5/20/2025 at 12:37:53 PM
Using a national currency as the de facto global reserve guarantees a trade deficit for that country.No one else can manufacture USD's, so other countries have to acquire them by shaping their economies to supply goods and services demanded by the US. They can then use these earned dollars to transact with other countries, as the US itself insists they do.
For the US, this is a simple trade off - gain massive political influence (and market intelligence - all USD transactions go through US institutions regardless of where those transacting partners are located), at the expense of hollowing out domestic industry and running a deficit in physical goods traded.
The solution is a non-national global reserve, calculated on a basket of national currencies. This was Keynes argument at Bretton Woods, but the US would not have it then, and does not want it now.
by hunglee2
5/20/2025 at 1:56:34 PM
US doesn't just get political influence. It gets massive amounts of products and services enabling the US residents live well beyond their means.China for example, sends huge number of electronics and all kind of other consumer goods that Chinese produce by sweating in 12 hours shifts in 6 day work weeks in exchange for imaginary numbers.
US is definitely not the victim here. There's the risk of this system stop working and that's when the US might have hard times due to being forced to live by its means and have no ability to kickstart its own production when that time comes.
It makes sense to be worried for such an eventuality but US is definitely not being taken advantage here. The situation is more like selling your startup at young age and live a lavish lifestyle with the money without working and studying and risk becoming penniless and unemployable by the 50s.
by mrtksn
5/21/2025 at 12:42:58 PM
Your statement would be true without nuance.Yes. The mass of US consumers do benefit from penny subsidies of certain foreign product.
However, for every penny of foreign subsidy benefitting US consumers buying finished iron or steel goods, a US metallurgist is losing a job somewhere.
On strictly numbers, we are better off with foreing-paid subsidies yes, but there are losers, and they take the brunt of the downside.
So id update your analogy by adding a twist: your childhood sitter living on anytown, USA was the virtual receptionist of the business. She had no RSUs in the business. She stayed in anytown and declined a career in a larger, growing city because she found virtual work and it made her happy. Now she's stuck with a mortgage, in a dying town, and with no career prospects locally. And all because you offered her a job that incentivized her to move, and then changed the relationship to her job 180 degrees .
Separately, ive only discussed the trade impact on consumers. We arent going into trade impacting producers, for example matters like producers having their inventions stolen, or their investment nationalized, to name a few examples.. -
by IG_Semmelweiss
5/21/2025 at 1:42:31 PM
How does the life of a US metallurgist who works part time at a grocery store compare to a Chinese metallurgist who is working 70 hours a week doing metallurgy?by Buttons840
5/21/2025 at 2:24:53 PM
I have interacted with Chinese people in IT for a few months, and they worked 5 days per week. I don't know how many hours they made per day.Another interesting stat is that they live longer on average than US people.
And until recently, men retired at 60 and women at 55 yo.
by JPLeRouzic
5/21/2025 at 4:34:38 PM
From working in China a bit (though could be wrong, n=1 anecdotes etc.), the majority of IT people are probably the lucky ones who mostly had a middle class upbringing, could live in a reasonable city and studied hard at school or had well connected parents. Life growing up with parents who were a rural rice farmer or metal scrapper or something would be way different. It is very hard to get a job after a certain age compared to the west, and there is pressure in some areas for women to quit once they have children.It was common to see people working from 7 or 8 am to 8 or 10pm in my office, though with a 2 hour lunch break where most people slept.
On average, people tended to look way healthier (at least superficially) on average compared to places I have been in the US. Maybe due to diet and activity level.
by quacksilver
5/21/2025 at 7:39:49 PM
Look up 996.https://www.bbc.com/news/world-asia-china-58381538
https://www.technologyreview.com/2021/11/15/1039650/china-te...
by ppseafield
5/22/2025 at 12:29:13 PM
That is a side effect of chinese kitchens shunning refrigeration and thus processed food. Even with the polution that makes for a healthier lifestyle .Although the younger generations catch up diabetes wise .by ashoeafoot
5/21/2025 at 8:07:14 PM
It is well known and established that stats favor rhetoric, and by extension lack credibility as fact.If you can't guarantee the expected methodology conformed in collection, bad data in causes bad data out, its worse than no data at all.
by trod1234
5/21/2025 at 10:26:34 PM
Occasionally, I wish I commented often enough to get downvote privileges.by a123b456c
5/22/2025 at 11:06:08 PM
Occasionally, I do to.Are you trying to say that China doesn't fabricate and lie about their metrics and collection methodology? because I hate to be the one to break this to you, it does and there's a lot of news coverage on it going back over a decade.
https://www.scmp.com/economy/economic-indicators/article/324...
https://sites.lsa.umich.edu/mje/2023/05/01/why-the-world-is-...
https://dialogo-americas.com/articles/china-withholds-manipu...
by trod1234
5/23/2025 at 8:02:20 AM
From one of the sources you provide:"reported by the state-run People’s Daily newspaper"
This sounds like a case of honesty, not the other way around.
by JPLeRouzic
5/23/2025 at 3:16:22 PM
They only started blaming the locals once there was concrete proof internationally where they were caught in the lie, and there is plenty of material all of which support this; not just the ones I linked.Shame is one of the worst things for Chinese culturally.
The fact is, this is not in doubt, and it wasn't a one time thing but rather a consistent effort. Do a simple google search, look at the dates of the articles, they go back decades.
Its well established at this point that this is what one must expect with them.
by trod1234
5/21/2025 at 4:26:28 PM
The latter is getting skills in real-world productive work?One problem with our information-and-services economy is that it enables a giant proportion of the population to live without any understanding of how anything in the physical world operates. You inhabit a universe of magic, using magic made by other people to provide services.
Eventually the entire country loses the ability to make anything in the real world.
by api
5/21/2025 at 5:01:29 PM
Good question, the former will have an easier life but still struggle to support a family (and will likely not have a family). The later will have a harder life but people depending on the later will live standard middle income lives.What happens when the part time grocery job is automated away?
The answer to that is not very pleasant for consumer economies.
by fooker
5/22/2025 at 12:21:01 AM
> However, for every penny of foreign subsidy benefitting US consumers buying finished iron or steel goods, a US metallurgist is losing a job somewhere.The US consumers can't bear the prices of US craftspeople anymore. Their purchasing power will drop so much that they would wish they still had the deficit and access to AliExpress. And nobody in the US will want to do factory jobs anymore. Really who wants to screw iPhones together all day every day for minimum wage? The few jobs on that category that are left are done by... immigrants. You know, the ones that Trump is kicking out. The ones that worked long hours to be able to live in the ghetto areas hoping in vain they'll one day benefit from the "American dream".
by wkat4242
5/22/2025 at 12:58:04 AM
You're overall correct, but made me notice that there is actually an unusually coherent argument (by their standards) being presented by the reactionaries pushing for the things you mention. It goes roughly like:>The reason these jobs are terrible is because immigrants are doing it for wages that would be intolerably low to anyone else.
>This is also why it's hard to find a decent job in general, our competition is basically cheating!
>But if we remove the immigrants, the employers will surely have to increase wages like they were supposed to
>Now americans will have high paying factory jobs, and if some goods increase in price that's ok, their wages will let them afford it.
>we got to have our cake and eat it too!
Obviously they're missing some key steps and consciousness here in the reasoning, but I feel it's interesting to reflect on in context of how it's almost right -- and surprisingly close to a marxist view of things until it starts assuming things like that individuals have more bargaining power than their employers or that economic agents will always try to set the lowest price they can afford for goods rather than the highest.
So for example they'd believe prices would only go up a little and manufacturing companies would just live with stagnant or reduced profits since they'd have no other choice.
Notice how they have a habit of assuming totally Good behavior from Companies but totally Bad behavior from Immigrants!
I think in context of all that, it becomes more visible both how we could actually resolve this problem other than by just accepting the loss of domestic industry, and what in specific the people falling for this narrative are being hooked on.
by monkeyfun
5/22/2025 at 8:03:59 AM
Well it's not just that but also the expectation that their wages will increase. The current government is only trying to drop the minimum wage (under the guise of minimum wage earners being losers/leeches which is a strange reasoning)And very few Americans are actually unemployed. The disappearance of manufacturing is a process that started decades ago and most people have moved on to bigger and better things. So why would they be making more in a minimum wage factory job? They will be making less and without access to cheap Asian manufacturing they can do even less with it. I totally agree the idea of companies doing the right thing is wrong.
But yes the reasons we're doing better in Europe is that we're not giving free reign to companies and have good welfare systems. When people have less worries about their survival they spend more. Of course to Trump backers this is unthinkable because of 'socialism'. Yes it is socialist which is different from communism.
We do of course have similar problems (housing is a problem too and there is resentment of immigrants)
I think the problems here are less bad though because:
1) We don't have a two party system (except for the UK which is in a similar situation to the US). That means it's not a zero sum game. A loss for one isn't an automatic win for the other. So politics are more focused on the positive than kicking the other down. Also we don't have this powerful singular leader with the kind of power the US president has.
2) Right wing politics is more a religion than anything. Not in a god per se but in the narrative and leader. Its followers like being told what to believe. This works best on the poorly educated. We see the same here but because our education system is better (less difference in quality between poor and affluent areas), less people fall into that trap.
by wkat4242
5/22/2025 at 12:05:43 PM
> We don't have a two party system (except for the UK which is in a similar situation to the US).The UK does not have a two party system to anything like the same extent the US does. There are 13 parties with at least one seat in the House of Commons and 15 independents.
Smaller parties look likely to gain a lot more seats in the next election.
> But yes the reasons we're doing better in Europe is that we're not giving free reign to companies and have good welfare systems
Historically true, but it seems to be less so.
> Its followers like being told what to believe. This works best on the poorly educated.
I think it is not that simple. The poorly educated correlate strongly with the poor, who have done badly in recent decades.
> We do of course have similar problems (housing is a problem too and there is resentment of immigrants)
To a great extent in some countries. There are multiple European countries that have parties more extreme than the US right that are growing: AfD, PVV, Fidesz, Rassemblement national etc.
by graemep
5/23/2025 at 4:26:41 PM
> Smaller parties look likely to gain a lot more seats in the next election.That's true but that's more because the "two party system" became a one party system with labour doing the same as the tories. They started to become more different again under corbyn after the disaster of "tory-lite" but now they're right back to their old ways.
> I think it is not that simple. The poorly educated correlate strongly with the poor, who have done badly in recent decades.
Yes but voting right-wing is making them even more poor because the right only think of the poor as a natural resource. Yet they manage to convince them they care. Why would a billionaire care about the poor?? The only reason they became a billionaire was exploiting the poor. The only reason billionaires exist is the huge gap between rich and poor and those are always going to draw the short end of the stick.
If they voted left they would fare way better. Yet the right manages to convince them that the left only wants to take what's theirs. This image is very apt I think: https://pjhollis123.medium.com/careful-mate-that-foreigner-w...
> There are multiple European countries that have parties more extreme than the US right that are growing: AfD, PVV, Fidesz, Rassemblement national etc.
