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For all the people in the “transitory camp” here are a few things I would like you to reconsider: - “underlying supply chain will go back normal” well the way

For all the people in the “transitory camp” here are a few things I would like you to reconsider: - “underlying supply chain will go back normal” well the way I see it the container owners and everyone downstream have no incentives for doing so. [1] - China is facing water crisis among many other issues from energy crisis as well. If the main supplier of US faces crisis it will likely affect US as well. [2] - and many actually don’t understand this, Fed actually has incentives to get inflation. For many years they spent time to get inflation and recently even accepted they will let it run beyond the benchmark 2%. Part of the argument is Fed currently has no leverage or tools left in an economic downturn given the amount of debt in the balance sheet. A mere 5% raise in interest rate would require interest payment equivalent of another US army. So rate hikes of any substantial measure is out of question without bankrupting US. The easiest way is to inflate the 40 trillion debt away like they did post war in the 40s. [3] [1] https://medium.com/@ryan79z28/im-a-twenty-year-truck-driver-i-will-tell-you-why-america-s-shipping-crisis-will-not-end-bbe0ebac6a91 https://medium.com/@ryan79z28/im-a-twenty-year-truck-driver-... [2] https://thehill.com/opinion/energy-environment/584266-american-supply-chains-face-a-dire-threat-from-chinas-water https://thehill.com/opinion/energy-environment/584266-americ... [3] https://www.lynalden.com/inflation/ https://www.lynalden.com/inflation/

SubiculumCode 5y ago
Post war was a pretty good time for Americans. Bring it on.
- mercy_dude 5y ago
  Except US has also hollowed out manufacturing becoming increasingly dependent on rival China (even for defence equipments), has been increasingly losing its sphere of influence (both soft and hard - ask anyone in Africa who wields its soft power there China or US; or look at the Afghanistan fallout), and there is very little bipartisanship left while everyone is busy fighting cultural war. One can hope at least de globalization is a partial outcome of this post covid realignment if ever one.
  - xwdv 5y ago
    What if China and US teamed up in a war against some common super enemy?
  - ethbr0 5y ago
    We'll see how friendly Africa is to China, when infrastructure debt payments start getting tight.
    - trcarney 5y ago
      China doesn't care about the debt payments. It is about maintaining the relationships in Africa so the countries there will favor China over the US in trade deals for resources.
      - ethbr0 5y ago
        China's just going to write off some of the unserviceable infrastructure loans they've made to Africa?
        trcarney 5y ago
        In exchange for favorable resource deals, yes I think so.
  - greedo 5y ago
    The US is dependent on China for defense equipment? Can you provide any examples?
    - mercy_dude 5y ago
      https://www.defensenews.com/opinion/commentary/2021/06/28/nothing-left-in-the-tank-the-state-of-the-pentagons-supply-chain/ https://www.defensenews.com/opinion/commentary/2021/06/28/no...
      - 5y ago
deleted 5y ago
[deleted]
jonnycomputer 5y ago
1. Actual throughput in our ports is up over previous levels. Its demand that has increased, a combination of redistribution downwards (through better wages, government benefits) and pent up savings. There's already evidence savings are depleted for lower income households (as evidenced by increased credit card balances). 2. Perhaps you could explain why container owners have no incentive to increase their business volume. 3. The US systematically undershot its 2% inflation target for years. It acted more like an upper bound. Its good that its gone over. Just now we've overshot. But we've overshot by a fair margin. So I think they'll pull back as soon as any perceived softness of the real economy has gone away.
- mercy_dude 5y ago
  > Perhaps you could explain why container owners have no incentive to increase their business volume. The article I linked does a fairly good job explaining it. Basically if you are a container owner, you can charge 10x the price for containers from Shanghai to Long Island, while the other way it’s almost a loss since it’s returning empty. The decline in ships waiting just offshore of Los Angeles/Long Beach continues to be touted as a sign that port congestion is easing — despite the fact that the true number of waiting ships has not actually declined. https://twitter.com/typesfast/status/1466424994670518279 https://twitter.com/typesfast/status/1466424994670518279
- Thrymr 5y ago
  > 1. Actual throughput in our ports is up over previous levels. Not true in general. The port of Long Beach is down 5% year-on-year (the third month in a row that is down compared with 2020) [0]. [0] https://gcaptain.com/amid-record-breaking-year-port-of-long-beach-throughput-falls-almost-5-in-november/ https://gcaptain.com/amid-record-breaking-year-port-of-long-...
  - conjecTech 5y ago
    It's still up 25% from 2019 numbers: https://polb.com/business/port-statistics/#teus-archive-1995-to-present https://polb.com/business/port-statistics/#teus-archive-1995....
  - 5y ago
q1w2 5y ago
China is bringing nearly 25 1GW nuclear plants online over the next 5 years. They additionally have investments all over Africa for the export of natural resources like coal/oil. I really don't see them falling into crisis over energy.
- londons_explore 5y ago
  25GW really isn't much for a nation the size of China. 25GW is really just insurance against forgetting how to build them like most of the west has. 1000 GWatts... Now that would make a dent.
conjecTech 5y ago
Merchants don't usually want to lower prices proactively, but it's done all the time because they do not exist in a competitive vacuum. From inception, container shipping has been plagued by oversupply because of the economies of bigger and bigger boats. That was still true 3 years ago. Shipping businesses were going bankrupt left and right. It is a commodity good with a relatively low cost of entry. If the existing companies don't feel like lowering prices, others will step in and happily take their market share.
dnautics 5y ago
China is no longer the main supplier of the US (it still is a very large supplier), but otherwise spot on.
bachmeier 5y ago
> Fed actually has incentives to get inflation Time's too valuable to get into a meaningless discussion about this, but they've had the same incentive for decades. Take a look at the inflation rate for the 30 years 1991-2020: https://fred.stlouisfed.org/series/CPIAUCSL#0 https://fred.stlouisfed.org/series/CPIAUCSL#0
jjcon 5y ago
> China is facing water crisis among many other issues from energy crisis as well. If the main supplier of US faces crisis it will likely affect US as well. China is only 14% of US trade (third place after mexico and Canada) - still a lot but not as big of a player as that sounds

