2 ms·

> with enough yuan to buy more chips than the US Er, no. By definition a country with higher nominal GDP can afford to import more chips than a country with lo

> with enough yuan to buy more chips than the US Er, no. By definition a country with higher nominal GDP can afford to import more chips than a country with lower nominal GDP. That's exactly what nominal GDP calculates. This is probably why you're being downvoted into oblivion. It's also why TSMC isn't exporting its chips to Huawei anymore. Also, there's a reason that the yuan is worth 7x less than the USD: it's because the PRC has intentionally devalued its own currency to keep manufacturing costs low and prop up local manufacturing instead of relying on imports, most recently in 2019 in an escalation of the U.S.-China trade war [1]. This helps bolster China's domestic manufacturing capabilities, but bites China in predictable ways when it wants to spend money abroad, e.g. importing chips from Taiwan. 1: https://www.investopedia.com/trading/chinese-devaluation-yuan/ https://www.investopedia.com/trading/chinese-devaluation-yua...

PKop 6y ago
For a while, but nations with twin deficits (trade and fiscal) historically saw their currency lose value, which was a natural correcting mechanism to close inordinately large imbalances, which US has.. massively. Of course what sustains this is $ as global reserve and for most of last few decades need for dollars to buy oil These things are changing. China's size and demand for commodities pushes oil exporters and commodity exporters more and more to accepting yuan. US loss of industry on the margins means $ has less use as reserve. Why stock pile dollars and treasuries if you anticipate large devaluation (deficits) in the future and are purchasing more goods from China? What does US do as a result? Sanction and or invade oil exporters trading for other currencies. Iraq, Iran, Syria, Venezuela, Russia. Nordstream 2 is a big one. Germany and Europe perfectly content to buy cheaper oil from Russia going forward. Much less need for $ though, as a result. Thus, this overvalued $ (based on balance of trade fundamentals) won't perpetuate as it has previously.

PKop 6y ago

For a while, but nations with twin deficits (trade and fiscal) historically saw their currency lose value, which was a natural correcting mechanism to close inordinately large imbalances, which US has.. massively. Of course what sustains this is $ as global reserve and for most of last few decades need for dollars to buy oil These things are changing. China's size and demand for commodities pushes oil exporters and commodity exporters more and more to accepting yuan. US loss of industry on the margins means $ has less use as reserve. Why stock pile dollars and treasuries if you anticipate large devaluation (deficits) in the future and are purchasing more goods from China? What does US do as a result? Sanction and or invade oil exporters trading for other currencies. Iraq, Iran, Syria, Venezuela, Russia. Nordstream 2 is a big one. Germany and Europe perfectly content to buy cheaper oil from Russia going forward. Much less need for $ though, as a result. Thus, this overvalued $ (based on balance of trade fundamentals) won't perpetuate as it has previously.