I don't think those are more extreme than the Republicans are now. They are the exact same. I'm from Holland myself and the reason the PVV (and also similar parties like FVD and BBB) is not getting anything done despite being the biggest party now, is that the coalition government waters everything down. The current government is constantly trying to grin to one another while trying to shoot each other in the back. Which is good, because it undermines their ability to do anything. I doubt they will make their full term.
by wkat4242
5/21/2025 at 1:59:01 PM
You might be losing as an individual but the country gains.by MaxPock
5/21/2025 at 3:25:02 PM
This is the exact same as automation. We need to be sure that we take care of those who lose their jobs.Truck Driver is one of the most popular professions in most states but the end is coming soon: https://www.cnn.com/2025/05/01/business/first-driverless-sem... you can imagine that they'll only need drivers that aren't on interstates or for inclement weather.
by abirch
5/21/2025 at 5:12:38 PM
People who lose their job need to take care of themselves. That's the only way it works. You can only make it easier on them and enable success.Teaching kids real fincial literacy and how to leverage derivatives is an approach to solving this problem (most adults can't even grok a check book). Save while you can and preserve and multiply your wealth.
In the typical truck driver world they have zero market participation other than selling their labor and maybe a 401k stuck in money markets or bonds, no derivative strategy and zero clue on what saving for retirement entails or how the money is leveraged in retirement. They do understand that they plan on working until they die but that isn't likely to pan out either.
We have a <100 IQ population living in a 120 IQ world and have created a meat grinder with all these tech and tax laws. You shouldn't have to work for 40 years.
by datavirtue
5/21/2025 at 6:29:37 PM
> People who lose their job need to take care of themselves.This feels incredibly simplistic. Taxpayer dollars go into funding tons of research that has led to automation improvements. Why shouldn’t taxpayers get some sort of return on that investment? When the US government negotiates trade deals, the money the country “saves” could go anywhere, to anyone. Why does almost all of it go to companies and not taxpayers? If a company wants to offshore work, why do they get to keep all of the monetary difference for themselves, instead of paying a substantial portion back to the country? Privatize the profits, socialize the costs doesn’t have to be how we allow companies to operate.
“Help themselves” assumes that all the other factors are some sort of unchangeable natural laws, and not laws and regulations chosen. We could choose different rules that more directly returned gains to taxpayers, instead of vague trickle down type benefits.
by 542354234235
5/21/2025 at 7:56:19 PM
> Taxpayer dollars go into funding tons of research that has led to automation improvements. Why shouldn’t taxpayers get some sort of return on that investment?But I am getting return on my investments: shipping costs will go down and, as a result, the toilet paper I've ordered online will be 5c cheaper and arrive 2h faster.
by maest
5/22/2025 at 9:19:33 AM
>Teaching kids real fincial literacy and how to leverage derivativesThat was a very specific skill you named. What are you referring to though? Literally leveraging derivatives on that market or are you being metaphorical?
by southernplaces7
5/21/2025 at 7:57:05 PM
What you are advocating is almost pure kapitalism. Its unfair/unbalanced as much as pure socialism is inefficient.by nuancebydefault
5/21/2025 at 4:25:54 PM
>>>> You might be losing as an individual but the country gains.The country is not an individual.
A country can't be happy, or sad or unemployed. People are.
So who in the country gain ?
by IG_Semmelweiss
5/21/2025 at 3:54:33 PM
Chris Arnade wrote a book, 'Dignity', traveling and talking with 'back-row' Americans about the individuals who have had the losing end of how the US economy has been run. I also think of James McMurtry's song 'Can't Make It Here Anymore.' Lastly, I'd wager anyone who's on the winning end of the US economy can drive half an hour out of town and find empty storefronts and rundown houses.If the purpose of the country is to support the 'life, liberty, and the pursuit of happiness' of individuals, there might be a balance that needs to be re-struck.
by pjmorris
5/21/2025 at 5:16:44 PM
In the 1920s almost the entire countryside of small towns evaporated to the major cities and urban sprawls.Since the 1950s anyone has been able to find empty towns in all directions.
There are some slight variations but most populations across US small towns peaked in the early 20th century.
by datavirtue
5/21/2025 at 4:27:45 PM
GDP (or equivalent) gains.Ricardo only says big aggregate number go up (with a bunch of caveats). Not for whom within that aggregate. It can (hypothetically) be one person seeing huge gains while every single other person loses a little bit. Or, pick any more-plausible scenario that sees a very-few benefitting greatly while the net for the rest of the population is somewhat negative.
by alabastervlog
5/22/2025 at 1:44:36 AM
The gains need to be socialized.by UltraSane
5/21/2025 at 1:01:27 PM
Good point but I think these are about the choices you make.You can choose to look after your metallurgist who become obsolete as a laborers but I'm sure they are amazing people. You might be worried for becoming communist or welfare state though.
You can choose to limit trade and other freedoms so you can artificially keep metallurgists at work so you don't have to share what you have with them without exchanging something. This can help you can feel good about not giving away freebies and pretend that this is a meritocracy but suffer from slow progress and other conflicts related in preserving these artificial limits.
You can just choose to leave them to suffer as long as their numbers are not enough to bother you. This one gives you the good life until suddenly it stops doing that if the numbers go up enough.
I guess in this case it was to ignore the "losers" in the system until they become numerous enough to tear down the whole system. A lot of people who vote for obvious frauds and outright fascists(I'm not talking about USA, but in general) are just anti-establishment who don't mean bad but just want to see the current order teared apart at any price.
by mrtksn
5/21/2025 at 1:55:50 PM
> who don't mean bad but just want to see the current order teared apart at any price.That sounds like a terribly bad intention to me. Significant destruction of social order leads to either authoritarianism or anarchy. Neither are even remotely desirable. The only sane path to deep, lasting, but also healthy change is to systematically work on each specific sector - only dismantling while building something better at the same time. Otherwise you are just an agent of suffering. This pathological egoism does not qualify, even remotely, as "don't mean bad".
by sgc
5/21/2025 at 2:28:10 PM
Sure its bad but its worse for those who have it good. Also, people don't plan or predict every outcome, they just want change and when that change is denied that's how we have civil wars. It all starts with a peaceful protest or some petty grievances and keeps growing when ignored or dismissed.by mrtksn
5/21/2025 at 4:34:36 PM
Yes, people do terrible things by neglecting their moral duty to actually think things through. This is a very basic known truth.by sgc
5/21/2025 at 4:15:13 PM
I will make you a deal.I will accept this premise of "choice" with 1 condition.
I will personally advocate for tariffs at 0% worldwide in 2030, if in the interim, ALL permits required to have or work as :
- an accredited university
- work in national security,
- or in university professors (economists!),
- accountant
- lawyer
- pharmacist
- insurance brokers
- any other white-collar profession, etc
Are rescinded. All of them.
So, anyone from abroad can open a university tomorrow, and get student loans, grants etc money. Or, anyone from china can come and become an accountant, if E&Y wants to hire them , either remotely, or in person. Up to E&Y.
Yes, those in person workers would use temporary (seasonal visas) for those jobs. So someone from China can come and teach econometrics at Stanford if Stanford wishes to hire them for 8 months (the undergrad season). Or someone can start a new Stanford in Bangalore, or whatever.
In other words. You don't need a license or some kind of permit to practice as a professor, or at a desk job at Raytheon.
Do you accept ?
My point. White collars are are protected by the state.
In the real world, i've come to learn that "free trade" doesnt actually mean "unrestricted free trade" .
Its just an excellent sleight of hand to say "free trade" when in the real world, the position you actually advocate is to sacrifice the have nots, while leaving the elites untouched
by IG_Semmelweiss
5/21/2025 at 2:47:35 PM
> pretend that this is a meritocracyThat is unfortunately all we do today. If you think our current system is a meritocratic one, do I have some bad news for you.
> You might be worried for becoming communist or welfare state though.
What does communism have to do with anything parent wrote?
by Draiken
5/20/2025 at 5:40:23 PM
Indeed true - US is 4% of the global population but 25% of the global consumption, if not more. You can see this via the eyeball test - everything is bigger: cars, houses, even the people. US invented 'overproduction' to smear Chinese manufacturing, but did not consider the other side of the coin, which is US 'overconsumption'. Two to tango etcby hunglee2
5/21/2025 at 1:06:50 AM
Wouldn't it be more apt to compare consumption vs production. It looks like US is about 26% of global GDP from a quick google. But I'm also suspect of comparing GDP's across nations that have very different methodologies.Also services are counted there, so it's likely we're exporting services in exchange for manufactured products.
by grayfaced
5/21/2025 at 6:08:52 AM
US GDP is grossly inflated by 'services' many of which are non-productive, even deleterious to society. Healthcare is probably the best example of this, I believe it is 10-15% of US economy, yet health outcomes for the people can be extraordinary poor, seeing as majority of bankruptcies in the country are as a result of healthcare costs incurred. We need to find a way to separate 'good' vs 'bad' GDP because the measure is way too crudeby hunglee2
5/21/2025 at 6:18:43 AM
Seems like U.S. healthcare spending is 17.5%-19.5% of its GDP: "Overall, health spending was 17.6% of GDP in 2023, similar to pre-pandemic shares (17.5% in 2019) after an uptick in 2020 (19.5%) and 2021 (18.3%)." (https://www.ama-assn.org/about/ama-research/trends-health-ca...)by eagleislandsong
5/20/2025 at 6:29:34 PM
I see this tossed around but no one ever seems to point out that EU has similar numbers, which are about half, but still extremely higher than global average; and much more so in the richer countries of the EU (per capita of course)by EasyMark
5/20/2025 at 6:57:32 PM
The EU complains about China Shock equally as much as the US [0][1][2][3][4][5][6]Just becuase Trump burnt bridges with the EU doesn't mean that EU member states will gladly allow job losses across Europe's industrial heartland to a country that is supplying a direct competitor (Russia) that has conducted grey zone warfare within the EU
The EU and it's member states are all working on building domestic capacity, and pushing Chinese manufacturers to manufacture WITHIN the EU [7][8], and further diversifying by making FTAs with ASEAN [9][10], Japan [11], SK [12], India [13], etc.
In essence, nothing has materially changed in European policy with regards to China compared to under the Biden administration.
Chinese overproduction is a global issue now, and most major economies and blocs have enacted barriers and will continue to do so unless China removes it's barriers to imports, subsidizes, and technology transfers.
[0] - https://ecfr.eu/publication/electric-shock-the-chinese-threa...
[1] - https://www.cer.eu/publications/archive/policy-brief/2025/ho...
[2] - https://www.gmfus.org/news/watching-china-europe-may-2025
[3] - https://www.chathamhouse.org/2021/07/eus-unsustainable-china...
[4] - https://www.ecb.europa.eu/press/blog/date/2024/html/ecb.blog...
[5] - https://www.iza.org/publications/dp/13259/hit-by-the-silk-ro...
[6] - https://www.bloomberg.com/news/articles/2025-05-15/eu-econom...
[7] - https://www.economist.com/europe/2024/09/19/near-shoring-is-...
[8] - https://www.bruegel.org/sites/default/files/2024-07/The%20EU...
