China spying on United states??

[Cat-Whiskers]

Legendary_ONE

Hanyue-Chan

forgotten_ninja

the US is just picking on china...the other day on the news the US wanted to put the Chinese economy down by I don't know..do what they call a "fair" trade....-_-|| and raise the value of yen or something... my teacher also said that the chinese economy is booming and china is emerging as one of the superpowers...^_^

that's what all of my teachers say! xD

Even though my major isn't economics, my political science prof. did talk about the whole "US pressuring China into raising the value of RMB" thing.

The mechanisms behind this stragety is rather simple: We all know US owes (and continues to owe more) hundreds of billions of debts world-wide, which are recorded in the unit of US dollars (which is kinda obviously because the US government can only produce its own currency).

Well, since China has a booming economy, if the value of RMB raises, the value of USD will naturally decrease. When that happens, even though the US may still appears to owe the same amount of debt in US dollars on the World Bank record, the actual amount of the debt will be smaller than before due to the decrease-in-exchange-value of the USD.

In simpler words, less debt to pay off than the original amount; A rather cheap way to dodge debts. sweatdrop

Not quite true actually. The reason why U.S. is pressuring the Chinese government to raise the value of RMB is a little complicated. On the surface it may seem that the States want the value of RMB to rise so that the huge trade deficit between China and U.S. would decrease as to relieve pressure to the U.S. based companies as well as to provide "fair" competition. However, if we look at the historical records, back in 1980s when the Japanese economy was booming and the Japanese were purchasing all the properties in U.S., this event also happened. The U.S. investment firms invested heavily in the booming Japanese real estate sector, when the Japanese Yen and U.S. Dollar was exchanging 240 to 1. Then after a while the States pressured Japan into raising the value of Yen, claiming it is "undervalued". The Japanese couldn't refuse due to the U.S. military stationed in Japan as well as the heavy political and economical influence U.S. exerted on them, so the Yen raised to 120 to 1 against the U.S. Dollar. Let's see an example here:
Say I am an U.S. firm and I used 300 million U.S. Dollar to buy up 300*240 = 720000 million Yen worth of Japanese real estate. Now, 5 years later after the Yen was forced to raise in value to 120 to 1 against the U.S. Dollar, I will sell all my investments, and essentially DOUBLE my investment in 5 years.
So... that was one U.S. investment firm... what happens if say... 100 U.S. investment firm does it? 1000? 5000? 10000? This is one of the main reasons why the Japanese economy went into recession, because most of the wealth made by the Japanese were taken by the U.S. investment firms back into the States. This is a very simple, yet hard to use economic bullying strategy. It is hard to use because in order to be effective, you must have a VERY strong economy, which the U.S. have. Now do you see why they want the RMB to appreciate in value so much? lol

P.S. It's ok if you didn't understand what I explained XP
P.S.S. If anyone is in economics/business major and sees something wrong with my reasoning feel free to correct me... seeing as I am in engineering and did not study very deep into economics xd  

[Legendary_ONE]

Cat-Whiskers

Legendary_ONE

Hanyue-Chan

forgotten_ninja

the US is just picking on china...the other day on the news the US wanted to put the Chinese economy down by I don't know..do what they call a "fair" trade....-_-|| and raise the value of yen or something... my teacher also said that the chinese economy is booming and china is emerging as one of the superpowers...^_^

that's what all of my teachers say! xD

Even though my major isn't economics, my political science prof. did talk about the whole "US pressuring China into raising the value of RMB" thing.

The mechanisms behind this stragety is rather simple: We all know US owes (and continues to owe more) hundreds of billions of debts world-wide, which are recorded in the unit of US dollars (which is kinda obviously because the US government can only produce its own currency).

Well, since China has a booming economy, if the value of RMB raises, the value of USD will naturally decrease. When that happens, even though the US may still appears to owe the same amount of debt in US dollars on the World Bank record, the actual amount of the debt will be smaller than before due to the decrease-in-exchange-value of the USD.

In simpler words, less debt to pay off than the original amount; A rather cheap way to dodge debts. sweatdrop

Not quite true actually. The reason why U.S. is pressuring the Chinese government to raise the value of RMB is a little complicated. On the surface it may seem that the States want the value of RMB to rise so that the huge trade deficit between China and U.S. would decrease as to relieve pressure to the U.S. based companies as well as to provide "fair" competition. However, if we look at the historical records, back in 1980s when the Japanese economy was booming and the Japanese were purchasing all the properties in U.S., this event also happened. The U.S. investment firms invested heavily in the booming Japanese real estate sector, when the Japanese Yen and U.S. Dollar was exchanging 240 to 1. Then after a while the States pressured Japan into raising the value of Yen, claiming it is "undervalued". The Japanese couldn't refuse due to the U.S. military stationed in Japan as well as the heavy political and economical influence U.S. exerted on them, so the Yen raised to 120 to 1 against the U.S. Dollar. Let's see an example here:
Say I am an U.S. firm and I used 300 million U.S. Dollar to buy up 300*240 = 720000 million Yen worth of Japanese real estate. Now, 5 years later after the Yen was forced to raise in value to 120 to 1 against the U.S. Dollar, I will sell all my investments, and essentially DOUBLE my investment in 5 years.
So... that was one U.S. investment firm... what happens if say... 100 U.S. investment firm does it? 1000? 5000? 10000? This is one of the main reasons why the Japanese economy went into recession, because most of the wealth made by the Japanese were taken by the U.S. investment firms back into the States. This is a very simple, yet hard to use economic bullying strategy. It is hard to use because in order to be effective, you must have a VERY strong economy, which the U.S. have. Now do you see why they want the RMB to appreciate in value so much? lol

P.S. It's ok if you didn't understand what I explained XP
P.S.S. If anyone is in economics/business major and sees something wrong with my reasoning feel free to correct me... seeing as I am in engineering and did not study very deep into economics xd

Ah, that makes sense.

