innocent in USA, you have plenty to worry about now.

The bankers are required to know who you are, so it is just another layer. Until we can elect some competent officials, we are in for Soviet Style inefficiencies. (and no, I didn't vote democrat either...)

We survived a huge, pointless increase in govt intervention in the 70's and we'll survive this too, but it sure makes us less competitive.


Lastly, he recommended a good Econ 101 book: "Economics for Real People" by Gene Callahan. It's on my to-read list. Here's his reason for recommending it - read the full message, it's worth it.

They call economics the dismal science, and it was for me until long ago when I walked into China from Hong Kong and wondered why China was poor and hong kong was rich. Then it got interesting. I quickly learned marxism was a fraud (Chairman Mao agreed) and free markets generated wealth. Keynes is marxism lite, and Friedman has since regretted monetarism (as did Greenspan recently at Aspen meet). The Chicago school of econ is a good gateway drug, it addresses real situations; the supply side economists want to keep the price of gold stable, but that requires the government stay in the business of managing money, which always fails.

None of the above are really economics anyway, they are schemes for manipulating people, just versions of social engineering. The only school worthy of the name "economists" are the so-called "austrian school."

Written by Andrew Ittner in misc on Sun 06 June 2004. Tags: business, government, international, money, rights