[9] - https://www.reuters.com/world/china/sweden-propose-eu-member...
[10] - https://www.ft.com/content/bee31826-012d-4bb1-a6eb-d6cc0d4ef...
[11] - https://policy.trade.ec.europa.eu/eu-trade-relationships-cou...
[12] - https://trade.ec.europa.eu/access-to-markets/en/content/eu-s...
[13] - https://apnews.com/article/india-eu-modi-ursula-von-der-leye...
by alephnerd
5/21/2025 at 2:59:59 AM
What about the EU stopping its own subsidies first, before asking this from other countries?by coliveira
5/21/2025 at 3:55:51 AM
Why not China. China spends 1.73% of it's GDP on subsidizes compared to 0.4-0.6% for France and Germany [0].At least Germany and France open factories across the EU. Chinese manufacturers did not until the EU began tariffs actions.
Furthermore, Chinese dumping in solar destroyed Germany's original lead in PV manufacturing, and China continues to force foreign manufacturers like VW to partner with Chinese SOEs.
European nations may as well demand the same as well then.
And Chinese dumping is something all nations are fighting - especially other developing countries like Vietnam, Indonesia, India, Brazil, Mexico, etc.
[0] - https://csis-website-prod.s3.amazonaws.com/s3fs-public/publi...
by alephnerd
5/21/2025 at 6:25:06 AM
> force foreign manufacturersIs it accurate to say that these companies are "forced"? Shareholders make cold, unfeeling, selfish calculations all the time. The shareholders of these companies could simply elect not to do business in China and accept the consequences of diminishing their access to the Chinese market.
Using the word "force" suggests that the largest shareholders of these corporations are victims acting under duress, which they most certainly aren't.
by eagleislandsong
5/21/2025 at 11:51:39 AM
That's laughable, countries in BRICS are so "worried" about Chinese cheap industrialized products, like cheap comfortable EV cars, that they're making more and more treats with China to keep these products coming...by coliveira
5/21/2025 at 4:42:23 AM
Or maybe the EU should subsidize more instead of policing around?The EU reminds me of the teacher's pet going around the playground, telling all the other children that they should follow the rules. But of course, the pet doesn't have a big stick, so nobody really bothers listening to him/her.
by fakedang
5/21/2025 at 4:54:35 AM
I don't disagree with the EU's laggardness around changing economic tides, but if just about every major economic bloc and country is initiating trade barriers against China to protect their domestic industries, at some point the common denominator is China.And as I mentioned elsewhere, much of this overproduction would go away were Chinese consumers able to dip into their savings if China's social safety net was expanded and the CCP's Reaganesque opposition to "Welfarism" was toned down.
by alephnerd
5/21/2025 at 10:03:40 AM
Of course but the EU thinks it’s a better strategy to engage with China which remains a major partner to move the needle in the right direction rather than burn bridges. There are a lot of tools which could be used to limit the impact of Chinese surproduction and push China towards shoring up its internal market.The US used to do the same and will hopefully be sane again in three years.
by StopDisinfo910
5/21/2025 at 12:09:01 PM
Command economies hell-bent on economic dominance are not going to engage. The only way to limit Chinese super production is to either block their goods outright or to subsidize your own to out-price theirs locally.A lot of people don't understand the CCP mentality clearly. China was once the epicenter of human production, making things the rest of the world desired, from Chinaware to silk to tea. The rest of the world fought wars and crossed oceans to obtain exclusive rights to those goods, while the Chinese dynasties simply sat on their thrones and levied tributes from every farflung nation. The CCP wants to return China to THAT level of dominance, this time with tech, electronics and an addiction to rare raw materials.
by fakedang
5/22/2025 at 3:32:58 AM
> sat on their thrones and levied tributes from every farflung nationYou mean, like the US is now doing?
by coliveira
5/22/2025 at 2:39:01 PM
Nope. Would have been the case if the US imposed usage taxes on foreign users of its goods and services, like tech products and cloud services, but that's not what's happening.The Chinese tributes were more like payments for the right to trade those goods (which were separate from the cost of goods itself). That's why when the European traders arrived in China, the Emperor simply thought that they were another tributary state seeking protection and trade rights.
by fakedang
5/22/2025 at 3:48:18 PM
The US is imposing terms on foreign countries for use of its goods, that's what the chips restrictions are all about.by coliveira
5/21/2025 at 11:48:54 AM
There is no such thing as "overproduction", all production in China is reaching a destination, so by definition it is the right production level.by coliveira
5/21/2025 at 5:00:17 AM
Retaliatory measures are a better way to balance things rather than playing a game of command-economy brinksmanship.by nwienert
5/20/2025 at 10:32:51 PM
[flagged]by TacticalCoder
5/21/2025 at 4:30:40 AM
> ZeissSince when is Zeiss Swiss and not German?
Also if ASML is partially US owned so are all major US tech companies partially “EU owned” in a similar way.
by wqaatwt
5/21/2025 at 7:02:08 AM
Bayer owns Monsanto for instance.by mordae
5/21/2025 at 9:27:33 AM
> It's exactly what's happening: what used to be leaders in ICE cars are now the laughing stocks of the EV world.This is really nonsense. VAG, BMW and Mercedes have been making good EVs for many years and are now progressing to making excellent ones. They only really lag Tesla on the software/hardware integration (and that isn't actually much of a selling point outside the HN crowd) while they lead on more traditional points like cabin quality.
If you previously wanted to drive a Golf (and tens of millions of people did), then you're likely to want to drive an ID.3, ID.4 or Enyaq. If you previously wanted to drive a Passat, then you're likely to want to drive an ID.7. If you liked the BMW saloons, you'll like the i4. Mercedes are a little further behind, but they're getting there with the EQE.
If I wanted to bet on the shape of the European car market in five years, I'd be betting on German, Korean and Chinese EVs dominating. I don't see much future for American brands on this side of the Atlantic.
by gnfargbl
5/21/2025 at 6:35:11 AM
Why stick around if you have this amount of pent-up hatred and disgust for the EU, the people who live here, and everything they believe in at a fundamental ideological level?If you believe the grass is so much greener on the other side then why not just go for it? Judging by your nickname I'm assuming that you have the means to move just about anywhere if you really wanted to, but I think you'll be sorely disappointed no matter where you end up going.
by dns_snek
5/21/2025 at 7:12:47 AM
> I'm not that concern for the US: lifestyle may go down a bit, but the US is a country of do'ers.Yeah, drug do'ers.
by formerly_proven
5/21/2025 at 7:15:57 AM
Whats stopping you? You sound like jaded old fool who made some serious irreversible mistakes in their lives, and now just overflowing with regret and hate.EU may be foolish in some aspects, I agree there, but life quality as in actual daily levels of stress, happiness, quality of life, quality and costs of basic services that take care of weak (which one day you will inevitably become too) is stellar and parsecs better what people in same position in life can rely on ie in US. Or crime level. Or free decent education.
But we have freedom, you don't like a place then trivially move, if your skills are worth its salt. You can spend rest of your life in society that has different priorities and thrive there, if you can.
by jajko
5/21/2025 at 8:31:44 AM
The question is whether this life quality is sustainable long term.Of course, the same goes even more so for US.
by int_19h
5/21/2025 at 1:00:32 AM
> It gets massive amounts of products and services enabling the US residents live well beyond their means.What does this mean really? That is their means.
For a somewhat topical example, people of Australia get access to cheap medications (in part because they pay to subsidize the cost of them but also because) their government negotiates with pharmaceutical corporations to pay lower prices. This kind of negotiation would be completely out of reach of any private Australian person, but they are not living outside their means. Their means includes the means to elect governments to run the country for the benefit of its own people including doing things like securing lower prices for medications.
> China for example, sends huge number of electronics and all kind of other consumer goods that Chinese produce by sweating in 12 hours shifts in 6 day work weeks in exchange for imaginary numbers.
Until 1990, Kenya had a higher GDP per capia than China. It is absolutely not "imaginary". Work produces real value, just because you can represent or trade that for allegedly "imaginary" currency does not mean that the value created was imaginary.
> US is definitely not the victim here. There's the risk of this system stop working and that's when the US might have hard times due to being forced to live by its means and have no ability to kickstart its own production when that time comes.
US manufacturing output is double that of China's on a per-capita basis.
> It makes sense to be worried for such an eventuality but US is definitely not being taken advantage here.
Seems like that's the popular assertion but I don't see much solid reasoning behind it in this thread (not picking on you specifically), just handwaving about how USD's status as a global currency somehow makes trade deficits inevitable despite simple facts available that US had a surplus trade balance 50 years ago, when the USD has been considered the global / reserve currency for over 60 years.
by starspangled
5/21/2025 at 6:28:11 AM
For other countries USD is something they have to work for or sell something to acquire it. If they screw up they may end up in crisis being unable to obtain USD. Borrowing in their own currency will be much more limited and borrowing in USD much more costly.USA on the other hand can just print it out of thin air and because the global USD liquidity is huge they can do it for much longer without facing the consequences of it. USA is also borrowing in currency they can just print to pay their debts. Very advantageous position for USA and they took advantage of it, imported crazy amount of products and services otherwise they wouldn't have.
by mrtksn
5/21/2025 at 10:43:50 AM
Thank you for elucidating the fact that US “borrows” in its own currency and so as long as we have monetary sovereignty (which we do to a great degree due to USD being the global reserve currency) we have no deficit problems (as long as we keep inflation in check).I implore everyone reading this thread to read up on Modern Monetary Theory (MMT). Stephanie Kelton’s “The Deficit Myth” is a good place to start. Until more people have a better understanding for how the system works, they’ll continue to be confused and easily led astray by politicians who don’t have the best interests of most people in mind, but instead wish to rob us blind in a vain attempt to eliminate trade/budget deficits.
(Note: I’m very much for restoring domestic manufacturing as much as possible, including the use of highly targeted tariffs, industrial policy, R&D, workforce development, etc. but this is not what the current administration is doing, not even close).
by selimnairb
5/21/2025 at 12:23:17 PM
as long as we keep inflation in check
by zaphar
5/21/2025 at 1:46:15 PM
Taxes. Letting bubbles pop without bailing out the losers.Both of those can be targeted in such a way as to deflate an inflated economy in a controlled way. The messaging is the hard part, as you're fighting against the emotions of a prideful workforce and the teeth-gnashing of the ambitious elite who see the stars as the literal limit. It is, however, possible to make sure everyone gets what they need to survive and even modestly thrive, while bringing the insanity of our current asset valuations and consumer prices back down to Earth, for a fraction of the cost of trying to keep the charade going indefinitely. You just have to throw rich people under the bus, instead of young and middle-aged workers whose purchasing power bleeds out every time we do yet another never-done-before thing to backstop failing banks and securities.
>That's a planned economy.