Although, I'm wondering if US has such a strong economy, what's up with its extremely high national debt, which increases at the rate of 1.9 billion USD per day and amounts to 8.6 trillion USD (the actual number is $8,617,325,010,175) at the present?

By the way, foreign/international debts actually make up about 22% of the total US national debt, so I wouldn't be surprised if US pressued Yuan for the sole purpose of reducing trade deficits with China.  

[Cat-Whiskers]

Legendary_ONE

Ah, that makes sense.

Although, I'm wondering if US has such a strong economy, what's up with its extremely high national debt, which increases at the rate of 1.9 billion USD per day and amounts to 8.6 trillion USD (the actual number is $8,617,325,010,175) at the present?

By the way, foreign/international debts actually make up about 22% of the total US national debt, so I wouldn't be surprised if US pressued Yuan for the sole purpose of reducing trade deficits with China.

Good question. While the common conception is that debt is bad, let me explain this through another example:

Say I have a company of my own. This company has a savings of 100 dollars in the bank. I need to purchase materials worth of 500 dollars in order to operate properly. To get the 400 dollars needed, I'll take a loan from the bank. The current interest rate is 3%. This is the scenario.

So I take out a loan of 400 dollars at an interest rate of 3% annually. Say then the next day I found out that, another bank is offering a lower interest rate - 2% annually. What should I do now? I would go to this other bank, take out a loan of 500 dollars, repay my 400 dollar debt to the first bank and continue with the new interest rate. This is the way all companies operate, to borrow money at a lower interest rate and repay debts from those of higher interest rates. The same applies to the States.  

[Legendary_ONE]

Cat-Whiskers

Legendary_ONE

Ah, that makes sense.

Although, I'm wondering if US has such a strong economy, what's up with its extremely high national debt, which increases at the rate of 1.9 billion USD per day and amounts to 8.6 trillion USD (the actual number is $8,617,325,010,175) at the present?

By the way, foreign/international debts actually make up about 22% of the total US national debt, so I wouldn't be surprised if US pressued Yuan for the sole purpose of reducing trade deficits with China.

Good question. While the common conception is that debt is bad, let me explain this through another example:

Say I have a company of my own. This company has a savings of 100 dollars in the bank. I need to purchase materials worth of 500 dollars in order to operate properly. To get the 400 dollars needed, I'll take a loan from the bank. The current interest rate is 3%. This is the scenario.

So I take out a loan of 400 dollars at an interest rate of 3% annually. Say then the next day I found out that, another bank is offering a lower interest rate - 2% annually. What should I do now? I would go to this other bank, take out a loan of 500 dollars, repay my 400 dollar debt to the first bank and continue with the new interest rate. This is the way all companies operate, to borrow money at a lower interest rate and repay debts from those of higher interest rates. The same applies to the States.

In that case, I doubt they'll ever pay them back. rofl  

[Cat-Whiskers]

Legendary_ONE

Cat-Whiskers

Legendary_ONE

Ah, that makes sense.

Although, I'm wondering if US has such a strong economy, what's up with its extremely high national debt, which increases at the rate of 1.9 billion USD per day and amounts to 8.6 trillion USD (the actual number is $8,617,325,010,175) at the present?

By the way, foreign/international debts actually make up about 22% of the total US national debt, so I wouldn't be surprised if US pressued Yuan for the sole purpose of reducing trade deficits with China.

Good question. While the common conception is that debt is bad, let me explain this through another example:

Say I have a company of my own. This company has a savings of 100 dollars in the bank. I need to purchase materials worth of 500 dollars in order to operate properly. To get the 400 dollars needed, I'll take a loan from the bank. The current interest rate is 3%. This is the scenario.

So I take out a loan of 400 dollars at an interest rate of 3% annually. Say then the next day I found out that, another bank is offering a lower interest rate - 2% annually. What should I do now? I would go to this other bank, take out a loan of 500 dollars, repay my 400 dollar debt to the first bank and continue with the new interest rate. This is the way all companies operate, to borrow money at a lower interest rate and repay debts from those of higher interest rates. The same applies to the States.

In that case, I doubt they'll ever pay them back. rofl

Oh they'll pay back, just end up borrowing more from another is all. 3nodding  

[Niphredil Ithilmir]

Everyone's spying on everyone else. Including themselves.


And how can you say 'spying on us'?! Are you siding with America against China?!

 

[NoNewNews]

shortiegrl8

Okay so i was just watching NBC news and its right now 5:46 pm, and gues what the topic was about??


CHINA


yes. You know WHAT they were talking about??

How china is stealing American technology!! WTF??! Used for missles?! Military and civilian technology!


CLAMING CHINA IS SPYING ON THE UNITED STATES!


http://www.msnbc.msn.com/id/3032619/


Topic: • Is China spying on us?


watch the clip.

discuss!

=0 Scary thing is, when I went to this thread there must've been a cop chase cause sirens were ringing nearby.