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Why couldn’t they? No/little international pressure to do otherwise and a currency printing press to subsidize back room deals. This is a great strategy for Ch

by gonyea 9y ago

Why couldn’t they? No/little international pressure to do otherwise and a currency printing press to subsidize back room deals. This is a great strategy for China and it’s utterly insane that we allow this situation to continue.

thisisit 9y ago
> it’s utterly insane that we allow this situation to continue. That is the point I am trying to make. How long before everyone says this is insane and tries to start blocking deals? Though China's inflation due to currency printing press might come home to roost before that happens.
- coliveira 9y ago
  If giving money for business development ever created inflation, the US would not have enough machines to cut the zeros from its currency. Please understand that creating money for productive purposes cannot generate inflation, this is essentially what banks have been doing since they were ever invented.
  - underdown 9y ago
    Adding money to the supply of money causes inflation regardless of the "productive purpose" for which it is used.
    - coliveira 9y ago
      Banks add money to the money supply daily. Money that didn't exist before a loan is approved suddenly appears out of thin air, due to the fractional reserve system. Billions of dollars in loans are created every single day in this way, and even before they are paid, more is created. Where is the inflation? Instead, we live in a deflationary world. Countries, through their development banks do exactly the same. No inflation is created because of this, stop believing in what has been proven untrue.
      - wahern 9y ago
        Not necessarily disputing your point, but part of the reason that there's deflation (or at least lack of inflation) is because banks _aren't_ investing in production capacity. Corporate debt is at an all time high, yes, but AFAIU mostly because corporations are swapping current earnings for debt because in the current environment it's [presumably] marginally more efficient. Capital investments largely are coming from equity markets, VC firms, etc. There's so much free cash floating around globally that there's little need to leverage fractional reserve banking. That's why banks so vociferously oppose margin controls--they're having to compete with all the cheap money.
- wahern 9y ago
  It's dumb greed. China dangles the prospect of a 1 billion+ consumer market in front of Western companies, and rational thinking ceases. The upside looks infinite. I bet that Taiwanese, Japanese, and Singaporean corporations filter and structure their deals differently given that they have much deeper and historic ties to China, and are more familiar with long-term planning in the context of centralized political economies. Perhaps someone could confirm or dispute that.

by gonyea 9y ago

thisisit 9y ago

> it’s utterly insane that we allow this situation to continue. That is the point I am trying to make. How long before everyone says this is insane and tries to start blocking deals? Though China's inflation due to currency printing press might come home to roost before that happens.

coliveira 9y ago
If giving money for business development ever created inflation, the US would not have enough machines to cut the zeros from its currency. Please understand that creating money for productive purposes cannot generate inflation, this is essentially what banks have been doing since they were ever invented.
- underdown 9y ago
  Adding money to the supply of money causes inflation regardless of the "productive purpose" for which it is used.
  - coliveira 9y ago
    Banks add money to the money supply daily. Money that didn't exist before a loan is approved suddenly appears out of thin air, due to the fractional reserve system. Billions of dollars in loans are created every single day in this way, and even before they are paid, more is created. Where is the inflation? Instead, we live in a deflationary world. Countries, through their development banks do exactly the same. No inflation is created because of this, stop believing in what has been proven untrue.
    - wahern 9y ago
      Not necessarily disputing your point, but part of the reason that there's deflation (or at least lack of inflation) is because banks _aren't_ investing in production capacity. Corporate debt is at an all time high, yes, but AFAIU mostly because corporations are swapping current earnings for debt because in the current environment it's [presumably] marginally more efficient. Capital investments largely are coming from equity markets, VC firms, etc. There's so much free cash floating around globally that there's little need to leverage fractional reserve banking. That's why banks so vociferously oppose margin controls--they're having to compete with all the cheap money.
wahern 9y ago
It's dumb greed. China dangles the prospect of a 1 billion+ consumer market in front of Western companies, and rational thinking ceases. The upside looks infinite. I bet that Taiwanese, Japanese, and Singaporean corporations filter and structure their deals differently given that they have much deeper and historic ties to China, and are more familiar with long-term planning in the context of centralized political economies. Perhaps someone could confirm or dispute that.