Man, do I have something to tell you about the FFR, porkbarrel spending, etc....
by h2zizzle
5/21/2025 at 3:13:17 PM
Taxes don't remove money from the supply unless the government is refusing to spend it. In which case that is just "reduce your budget and spend less" with extra steps. If you could do one you could do the other just as easily.And letting bubbles pop isn't an MMT thing. It's bog-standard economic theory. The fact that politicians often don't do it has nothing to do with which theory they subscribe to. It's just cowardice on their part.
by zaphar
5/21/2025 at 5:35:35 PM
> In which case that is just "reduce your budget and spend less" with extra steps.I'm pretty sure the extra steps are the point, in that I simply don't believe the MMT folks expect them to ever take place.
It's not a coincidence it's an American theory, from a country where it's politically almost impossible to raise taxes. Otherwise it would just be a roundabout way to raise taxes and pay for stuff in reverse order. But in fact it isn't "buy now pay later". It's "buy now YOLO LOL". But hey, maybe I'm missing something.
by 0xBDB
5/22/2025 at 12:01:48 PM
I don't know why one would think they would perform the extra steps any more than you would expect them to reduce the budget and spend less.by zaphar
5/21/2025 at 12:53:05 PM
> MMT discourse tends to gloss over or ignore the dangers of runaway inflation and act as if you can borrow all you want with no consequence.I see people say this a lot, which is odd since as far as I have seen it's one of the main points MMT people make. I'm not sure how one of the core insights of MMT has become the main criticism of it, it's kind of funny.
I suppose this is because some people have taken MMT to mean that debt doesn't matter, however that is really not at all what it says. I think a more reasonable conclusion of the system MMT describes is that how money is spent matters greatly (productive vs unproductive spending), the primary purpose of taxes is keeping inflation in-check, and real resources are critical to the health of a currency.
by OGWhales
5/21/2025 at 1:12:59 PM
Exactly. The power of MMT is that it credibly explains what taxes actually are (not a source of government funding, but control rods for inflation and a constant source of domestic demand for the currency that helps maintain monetary sovereignty) and how to make sure spending is productive and not inflationary (e.g. through the currency issuer being the employer of last resort, etc.). You might not like it, but if you want to have a vaguely capitalistic system that has long term stability, you need to employ mechanisms like this.by selimnairb
5/21/2025 at 1:56:54 PM
I have not seen an explanation that makes the case for taxes as a good tool for controlling inflation. This is sort of what I mean by the discourse ignoring inflation. We already know what how inflation happens. MMT doesn't bring anything new to the table here.by zaphar
5/21/2025 at 8:56:58 PM
> I have not seen an explanation that makes the case for taxes ... This is sort of what I mean by the discourse ignoring inflation.I've not seen one that is properly based in reason either, most lines of thought in this vein typically use a strawman version of Say's law as the basis, following a deeply carved fallacy in economics from an early error of Keynes.
by trod1234
5/21/2025 at 12:49:50 PM
It really is bizarre that huge portions of economics nowadays sidestep the fact that individuals, groups, and countries, have finite amounts of credibility.That it can be depleted and take well over an average lifetime to regain.
by MichaelZuo
5/21/2025 at 11:04:29 AM
I don't think domestic manufacturing works anymore.The pressure to automate will just skyrock.
I'm more for a global currency which will be given to everyone who does certain jobs we can't automate away or don't want to like nursing, teaching.
Everyone around the globe can get worldfiat when they do these jobs.
We need to start thinking beyond known capitalism in a modern highly automated world.
by Flemlo
5/21/2025 at 11:27:00 AM
There are important reasons to have domestic manufacturing even if automated and not creating jobs.by mmillin
5/21/2025 at 8:03:14 PM
Sure but that's not enough to give people enough jobs.by Flemlo
5/21/2025 at 12:48:14 PM
We want automation x1000, every useful automaton increases the quality of life by increasing productivity.by mensetmanusman
5/21/2025 at 1:37:30 PM
We don't have as problematic a deficit problem so long as reasonable sane people are running tr4e system and willing to turn on the printers when required so as not to generate excess inflation.by johnrgrace
5/21/2025 at 11:37:24 AM
[dead]by OfficeChad
5/21/2025 at 6:54:17 AM
Many countries control their currency and can print money to pay debts, and can control their fiscal and monetary policies to best gain advantage for themselves. And they do.US can do some things more, bigger, longer, etc., for various reasons. Just like Australia can do more, bigger, longer, etc., than Tonga. I don't really see anything profound being said here.
USA might be in some advantageous position now, and it might not always be in such a position, which is a pretty bland observation, but it also does not support the idea that they are living beyond their means today.
by starspangled
5/21/2025 at 7:14:43 AM
The reserve currency status makes all the difference on how much of all this you can do and under what conditions. That's the difference and that's why US had it so good for so long and now is due for such a large correction. Also, US is blessed with huge natural reserves, didn't actually waste it all on drugs and alcohol but did in fact created some of the best institutions in many areas so maybe it wouldn't be that bad if the politics don't make it bad.by mrtksn
5/21/2025 at 7:38:54 AM
It's not a reserve currency because the US decided it is, it's a reserve currency because everybody else decided it is. They decided that because they decided it was in their own best interest to trade in and maintain reserves of USD.But whatever difference it makes is still just a matter of degrees. Countries keep reserves of and trade in currencies other than USD. Some get more benefit than others from this, and they all work to benefit from what advantage they can take from their own positions within their means to do so.
by starspangled
5/21/2025 at 8:48:55 AM
USD became the reserve currency in the Bretton Woods, when it was pegged to gold and major currencies were pegged to USD. This was pretty much demanded by US in the Bretton Woods conference.In 1971 US unilaterally scrapped the Bretton Woods and essentially stole the gold reserves. Other countries protested heavily but could not really do much.
US then transitioned to the petrodollar system where demand for and value of the dollar is/was ensured by dollar monopoly in oil trade. This was done with deals with oil producing countries with varying levels of coercion.
Granted it is in a country's best interest not to piss off the world's largest military. Silver or lead is a decision too.
by jampekka
5/21/2025 at 12:24:32 PM
The gold reserves wasnt stolen - it is the US's gold that was acquired as a result of WW2. The revocation of the convertability of the US dollar to gold was suspended because it became impossible to honor it due to the increase in the amount of circulating dollars (what people generally call printing - it isn't "printed", it is debt created that produced more currency). And imho, while it seemed like other countries complained, i think this system allowed the world to move off the gold standard - a system which does not allow for flexibility.And the idea that the US somehow enforces their dollar as being the reserve is moot - it is simply not true. Countries use the US dollar for trade because both sides of the trade believes that the other side cannot "cheat" using this currency, and implicitly believes that the US gov't won't "cheat" on behalf of one side either.
Unfortunately, this trust is being undermined from various sides, including the current US administration (and i have a hard time believing that the trump administration doesnt know this - it seems deliberate).
by chii
5/21/2025 at 7:52:16 PM
The situation was similar to there being a gold ETF that just decides to remove the gold peg and start diluting the shares. Whether that's essentially stealing or not is a matter of terminology IMHO.US for sure didn't do it out of goodness of their hearts even if it led to arguably better monetary system. And US did get lopsided benefits out of it. Consistently recieving more goods than you give out is a huge benefit.
by jampekka
5/21/2025 at 11:22:46 AM
In other words, what I said was correct.by starspangled
5/21/2025 at 12:59:08 PM
Is the USD due for a correction? I would agree the current policies do not help, however I have a hard time seeing any other currency actually replacing the dollar as the world's reserve currency.by OGWhales
5/21/2025 at 4:02:13 PM
If USD stops being global currency, there probably will not be just one that replaces it, but there will be several competing ones (USD still probably being there), for foreseeable future, with countries hedging bets.by unionpivo
5/21/2025 at 11:18:00 AM
When Aus print money they devalue the currency, spreading the cost over all Aus dollar holders.When USA do the same, the non-USA dollar holders also take on the cost, same-same, excepting that is everyone around the World who trades in dollars. Which comes back to USA's military-industrial complex to some extent. It's like having the ability to steal a gram from every gold bar in the World.
by pbhjpbhj
5/22/2025 at 12:00:13 AM
> When USA do the same, the non-USA dollar holders also take on the costThey don't. If they aren't holding USD or something pegged to it then it is not devalued.
by starspangled
5/22/2025 at 7:13:32 AM
Sorry, I made that hard to parse - "the dollar holders outside USA".by pbhjpbhj
5/21/2025 at 9:37:55 AM
It doesn't matter how much money you print if your debts are USD denominated. If for example Tonga has double their currency in circulation with a debt of Y USD tomorrow they will still owe Y USD and their currency will probably be worth half of what it was before.In the case of the dollar if you suddenly double the supply it's not just the US national debt that is affected, it's all the secondary financial products indexed on dollar that are affected: debt from countries and private companies across the world, commodities and all transactions between countries not involving US that are dollar denominated. So in a way the value of a single dollar is diluted but it's diluted over a much bigger pool of participants.
That's the main reason printing money is cheaper to US as is reflected on the bond market, just look at supply vs inflation around the years following the global pandemic.
Living beyond their means is very relative. When credit is virtually free for years it makes sense to run 10x leveraged, the problem is when interest rate rises and you have to deleverage without showing too much that you don't have that much money as failing to do so could result in a death trap spiral.
by mtrovo
5/21/2025 at 4:39:19 PM
>For other countries USD is something they have to work for or sell something to acquire it. If they screw up they may end up in crisis being unable to obtain USD.Right on the mark. This is happening to my country and it's an existential threat to my country's continued existence tbqh.
by nisegami
5/21/2025 at 1:42:06 AM
> US manufacturing output is double that of China's on a per-capita basis.Only on a dollar value basis. And that's heavily skewed on how an item's value is calculated. When you use $50 of parts (all made in China) to assemble a machine that you sold at $500 , $50 of GDP value is attributed to China while $450 of GDP value is attributed to the US. But who did more "manufacturing"?
by chabska
5/21/2025 at 2:47:29 AM
What other system of value are you using here? Bottle caps? Nostalgia?While the dollar remains the global reserve currency, this is just a wild theory of trade. If the $450 of value was so easy to extract, why wouldn't China simply assemble it in their own country and take the whole pie?
(they clearly already do this everywhere they can)
by AnIrishDuck
5/21/2025 at 5:04:39 AM
> What other system of value are you using here? Bottle caps? Nostalgia?A common proxy is "metric tonnes of steel produced" and "metric tonnes of sulfuric acid produced". For China, these have been going up in-line with their GDP growth, whereas for USA they have flatlined since 1980 despite the increase in manufacturing dollar-value output.
by chabska
5/21/2025 at 12:28:59 PM
And how do you compare metric tonnes of steel produced, with metric tonnes of plastic produced? What about metric tonnes (hours?) of entertainment on films?The metric to measure value using quantity of goods must use a common denominator unit, otherwise, comparison becomes subjective (one might want to value tangible goods more than intangibles for example).
So making comparison using a price makes a lot of sense.
by chii
5/21/2025 at 7:26:57 AM
You, of course, can choose these as your units of value.I think it is telling that the rest of the world (particularly the central banks of most countries) have instead chosen USD (well, more specifically US treasuries) as their preferred store of value.
