6 ms·

Because you need to defend the exorbitant privilege of having the worlds reserve currency. This means Americans can generally live easier lives by borrowing fro

Because you need to defend the exorbitant privilege of having the worlds reserve currency. This means Americans can generally live easier lives by borrowing from the rest of the world. It’s also why wages in the US are so high. America can’t really be an export manufacturer as long as it’s currency is artificially inflated by massive inflows from global trading imbalances. It could after WW2 for a short while. That was because all others were bombed out and China etc weren’t developed.

baybal2 6y ago
And now the price is here. I was always telling all smarty business degree holder that you can't make money out of thin air no matter what trick you use. One way, or another, you can't escape the invisible hand finding ways to smack you good in the end.
- thewarrior 6y ago
  It’s not easy to go back to working hard in an era of global competition. Chinese workers work far longer hours and make more product for each hour worked. Plus they are integrated into a massive supply chain and ecosystem. The wages that need to be paid to an American worker to assemble phones all day would be really really high. They’d rather just work at McDonald’s or play video games. Those high wages would give them enormous leverage (unions etc) upsetting the entire American economic system. The American system is a cyber punk reality where a country is just a container for the aspirations of a bunch of short term thinking warring AIs called corporations. The people being one of its inputs. Elections don’t change much. Anything that disrupts the AIs too much is taken care of one way or the other. Doesn’t matter if it’s Bernie or Trump. So I would say that China is safe because the last thing america will do give up any notions that their system is the best or needs to change. The west needs to realize that the momentum of a head start on industrialization and ill gotten gains from historical loot is running out. As everyone joins the industrial game the world inherently becomes multi polar. There’s no reason why only the west can have high living standards or that only the western system can sustain it. in a situation of having to manage Russia, China and Iran at once while greatly weakened , Multi lateralism is inevitable. Democracy cannot be delivered at the barrel of a gun. That only creates more messes. This week witnessed the amusing spectacle of Boris Johnson calling himself a Sinophile (give us a trade deal please). All this after running down the Chinese for months. The west can’t even decide what to do.
  - baybal2 6y ago
    And the price for it is China being able to shut down a big chunk of your multi-trillion dollar economy with a few pen strokes. Look for example how SMIC sanctions effectively shut down the car industry, and few others. A murmur I heard is of US now backing off on SMIC because of the car industry, but that will send an even worse precedent. It will mean that nobody else will come and fill the SMIC niche, and it will still have a chokehold on a very well moneyed, and full of lobbyists industry. The next time, sanctions on SMIC may come not from US, but China itself.
    - thewarrior 6y ago
      The sanctions on SMIC were imposed by the US which incentivized a stock piling and cut global supply. So it was US hobbling itself and not Chinas doing. Instead of this ham fisted approach it needs systemic solutions. For eg - make college free. Make corporations subservient to state planning of strategic priorities. It’s clear that China has the upper hand as long as US is a bunch of warring corporations that think of the next quarter. US corporations will eventually force a retreat to protect their Chinese profits. China just needs to offer them some returns. As the largest market in the world they now can.
      - baybal2 6y ago
        > The sanctions on SMIC were imposed by the US which incentivized a stock piling and cut global supply. No... SMIC was making a great deal of 200mm business, possibly the biggest 200mm foundry. A lot of those decades old automotive ICs were fabbed there for the proximity to assembly lines, and tarriff avoidance.
        sudosysgen 6y ago
        Of course, but if it can't develop finer lithographies, it might as well give up and declare bankruptcy right now.
        6y ago

baybal2 6y ago

And now the price is here. I was always telling all smarty business degree holder that you can't make money out of thin air no matter what trick you use. One way, or another, you can't escape the invisible hand finding ways to smack you good in the end.

thewarrior 6y ago
It’s not easy to go back to working hard in an era of global competition. Chinese workers work far longer hours and make more product for each hour worked. Plus they are integrated into a massive supply chain and ecosystem. The wages that need to be paid to an American worker to assemble phones all day would be really really high. They’d rather just work at McDonald’s or play video games. Those high wages would give them enormous leverage (unions etc) upsetting the entire American economic system. The American system is a cyber punk reality where a country is just a container for the aspirations of a bunch of short term thinking warring AIs called corporations. The people being one of its inputs. Elections don’t change much. Anything that disrupts the AIs too much is taken care of one way or the other. Doesn’t matter if it’s Bernie or Trump. So I would say that China is safe because the last thing america will do give up any notions that their system is the best or needs to change. The west needs to realize that the momentum of a head start on industrialization and ill gotten gains from historical loot is running out. As everyone joins the industrial game the world inherently becomes multi polar. There’s no reason why only the west can have high living standards or that only the western system can sustain it. in a situation of having to manage Russia, China and Iran at once while greatly weakened , Multi lateralism is inevitable. Democracy cannot be delivered at the barrel of a gun. That only creates more messes. This week witnessed the amusing spectacle of Boris Johnson calling himself a Sinophile (give us a trade deal please). All this after running down the Chinese for months. The west can’t even decide what to do.
- baybal2 6y ago
  And the price for it is China being able to shut down a big chunk of your multi-trillion dollar economy with a few pen strokes. Look for example how SMIC sanctions effectively shut down the car industry, and few others. A murmur I heard is of US now backing off on SMIC because of the car industry, but that will send an even worse precedent. It will mean that nobody else will come and fill the SMIC niche, and it will still have a chokehold on a very well moneyed, and full of lobbyists industry. The next time, sanctions on SMIC may come not from US, but China itself.
  - thewarrior 6y ago
    The sanctions on SMIC were imposed by the US which incentivized a stock piling and cut global supply. So it was US hobbling itself and not Chinas doing. Instead of this ham fisted approach it needs systemic solutions. For eg - make college free. Make corporations subservient to state planning of strategic priorities. It’s clear that China has the upper hand as long as US is a bunch of warring corporations that think of the next quarter. US corporations will eventually force a retreat to protect their Chinese profits. China just needs to offer them some returns. As the largest market in the world they now can.
    - baybal2 6y ago
      > The sanctions on SMIC were imposed by the US which incentivized a stock piling and cut global supply. No... SMIC was making a great deal of 200mm business, possibly the biggest 200mm foundry. A lot of those decades old automotive ICs were fabbed there for the proximity to assembly lines, and tarriff avoidance.
      - sudosysgen 6y ago
        Of course, but if it can't develop finer lithographies, it might as well give up and declare bankruptcy right now.
        6y ago