SubiculumCode 5y ago

Post war was a pretty good time for Americans. Bring it on.

mercy_dude 5y ago
Except US has also hollowed out manufacturing becoming increasingly dependent on rival China (even for defence equipments), has been increasingly losing its sphere of influence (both soft and hard - ask anyone in Africa who wields its soft power there China or US; or look at the Afghanistan fallout), and there is very little bipartisanship left while everyone is busy fighting cultural war. One can hope at least de globalization is a partial outcome of this post covid realignment if ever one.
- xwdv 5y ago
  What if China and US teamed up in a war against some common super enemy?
- ethbr0 5y ago
  We'll see how friendly Africa is to China, when infrastructure debt payments start getting tight.
  - trcarney 5y ago
    China doesn't care about the debt payments. It is about maintaining the relationships in Africa so the countries there will favor China over the US in trade deals for resources.
    - ethbr0 5y ago
      China's just going to write off some of the unserviceable infrastructure loans they've made to Africa?
      - trcarney 5y ago
        In exchange for favorable resource deals, yes I think so.
- greedo 5y ago
  The US is dependent on China for defense equipment? Can you provide any examples?
  - mercy_dude 5y ago
    https://www.defensenews.com/opinion/commentary/2021/06/28/nothing-left-in-the-tank-the-state-of-the-pentagons-supply-chain/ https://www.defensenews.com/opinion/commentary/2021/06/28/no...
    - 5y ago

deleted 5y ago

[deleted]

jonnycomputer 5y ago

1. Actual throughput in our ports is up over previous levels. Its demand that has increased, a combination of redistribution downwards (through better wages, government benefits) and pent up savings. There's already evidence savings are depleted for lower income households (as evidenced by increased credit card balances). 2. Perhaps you could explain why container owners have no incentive to increase their business volume. 3. The US systematically undershot its 2% inflation target for years. It acted more like an upper bound. Its good that its gone over. Just now we've overshot. But we've overshot by a fair margin. So I think they'll pull back as soon as any perceived softness of the real economy has gone away.

mercy_dude 5y ago
> Perhaps you could explain why container owners have no incentive to increase their business volume. The article I linked does a fairly good job explaining it. Basically if you are a container owner, you can charge 10x the price for containers from Shanghai to Long Island, while the other way it’s almost a loss since it’s returning empty. The decline in ships waiting just offshore of Los Angeles/Long Beach continues to be touted as a sign that port congestion is easing — despite the fact that the true number of waiting ships has not actually declined. https://twitter.com/typesfast/status/1466424994670518279 https://twitter.com/typesfast/status/1466424994670518279
Thrymr 5y ago
> 1. Actual throughput in our ports is up over previous levels. Not true in general. The port of Long Beach is down 5% year-on-year (the third month in a row that is down compared with 2020) [0]. [0] https://gcaptain.com/amid-record-breaking-year-port-of-long-beach-throughput-falls-almost-5-in-november/ https://gcaptain.com/amid-record-breaking-year-port-of-long-...
- conjecTech 5y ago
  It's still up 25% from 2019 numbers: https://polb.com/business/port-statistics/#teus-archive-1995-to-present https://polb.com/business/port-statistics/#teus-archive-1995....
- 5y ago

q1w2 5y ago

China is bringing nearly 25 1GW nuclear plants online over the next 5 years. They additionally have investments all over Africa for the export of natural resources like coal/oil. I really don't see them falling into crisis over energy.

londons_explore 5y ago
25GW really isn't much for a nation the size of China. 25GW is really just insurance against forgetting how to build them like most of the west has. 1000 GWatts... Now that would make a dent.

conjecTech 5y ago

Merchants don't usually want to lower prices proactively, but it's done all the time because they do not exist in a competitive vacuum. From inception, container shipping has been plagued by oversupply because of the economies of bigger and bigger boats. That was still true 3 years ago. Shipping businesses were going bankrupt left and right. It is a commodity good with a relatively low cost of entry. If the existing companies don't feel like lowering prices, others will step in and happily take their market share.

dnautics 5y ago

China is no longer the main supplier of the US (it still is a very large supplier), but otherwise spot on.

bachmeier 5y ago

> Fed actually has incentives to get inflation Time's too valuable to get into a meaningless discussion about this, but they've had the same incentive for decades. Take a look at the inflation rate for the 30 years 1991-2020: https://fred.stlouisfed.org/series/CPIAUCSL#0 https://fred.stlouisfed.org/series/CPIAUCSL#0

jjcon 5y ago

> China is facing water crisis among many other issues from energy crisis as well. If the main supplier of US faces crisis it will likely affect US as well. China is only 14% of US trade (third place after mexico and Canada) - still a lot but not as big of a player as that sounds