Well, at least, for now...
by AnIrishDuck
5/21/2025 at 8:09:41 AM
(Not the person you were replying to)You asked a question, they answered in good faith, and now you've dismissed their answer. I would also point out that you're dismissal is actually about a related, but separate issue - you've suddenly started talking about preferred store of value, when your original question was about how to value production.
I don't think you're arguing in good faith.
by biorach
5/21/2025 at 8:31:46 AM
I pointed out they were providing ridiculous answers to the question of "how do you measure value" and they doubled down on the ridiculous.You are correct, there are many ways to measure value.
However, I don't think picking various commodities as the "true" measure of what is "valuable" is a useful exercise.
You may disagree. That's fine! I suggest you put your wisdom to use on the various markets that are set up for this purpose instead of arguing with me.
EDIT: they ultimately never reached my main point anyway, which is: regardless of if you measure value in tons of steel or crushed coconut shells, if China could easily obtain that value by assembling this stuff themselves, why export all the inputs to us instead?
by AnIrishDuck
5/21/2025 at 8:47:28 AM
> I don't think picking various commodities as the "true" measure of what is "valuable" is a useful exercise.No one said that a commodity is a "true" measure of value. A commenter simply said that it is often a useful proxy. It is something that is useful to do to understand specific trade patterns.
> I suggest you put your wisdom to use on the various markets that are set up for this purpose instead of arguing with me.
I did not claim any wisdom on the subject. And I suspect you are deflecting attention from the fact that you are not arguing in good faith
by biorach
5/21/2025 at 9:00:24 AM
> No one said that a commodity is a "true" measure of value. A commenter simply said that it is often a useful proxy. It is something that is useful to do to understand specific trade patterns.Ok, if it helps replace "true measure" with "useful proxy". My argument remains the same.
Continue to accuse me of whatever you want, I still do not feel you are engaging with the substance of what I'm saying.
by AnIrishDuck
5/21/2025 at 4:14:20 PM
I feel like it’s pretty clear that chabska was saying that China does more manufacturing per capita, creates more stuff, whereas the US captures more value.If a paralegal at a fancy law firm works 9 billable hours at $200/h, and a senior partner then spends one hour adding some finishing touches for which he bills $2000, the paralegal has likely produced more work, but the partner’s output is more valuable (and sometimes it might not even be that useful, maybe the paralegal could’ve done the whole thing himself, but the oversight is part of the package and that’s what a senior partner costs).
Which metric is more useful probably depends on what you’re trying to find out.
by StackRanker3000
5/21/2025 at 10:06:08 AM
I didn't "choose" these, they are standard metrics used by industrial analysts. You know, the people who plan port expansions and cargo ship purchases, they need to deal with the actual tonnes of goods moved, not the dollar value of those goods.by chabska
5/21/2025 at 6:18:39 PM
Why should tonnage matter more than value? Would you rather have 10 tons of dung or 1 ton of smartphones?by p_j_w
5/21/2025 at 12:52:03 PM
They do. If you just scroll the ubiquitous online market, that doesn't need to be named, and look for odd brand names. Intentionally odd. Like "sxrpgh" as the brand as a made up placeholder. These brands are named to quickly start a business.Why? It's an aliexpress model. Create as many legal entities as you can and let an economic Darwinism kill the ones you do poorly at and cherry pick your successful businesses.
The actual labor is outsourced to the market itself with products produced in southeast Asia by a wholesaler, sent to the market by said contracted wholesaler, and sales handled by the market's fairly much only retailer. It's so automated you really only have to be lucky that consumers pick your product and luck can be bent to will at times.
It's a very botnet approach to business.
This does expand the approach from flooding the market with cheap goods, to making cheap goods and competing with prices from the middlemen, making less efforted profits using the same approach, but exports the profits out of the US economy. I know this is a unusual framing but that's exactly what is happening.
Before a middleman within the economy would extract the wealth from that labor in this way. Why not cut out the middleman if the formula can be followed by anyone? And in the current belligerent state of trade it would politically expedient to do so or at the very least encourage this model if you are adversarial to the US because it works well. Our businesses already proved that.
by NobodytheHobbit
5/21/2025 at 3:17:50 AM
> If the $450 of value was so easy to extract, why wouldn't China simply assemble it in their own country and take the whole pie?If you pay attention, you'll notice that's what China is doing. For decades, China's GDP growth towered over the US's. Around 2015, China's GDP PPP overtook the US's.
by motorest
5/21/2025 at 4:03:18 AM
Growth is trivial to achieve when you are starting from zero. My footnote very much alludes to this. This is incidentally what the US did to powers like Britain a century and a half ago.I just find it amusing that in this theory of trade China has found a way to do all the work while the US does nothing and takes all the value. Perhaps all that extra money is not as easy to claim as the OP suggests.
Maybe economies are changing and purely physical goods are becoming less valuable...
by AnIrishDuck
5/21/2025 at 7:31:23 AM
> Growth is trivial to achieve when you are starting from zero.China currently reports the second highest GDP in the world.
by motorest
5/21/2025 at 7:34:36 AM
> For decades, China's GDP growth towered over the US's.It's much easier to 100x $1k than to 10x $1m.
This is not to take away from the achievements of the Chinese economy, which are gargantuan. You just can't linearly extrapolate growth rates.
by AnIrishDuck
5/21/2025 at 10:51:39 AM
> It's much easier to 100x $1k than to 10x $1m.That's kind of goes against the conventional wisdom, which largely feels true in my experience, that "the rich get richer". Countries are a bit different, but China looks poised to avoid the middle income trap up to a point, and even if they don't, their "middle income" is a lot more likely to fall somewhere near the Japanese levels, which would make the Chinese economy massively bigger than the US one, by 2050.
by oblio
5/21/2025 at 10:52:11 AM
[dead]by teamcampapp
5/22/2025 at 3:56:09 AM
> It's much easier to 100x $1k than to 10x $1m.China's GDP is the second largest in the world, and is around two thirds of US's. China's economy is growing continuously over 5% whereas the US already discussed facing a recession.
In some metrics, such as PPP GDP, China already towers over the US.
I think you're trying ver hard to diminish the second largest economy of the world at a moment where it's expected to be a few years until it's the single largest.
by motorest
5/21/2025 at 11:43:31 AM
[dead]by OfficeChad
5/21/2025 at 4:26:01 AM
China’s GDP growth is great but they will face a huge pain now that they face an unsustainable population decline. They have more people aged over 52 than younger. I empathize with their youth.by jorts
5/21/2025 at 4:34:47 AM
You are claiming that the median age in China is 52 or did I read this wrong? That would be beyond fake news level of statement (for my reading of the meaning)The current median age of China is about 40, which is not great for their context, but a world apart from 52.
by NhanH
5/21/2025 at 5:46:12 AM
China is automating at an impressive rate. Isn’t automation easier to face with population decline than with population increase? I’d imagine young people mind getting replaced by machines more than old people.by aylmao
5/21/2025 at 8:37:59 AM
>Isn’t automation easier to face with population decline than with population increase?No? These things do not seem to be connected in any way.
by Ray20
5/21/2025 at 9:44:13 AM
I mean, of course they are. If you have a population increase you have plenty of young people who will complain that automation is taking their jobs. But with a population decrease you eventually end up with just old people and not enough working people to sweep the streets or wash cars or whatever - so automation is welcome because it doesn't "steal" jobs.by gambiting
5/21/2025 at 12:37:17 PM
I do not think that labor sentiment has a strong impact on whether or not jobs are automated away. Go watch an old movie from the 40’s or 50’s that features a hotel. The number of small, niche jobs that existed are surprisingly numerous by modern standards: porters, elevator operators, switchboard attendants, and so on. Busy places employing a lot of people. This was undoubtably true across industries, and we have automated away almost all those jobs one way or another without much fanfare. Sure - someone might have complained in the moment, but it’s death by a thousand cuts.by germinalphrase
5/21/2025 at 4:49:13 PM
This sort of automation along with consolidation has been the death of small cities and towns in the US.It's basically what's mostly killed my own small town.
My hometown, with a fairly consistent population of about 300 people, used to have a restaurant, bowling alley, full-service station, hardware store, bar, and grocery store. In my childhood, the restaurant, grocery store, and hardware store were still around. They died. And they died partially because gas got cheap and partly because goods producers increasingly jacked up their prices to small suppliers because they didn't want to deal with them. It was simply more lucrative and easier to see 1000 units to walmart than 10 to "Small town USA grocer". Near the EOL of the grocer, they'd literally buy their good from walmart because they couldn't get them anywhere else. The cheap gas led to people from my town traveling to nearby larger towns and cities to find cheaper goods.
The restaurant went out of business because it depended heavily on the prices of the local grocer. Towards the end, you'd literally call ahead the owner so they could open the doors and start cooking for you.
I can't say what the solution to all this is. The market is simply busted for small time business owners who want to move any sort of physical good. That has had knock on effects nationwide that haven't been positive, particularly for rural america.
by cogman10
5/21/2025 at 5:02:47 PM
I come from (and still leave near) a similar-sized town, and it went through the same process. And my dad remembers when it had even more businesses than I can remember, with movie theaters and the like.It's actually gotten a little better in the last decade, I think because people got some hope again that jobs might come back, and because remote work meant fewer people were driving to the bigger town down the road every day, so there became more of a market in the small town for things like a grocery store or Dollar General-type store again. There are also more home-based businesses, started by people who work full- or part-time remotely and put their spare time into starting a local business.
But in the 90s/2000s, it was nothing more than a bedroom community for the town 20 miles away, which was sad. It's still nothing like it once was, but at least there are some signs of life now.
by aaronbaugher
5/21/2025 at 11:24:47 AM
Please explain your position here?by pbhjpbhj
5/21/2025 at 5:36:31 PM
By population decline we mean a depopulation scenario, when the birth rate falls, the number of young people decreases, while the proportion of elderly people increases?Automation can create a dynamically changing labor market. Today you had a job, tomorrow it is automated, you need to find another job, learn new skills required for it, and all of this.
Not a problem for the young (especially since automation increases the general standard of living, so young people will often find that their new job pays better).
But older people find it more difficult to adapt, learn new skills and find their place in a changed world.
And then there is career growth. Imagine an elderly gentleman who has spent 30 years building a career, accumulating valuable experience, and is USED to receiving a huge salary for his qualifications... And he is told that he has been replaced by a video card, his skills are now worth nothing on the market, and in the job available to him he will now be paid the same as a snotty 20-year-old yesterday's schoolboy. Do you think this won't become a point of social tension in a situation where there aren't many young workers?
There is also a solidarity pension system, which creates a greater burden on workers the smaller the proportion of young people and the greater the proportion of old people.
And in the scenario of a population decline with a simultaneous increase in living standards - this will create enormous social tension, when the shrinking working class will ask itself: why should we give more and more of the money we earned with our sweat and blood to old people who were unable to save for their old age when were younger?
Even if no one voices this as an official slogan, it will still be implied in political decisions and will boil down to at least the fact that old people will be denied an increase in their standard of living ("because we are already giving them more and more, but look at what a terrible world they left us, and now they want to live in luxury at the expense of our sweat and blood?").
But with the aging of the population, the proportion of old people will increase very much, and, if we are talking about democratic regimes, their political influence will be increased.
And the situation, when we have a confrontation between a shrinking productive minority and people who do not produce anything, but have power over them and live at their expense - can end badly. It will definitely end badly. Like, really badly
by Ray20
5/21/2025 at 5:17:57 AM
The good thing about being authoritarian is that you can easily solve the births issue. The same way there was one child policy, there could be 3 or 4 with penalties for non compliance.by ReptileMan
5/21/2025 at 11:17:43 AM
Highly unlikely CCP would pursue coercive birth policy, or even could do it if it wanted. CCP is extremely powerful but it still has to rely on the consent of the governed. It has to frequently roll back policies due to public outcry.Current birth rate increase policies in China are based mostly on rewarding for births and subsidizing parenting costs.
by jampekka
5/21/2025 at 4:26:09 AM
> GDP PPPThat’s not a particularly meaningful metric.
by wqaatwt
5/21/2025 at 6:30:32 AM
No more no less than GDP. They outline different realities, which are all interesting to analyse as a whole.by psalaun
5/21/2025 at 3:54:37 AM
but not GDP per capita in purchasing power, in that the US is still far ahead. China's GDP PPP is greater, but with 4 times the population.by amilios
5/21/2025 at 9:59:07 AM
> What other system of value are you using here? Bottle caps? Nostalgia?The system where "production" means "where has item XYZ actually been made".
And for more than 1/3rd of all items, the answer to that question is: China.
https://cepr.org/voxeu/columns/china-worlds-sole-manufacturi...
by usrbinbash
5/21/2025 at 6:11:32 AM
China's GDP (PPP) is already ~22% higher than the USA's [1]. Arguably, isn't this a better measure of value? PPP measures the real value to the citizens in a nation, and more closely measures actual economic activity.Say a bottle of wine costs $20 in the USA, and in total one bottle is produced and sold for a total of $20 GDP. France makes 10 bottles at $2 each, for a similar GDP of $20. It's cool that the USA manages to "extract more value" from its smaller wine production, but at the end of the day, France has the stronger economy.
There's more wine to go around, more resilience to the loss of a bottle, arguably this higher production means more export capacity, more employment, more generation of wine expertise, supply chains, etc.
The nominal GDPs might be the same, but the GDP (PPP) of France in this case would be $200 to the USA's $20.
[1]: https://www.cia.gov/the-world-factbook/field/real-gdp-purcha...
by aylmao
5/21/2025 at 6:39:45 AM
> China's GDP (PPP) is already ~22% higher than the USA's [1]. Arguably, isn't this a better measure of value? PPP measures the real value to the citizens in a nation, and more closely measures actual economic activity.Only if the only things you purchase are exclusively domestic. Turns out, the vast majority of Chinese citizens with any means are interested in foreign products (like most people in the world).
by deaddodo
5/21/2025 at 10:28:42 AM
> Only if the only things you purchase are exclusively domestic. Turns out, the vast majority of Chinese citizens with any means are interested in foreign products (like most people in the world).Are they, though? China has its own huge software stacks, cloud providers, car manufacturers, etc? Is China really starving for anything not made in China, except for luxury goods? To which, I would point at Lexus (the archetypal example from Japan, a comparable country) and say that if you're a luxury good manufacturer in the Western world, I would not rest on my laurels, it's just a matter of time: either by development or acquisition, China will be making its own luxury goods and even exporting them, soon.
by oblio
5/21/2025 at 11:59:39 AM
If China embraces capitalism more tightly that will be a good thing for the world. The problem with China is not its wonderful people or culture, nor its prosperity, the glaring problem with China is Communism and the morality of authoritarian style central planning and the Xi/Putin axis of evil.by ggandv
5/21/2025 at 12:17:46 PM
What China is not do Communism in any shape or form. It used to be back in Mao's days. Now it's just capitalist authoritarianism.What you are mistakingly calling "capitalism" that China should adopt is... democracy.
by oblio
5/21/2025 at 2:23:01 PM
I’d argue. The CCP isn’t ideologically opposed to democracy but rather capitalism. Capitalism is an inherent feature of democracy. They despise capitalism (the Communist Party) even though they will play the long march and use it to subvert and destroy non-Communist ways of life.Edit to add link: https://en.m.wikipedia.org/wiki/Ideology_of_the_Chinese_Comm... (“views on Capitalism”)
by ggandv
5/21/2025 at 7:42:02 PM
The CCP is the single party of China. How are they "ideologically" not opposed to democracy? Democracy requires a multi-party system.by oblio
5/21/2025 at 7:57:47 AM
> Turns out, the vast majority of Chinese citizens with any means are interested in foreign products (like most people in the world).Is there data that backs up this claim? Is this broadly the case? Cause I do know that local brands have been taking over foreign brands recently. Take for example Apple— sales in China plunged 50%, and reports are pointing at Huawei [1], which amongst other things has been making some impressive high-end phones. Tesla is falling to Chinese brands too [2].
Moreover, foreign brand != foreign product. Tesla manufactures in China, as does Apple, Louis Vuitton, etc.
But regardless of specific examples, I'd imagine the vast majority of consumption in China isn't products of foreign origin given its massive trade surplus [3] and just how much of what it imports are materials, rather than finished consumer goods [4].
[1]: https://www.asiafinancial.com/apple-sales-in-china-plunge-50...
[2]: https://carnewschina.com/2025/05/12/teslas-sales-in-china-do...
[3]: https://tradingeconomics.com/china/balance-of-trade
[4]: https://oec.world/en/profile/country/chn?selector343id=Impor...
by aylmao
5/21/2025 at 6:17:25 AM
That bottle of wine is going to be at least 400 RMB in China, so I’m not sure how PPP can be argued here. You would need to focus on things that are less expensive in China than the UsA (services mostly, low end goods and food), but things get more expensive quickly if you go for something nice outside of a restaurant. PPP is oddly calculated given that services in china’s case are mostly what is driving its higher value, and that simply means people are paid less (and increasingly they aren’t, which means PPP will shrink closer to GDP unless their automation investments really pay off).by seanmcdirmid
5/21/2025 at 5:28:36 AM
The he issue with this is the dependency direction, if the supplier learns to do the assembly then they don’t need US anymore and can sell the same thing for a fraction of the price.Or if you go to war then all those base manufacturing can be used to manufacture for military
by ozgrakkurt
5/21/2025 at 5:21:34 PM
> If the $450 of value was so easy to extract, why wouldn't China simply assemble it in their own country and take the whole pie?As someone else pointed out, they do, under various odd brand names.
You make what seems like an obvious point. However, The iPhone is assembled in China for the ballpark cost you mention, and sells for double the $450 price you mention... so they must have reasons to not take the whole pie.
by pjmorris
5/21/2025 at 6:05:11 AM
The IP is important. Not only did you use $50 in parts, but the design, software, and marketing were done in the states. One critical flaw in MAGA thinking is that these inputs are worthless: the full value of an iPhone comes from China because that’s where it was assembled even if most of the value was actually added in the USA. China wants to be on the other side of the value chain as well and really don’t mind swapping places with the US (and it looks like that will happen long term now due to Trumpism).by seanmcdirmid
5/21/2025 at 12:40:08 PM
The value of the American "IP" consists more in the might of the US government than in the actual value of that "IP".A few years ago, Huawei was in a clear path of becoming the biggest producer of smartphones in the world, with smartphones that by now were based on their own IP, including CPUs and modems, even if Huawei had started 20 years ago by buying smartphone IP from companies like Siemens (which had been reckless enough to sell it). At that time, the latest Huawei designs were superior in performance to those of Qualcomm and superior in performance per dollar to those of Apple.
The result was that the US government has started a campaign of sabotage against Huawei, because they did not like the result of a "free market".
A couple of years later everything has repeated when there was the danger that Chinese manufacturers of flash memories will overcome Micron.
So the percentage that American "IP" takes in the products of other countries is only maintained by quasi-military actions of the US government, which treats any commercial rivals as enemies against which any sanctions are justified.
by adrian_b
5/21/2025 at 10:12:21 PM
China is definitely getting there, no doubt. They won't be a place where assembly just happens anymore, it will be more like robots assemble things and people mostly focus on IP/software/etc...The fairness of the competition between American and China in IP, I'm sure if you are heavy on one side or the other its obvious, but to me it seems like there is truth in China stealing secrets and there is truth in America using quasi-military actions to protect what is basically a monopoly on a segment of high-value goods. But whatever you think, what Trump is doing now ultimately benefits China and hurts America in the short and long term.
by seanmcdirmid
5/22/2025 at 8:36:46 AM
I have no doubt that China has stolen IP whenever they had a chance.For example, Huawei was famous for draconic rules imposed to its employees in order to ensure that they could not take out any information from their computers and also that no information could be accessed by any visitor or by anyone outside working hours.
Presumably they were very careful with this because that is how they would have attempted to exploit a competitor.
Nevertheless, the many Americans who still believe that the Chinese success is based on stolen IP are completely delusional.
China has bought most of the IP with which they have started developments and not stolen it. Reckless companies from USA and EU have sold all that IP. Talking about "stealing" is just a tactic used to obscure who are the culprits, who have obtained nice financial gains from selling IP to China.
Moreover, in recent years China no longer has much to steal from USA, more the opposite becomes true.
If I look at recent research papers, even if there are also many published Chinese papers that are garbage, there also many that are very innovative, and such innovative Chinese research papers have become much more numerous than the innovative research papers coming from USA. The reason appears to be that the Chinese seem now willing to assume more risks, in searching paths that are uncertain to lead to useful results, while the research in USA seems to have become more conservative, striving to obtain immediate and guaranteed results, which however may not be able to exit a local optimal point in the space of solutions.
I assume that as research financing becomes more difficult, the research in USA will become even more conservative, diminishing its chances to compete successfully in innovations with China.
by adrian_b
5/21/2025 at 1:59:38 AM
> Only on a dollar value basis.Uh, yes.
> And that's heavily skewed on how an item's value is calculated.
An item's value is calculated according to what it is bought and sold for. That's how value is determined. What would you rather it "skew" towards?
> When you use $50 of parts (all made in China) to assemble a machine that you sold at $500 , $50 of GDP value is attributed to China while $450 of GDP value is attributed to the US. But who did more "manufacturing"?
If an American company can design and develop and sell a product that requires $50 of parts and people are willing to pay $500 for it, then clearly that company created an enormous amount of value, didn't it? By definition almost. Manufacturing output or value is not a function of the number of beads of sweat or drops of blood or hours in a factory to make something. It is how much value (i.e., what others are willing to pay for) the things you create.
by starspangled
5/21/2025 at 5:19:00 AM
I suspect in many cases, the "value add" an American firm provides is an intangible.In the pre-tariff omnishambles world, I could buy a more or less equivalent widget for $18 branded with a recognizable American brand, for $12 as a KWJIBO non-brand delivered from Amazon, or for $6 more-or-less manufacturer direct from AliExpress.
Amazon added $6 of value by saying "I can get it to you in a timely manner and offer a confidence-reinforcing return policy."
The American brand added another $6 of value for "this can probably be sourced consistently and people won't look at you weird trying to get it Shenzhen Tchang Zu Shrimp Cannery And Electrolytic Capacitor Plant #5 onto the approved vendor list."
They didn't actually improve the widget itself, just logistics around it. That means their value-add is extremely tenuous, and has a limited moat.
by hakfoo
5/21/2025 at 2:58:15 PM
Well, I never thought that Toby Jones barbecue and foot massage would have a resurrection, but here we go.by selimthegrim
5/21/2025 at 7:41:23 AM
The fact remains that the data we have says the value of US manufacturing is about 50% of that of China. You have your own perceptions of value of course, but that's not how value is actually calculated. The same as people who perceive China's manufacturing to be worthless because they produce cheap flimsy junk is also not an indication of any reality other than their own.by starspangled
5/21/2025 at 2:56:25 AM
> then clearly that company created an enormous amount of valueNo, it is more like these companies monopolized access to the high income market and exploited this inefficiency. It is similar to buying a stock for $10 then increasing the bid ask spread to sell it for $100.
by coliveira
5/21/2025 at 3:50:26 AM
> No, it is more like these companies monopolized access to the high income market and exploited this inefficiency. It is similar to buying a stock for $10 then increasing the bid ask spread to sell it for $100.Okay so we have this scenario you constructed where the Chinese company produced great value without engaging in any IP theft or unbalanced terms of trade or currency manipulation and the American company simply took that and gouged prices with anticompetitive practices. What exactly is your question? The hypothetical American company in your example did not create value, by definition. I don't see how that's particularly useful though.
by starspangled
5/21/2025 at 6:30:46 AM
This applies to a very specific type of constrained market, and does not generalize in this manner, making your example trivial to argue against, and then confuse readers.If access was monopolized, then no competition would exist. Competition very much exists, and has resulted in a massive amounts of growth and improvement globally.
by intended
5/21/2025 at 8:21:45 AM
The main reason why the American company can do this is because we have borders that allow said company to move goods across them, but prevent the cheap Chinese labor from moving to US. If not for the latter, US would be mostly speaking Mandarin by now and things would be a lot cheaper (and salaries would be a lot lower).by int_19h
5/21/2025 at 9:27:25 AM
> > It gets massive amounts of products and services enabling the US residents live well beyond their means.> What does this mean really? That is their means.
The argument presented here is that economic growth (more specifically trade volume increase) outside USofA forces USD acquisition transactions with USofA. This means that there is constant surplus of goods flowing into USofA without accompanying surplus of circulating money supply, leading to artificial deflation.
In other words, the cumulative productivity, measured in USD, of USofA is lower than cumulative outside-USofA-fair-market value of goods transacted in USofA. This effect increases gross value on supply side without balancing out gross value on demand side, allowing domestic players larger transaction volumes than their total productivity, with deficit covered by the central bank.
by friendzis
5/21/2025 at 6:26:42 AM
> US manufacturing output is double that of China's on a per-capita basis.If you're going around quoting those figures, you should be aware they're kinda sketchy.
Headline manufacturing output figures measure "real" output, rather than $ of output, as the latter would just be a graph of inflation and exchange rate. And when measuring "real" output, if a factory making 1TB SSDs switches to producing 2TB SSDs it has increased its output, despite the fact they're shipping the same number of boxes as they were yesterday.
Sure, the numbers say real output per worker has risen a lot since 1980. But most of the "rising efficiency" comes from the folks making 33MHz 1-core CPUs now making 5GHz 24-core CPUs. Cut out that sector and you'll discover why the US has an entire region known as the "rust belt".
by michaelt
5/21/2025 at 2:40:08 AM
> What does this mean really? That is their means.It means Americans are providing mainly a financial service, by managing the dollar. The value of their currency therefore doesn’t accrue from a real economy, which, by definition, only includes consumer goods and services.
by xk_id
5/21/2025 at 3:54:13 AM
Even if we take what you wrote as fact, that does not answer how it is living beyond their means if their means includes "providing mainly a financial service, by managing the dollar".by starspangled
5/21/2025 at 7:36:43 AM
If you're spending $1.9 trillion per year more than you're earning (projected for 2025), accumulating debt, I think it's fair to say you're living well beyond your means.We're talking about $5600 per inhabitant per year.
by vanviegen
5/21/2025 at 8:01:12 AM
I didn't say Americans aren't living beyond their means. Just that on the face of it they aren't living beyond their means due to their currency's status if that status gives them some means to buy more. OP just didn't really provide a rationale as to why it's this currency issue in particular that you can point to to say Americans are living beyond their means.Lots of countries have a lot of debt, many are in similar boats or worse as USA when you look at various metrics like debt per capita, per gdp, etc. Politicians and their "experts" and economists etc generally insist this is perfectly fine. I also get the feeling they're probably lying about that and many other things, though I don't know enough about the subject to actually know myself.
by starspangled
5/21/2025 at 5:21:22 AM
it's called the “exorbitant privilege”by __m
5/21/2025 at 5:30:53 AM
I'm not asking what it's called, I'm asking why that's claimed to be out of their means when it quite clearly is within their means to have this exorbitant privilege, as evidenced by the fact that they have exorbitant privilege.by starspangled
5/21/2025 at 6:04:21 AM
Because at some unspecified point in the future, the rest of world will stop playing the game where the house always wins.by dns_snek
5/21/2025 at 6:34:07 AM
No, the meaning of the phrase "living beyond one's means" doesn't go to the unavoidable fact that circumstances change over time. I will one day become infirm and unable to earn money, that does not mean I'm currently living beyond my means.US dollars might one day cease to be the global reserve currency in which case Americans will not see such benefits associated with that. This is a true statement. That doesn't mean they are currently living beyond their means either though.
by starspangled
5/21/2025 at 7:25:29 AM
> I will one day become infirm and unable to earn money, that does not mean I'm currently living beyond my means.That is not the same thing because it's real productivity, labor is the only thing in the world that has any real value. You're exchanging your own labor for other people's labor. The US is exchanging something that has no inherent value (USD) for other people's labor.
If I take on all the debt that I can, max out my credit cards, mortgage my house, and spend everything I have on luxuries, am I living beyond my means, or am I living within my means as evidenced by the fact that I'm actually doing it?
by dns_snek
5/21/2025 at 8:07:31 AM
> That is not the same thing because it's real productivity, labor is the only thing in the world that has any real value.Note that I'm strictly discussing this topic using words in the way you'd find them defined in a reputable dictionary or a high school economics book.
by starspangled
5/21/2025 at 6:36:46 AM
The rest of the world wants to be the house.The rest of the world was and remains very happy to play this game, because it reduces the amount of trouble people have when exchanging currencies.
It gives advantages to America, sure. But America recognized that there were consequences.
Today, 1/3rd of the American electorate is insulated from reality, and its politics are free to downplay, or ignore consequences, if not just blame them on the opposition.
No one has an answer to a broken market of information. In the end, reality will have its due.
by intended
5/21/2025 at 7:03:31 AM
> What does this mean really? That is their means.Kind of, yes. Also if you take away other's people assets by force you can say you live by your means because you produce violence.
That's a matter of terminology, the real thing to be considered is the sustainability of this system.
If this setup can be sustained perpetually then yes, it's sort of within your means. If gradually deplete some reserves (gold or trust or domestic stability due to rising inequality) then it can be argued that you live beyond your means.
by alexey-salmin
5/21/2025 at 10:20:47 AM
> just handwaving about how USD's status as a global currency somehow makes trade deficits inevitable despite simple facts available that US had a surplus trade balance 50 years ago, when the USD has been considered the global / reserve currency for over 60 years.US has had two trade surplus years since the USD essentially replaced gold as the reserve asset: 1973 and 1975. The reserve currency status is the primary reason for the practically constant deficit. During the Bretton Woods era US ran consistent surplus.
https://www.stlouisfed.org/publications/regional-economist/t...
by jampekka
5/21/2025 at 6:58:55 AM
> Seems like that's the popular assertion but I don't see much solid reasoning behind it in this thread (not picking on you specifically), just handwaving about how USD's status as a global currency somehow makes trade deficits inevitable despite simple facts available that US had a surplus trade balance 50 years ago, when the USD has been considered the global / reserve currency for over 60 years.Prior to 1971 the Dollar was tied to Gold and exchange rates were fixed by agreement.
by formerly_proven
5/21/2025 at 11:01:56 AM
> What does this mean really? That is their means.The "means" is being able to print trillions of imaginary dollars with value that magically pops into existence, merely backed by the fact that other nations do not want USD to lose value because they invest in it.
US did not care about trade deficits because they were able to just print dollars without having dollar itself devalued, which is what happens if any other nation decides to print currency without having a way to back its value. Because the US status as global hegemony is getting challenged, these trade deficits may become an issue. But trade deficits were not an issue until now (and they still are not as long as they can keep printing dollars without hyperinflation happening).
by nis251413
5/20/2025 at 3:38:40 PM
>There's the risk of this system stop working and that's when the US might have hard times due to being forced to live by its means and have no ability to kickstart its own production when that time comes.I think the risk is greater than that. A concern is not just a regression to the mean, but indebtedness and the future having to pay up for the spending of the past.
I think a different analogy would be a joint credit card where someone can run up the bill and then die. Like national debt, you can always default, but it will be the survivor that takes the hit, not the dead person that spent their life in luxury.
The trade deficit isn't necessarily a problem, but national debt is. It would be one thing if this money was being invested in growth, but it largely isn't. Most of it funds non-growth consumption.
This is largely a self-made internal problem around governmental prioritization and balancing revenue with expenditure. That isn't to say other countries don't also benefit.
The US is trading future prosperity for consumption today. Investing countries are trading consumption today for future prosperity.
by s1artibartfast
5/20/2025 at 5:08:51 PM
> but indebtedness and the future having to pay up for the spending of the pastThe debt is denominated USD, the US mint could hypothetically print a trillion dollar note and settle the debts. Doing so would wreck trust in the existing system - so it's not just about the debt, but people tend to gloss over how much control the US has over the debt, so the indebtedness (in USD) is a relatively small factor overall.
by overfeed
5/20/2025 at 10:39:45 PM
> Doing so would wreck trust in the existing systemIt would cause immediate hyperinflation. Those notes would go to bondholders who would use it to buy things because holding billions in cash printed by a defaulter isn’t anyone’s cup of tea. So anyone willing to take even absurd amounts of dollars for non-dollar assets is offered absurd amounts. Which means those who didn’t get the helicopter drop find their currency, savings and wages worthless in real terms.
by JumpCrisscross
5/21/2025 at 2:41:09 PM
And this is a timely discussion. Yesterday the Fed held an auction for US Bonds and no one showed up, so the Fed bought it all.by david927
5/21/2025 at 3:04:02 PM
Source? (I’ve been on holiday.)by JumpCrisscross
5/22/2025 at 11:15:24 AM
As suspected, “the Fed held an auction for US Bonds and no one showed up, so the Fed bought it all” is crap. The Treasury held an auction. It was weak but didn’t fail. The Fed, as required by law, did not participate in the auction.by JumpCrisscross
5/20/2025 at 6:45:55 PM
Inflating away the debt is a default in all but name, with the same results. If I pay you 50% of what I owe, or 100% reset to half the value.Both burn creditors and ruin credit.
by s1artibartfast
5/21/2025 at 5:22:40 AM
While there are similarities, I think it's still very different. Default by itself doesn't make the debt disappear, you just stop serving it for a while. Then you may negotiate some cuts with creditors in exchange for a promise to repay the rest but there's no way they just forgive 100% of it, this makes no economic sense. If you want to get out of the debt completely you need not only a default but bankruptcy and dissolution which is rather painful at the state level. An example would be the Russian revolution and civil war where among other things the Bolsheviks refused to recognize tsar's debts claiming it's a new state now.by alexey-salmin
5/21/2025 at 6:13:32 AM
The US has done this before, more than a few times. In fact, de-globalisation can be traced directly to the GFC, where the US did indeed print billions to bail out US banks and auto, then getting Japan and China to step up and buy UST to recapitalise the economy. PBoC in 2013 said 'no more' and launched BRIby hunglee2
5/21/2025 at 3:12:54 AM
Do you understand what $100T printed overnight would cause to the economy? The price of everything starting from assets would skyrocket and in a few months we could be living in hyper inflation.by coliveira
5/21/2025 at 5:28:49 AM
Yes, but it's a temporary turbulence that lasts for a few years, then you can rebound. The debt on the other hand can last for decades taxing the economy more and more. If the cost of servicing the debt crosses a certain threshold there can be no rebound, not without a default.Effectively when printing money you reset both the debt and the savings. If your debt is much bigger than savings it becomes a good deal.
by alexey-salmin
5/21/2025 at 12:01:18 PM
The US economy still hasn't "rebounded" from the effects of the 2008 recession, forget COVID, even after the bailouts and the offloading of the US debt onto Europe, Japan and China, even though that was in the order of single digit trillions. I don't know where people get the idea that adding a hundred trillion more is where you can cure the deficit. Especially when this time around, you're not going to have EU, China and Japan to baghold for you.> when printing money you reset both the debt and the savings. If your debt is much bigger than savings it becomes a good deal.
Huh how? When printing money, you make your ability to pay further down the line even more tenuous. I don't know how people can't see the obvious parallels between money-printing and currency-debasing of the Roman times (which led to the economic downfall of that empire).
The only way to cure a deficit while retaining your trustworthiness is to pay it down one way or another.That requires intense taxation for a few years on the rich and corporations alike, and using those proceeds to pay it off. And if possible, to loot someone's gold reserves or something, although that would destroy your trustworthiness on all other fronts and equate you to Nazi Germany.
by fakedang
5/21/2025 at 5:15:06 PM
> The US economy still hasn't "rebounded" from the effects of the 2008 recessionThis is a true statement lost on many people who don't remember. The chickens coming home to roost are not from the actions taken during COVID but from the 2008/9 bailout. That's when the whole ZIRP regime started and ran for over a decade. COVID added fuel to that fire but, really, the 2008/9 bailout "kick the can down the road" policy is to blame. We're back to the can and out of road to kick it down.
by chasd00
5/21/2025 at 4:38:35 PM
>.That requires intense taxation for a few years on the rich and corporations alike, and using those proceeds to pay it off.This is your bias and preference seeping in. Simply put, you need to balance your budget.
The US already has some of the highest corporate taxes in the world. Most countries don't rely on them, and instead focus on the individual pass through profits. most European democracies tax the middle class much more heavily through value-added taxes.
by s1artibartfast
5/21/2025 at 5:43:57 PM
There are so many loopholes in the current tax system. And I say this as someone who benefits massively from the status quo. But like I said, where else can the govt get the cash to "balance the budget"?And again, European democracies aren't the ideal here when we're talking about balancing the books. Look to the American 1950s and the Clinton Era for better role models.
by fakedang
5/22/2025 at 12:29:14 AM
I'm pretty sure those included higher taxes on the middle class as well.There are fewer loopholes than intentional features and shelters people don't like or don't understand
by s1artibartfast
5/21/2025 at 11:43:33 AM
Ask Argentina how this kind of experiment is going...by coliveira
5/21/2025 at 11:50:12 AM
They didn't have the luxury to inflate-away their own debt.by alexey-salmin
5/21/2025 at 11:55:10 AM
The US won't have it either for much longer, investors are not so stupid as people think.by coliveira
5/20/2025 at 6:03:45 PM
> but indebtedness and the future having to pay up for the spending of the pastWho do you expect will hold the US into its indebtedness?
The entire world is powerless to stop Argentina, why do you think the US will be more impacted?
by marcosdumay
5/20/2025 at 6:50:04 PM
Nobody can stop the US, they just stop lending under favorable terms, like Argentina.Nobody wants to make loans to Argentina (or within Argentina) payable in the Argentine Peso. This is the punishment.
The punishment of being credit unworthy is an inability to use credit markets.
This means businesses struggle and the government has its hands tied in dealing with economic crises.
Argentina can't use economic stimulus to correct economic recessions. There is no deep demand for the Argentine peso, so stimulus leads to more inflation rather than increased economic activity
by s1artibartfast
5/20/2025 at 4:21:50 PM
These all seem like side effects of the global reserve currency status. You can't balance the budget until that is given up. Giving up that status would be very painful, so given the choice of pain now or pain later, the current situation seems reasonable to me.by foobarian
5/20/2025 at 7:36:20 PM
I disagree, it is a consequence of debt outpacing growth.The key characteristics of a reserve currency are stability and liquidity. If you have these, you don't even need to pay interest.
With properly managed that, being the reserve currency is a win on all fronts. You get to run a deficit because people are happy to trade real products for your paper. People are also willing to loan your paper back to you at more favorable rates. The only downside is if you get drunk and outspend even the inflated demand for your currency. The smart move is to rain in deficit spending if you can't get favorable lending rates.
Blowing up reserve status doesn't help this problem. Then you just have to pay higher and higher interest rates because no one wants your paper anymore
by s1artibartfast
5/21/2025 at 1:58:58 AM
Maybe I'm missing something, but the budget deficit and trade deficit are two separate issues. We can have a budget surplus (as we had under the Clinton administration) while still having a trade deficit.by randerson
5/21/2025 at 6:41:38 AM
They are separate but closely connected. Something has to cross the border in the opposite direction. Could be corporate stocks or bonds, could be government bonds.You can see export of government bonds as the last line of defense where the economy failed to produce enough of other instruments to cover the imbalance.
by alexey-salmin
5/21/2025 at 11:29:38 AM
My understanding is that other countries who end up with those dollars from our trade deficit tend to invest those dollars in US financial institutions: treasuries being one form, but also US stocks and corporate bonds and so on. So the deficit indirectly helps anyone with a 401K, and also allows the government to keep borrowing money.But the trade deficit is mostly a private sector thing. It doesn't stop the government from raising taxes and cutting spending to achieve a budget surplus and eventually paying down the debt.
by randerson
5/22/2025 at 12:36:05 AM
>So the deficit indirectly helps anyone with a 401K, and also allows the government to keep borrowing money.And hurts taxpayers and anyone who wants to buy stock, housing, or anything else that has been bid up.
You are right that budget deficits are a governmental problem independent of trade.
by s1artibartfast
5/20/2025 at 2:10:05 PM
> China for example, sends huge number of electronics and all kind of other consumer goods that Chinese produce by sweating in 12 hours shifts in 6 day work weeks in exchange for imaginary numbersThat's more a function of subsidizes instead of foreign preference for USD.
Chinese median household incomes (Yuan 34,000 or around $4,700) are much too low to spend on most goods at scale [0], and most of the money that could be spent on expanding the social safety net (and thus incentivizing Chinese consumers to spend instead of save) is spent on industrial subsidizes like tax holidays, a regressive income tax system comparable to the US, and subsidizing various redundant but provincially influential SOEs that can't compete with domestic private sector players (eg. traditional Chinese automotive players like SAIC and Chery versus BYD), and this is reflected in Chinese spending data as well as StatsChina's breakdown of spending by urban and rural Chinese [0].
You are going to be dependent on foreign exports if your domestic consumers can only spend around Yuan 4000/$550 a year on transportation and telecom combined. Even factoring for PPP, it is difficult as these metrics are low in comparison to peer countries from a developmental standpoint.
A lot of the "overproduction" that has made Chinese goods globally dominant is a result of that misalignment between consumers and production.
Expanding the social safety net in China would dramatically enhance Chinese competitiveness over the long term, but top level leadership remains explicitly opposed to what they call "Welfarism" [1]:
"福利主义典范国家，中产塌陷、贫富分化、社会撕裂、民粹喧嚣，这不乏警示— 防止落入“福利主义”养懒汉陷阱"
"In countries that use a welfare model, the middle class is collapsing, the rich and the poor are polarizing, society is torn apart, and populism is rising. This is a warning - Prevent yourself from falling into the trap of "welfarism" to support lazy people"
[0] - https://www.stats.gov.cn/english/PressRelease/202501/t202501...
[1] - http://theory.people.com.cn/n1/2021/1116/c40531-32283350.htm...
by alephnerd
5/20/2025 at 3:20:44 PM
China definitely has industrial policy supporting its manufacturing, but the wages argument is begging the question. The USD, as the global reserve currency, is over-valued; if an alternative system were used (eg. the Bancor) and the Yuan allowed to float, then those 34,000 Yuan would buy a lot more and the median US wage would buy less.by mitthrowaway2
5/20/2025 at 3:31:54 PM
Hypothetically yes, but the lack of social safety net means most of that hypothetical purchasing power expansion in China is moot.China has a medical debt problem [0], education pricing problem [1], and private sector capital crunch [2] similar to that of the US. This makes it much more difficult for the median household to spend in China because there is an incentive to keep saving.
In isolation an $8,000 EV looks cheap to us earning a salary in the West, but that is still 1.7x the median household income (so half of all Chinese households have even less money to spend). For half of Chinese households, that's the equivalent of your median American household purchasing a Maserati. And healthcare costs can reach the $8k-15k price point in China for critical operations.
The reality is, the median Chinese household is significantly underpaid compared to their peers in Thailand [3] or Malaysia [4] - either incomes have to rise to allow Chinese consumers to consume as well as cover health+education spending, or the central and provincial governments will have to dramatically expand social services in order to cover rising costs.
The Chinese consumer cannot replace the American consumer without an expanded social safety net giving some breathing room to spend instead of saving.
[0] - https://www.ft.com/content/4d892cd4-e7ef-446d-85c4-93262a7a3...
[1] - https://sccei.fsi.stanford.edu/china-briefs/high-cost-educat...
[2] - https://www.bloomberg.com/news/articles/2025-03-18/china-pri...
[3] - https://www.nso.go.th/nsoweb/storage/survey_detail/2023/2023...
[4] - https://open.dosm.gov.my/dashboard/household-income-expendit...
by alephnerd
5/20/2025 at 4:13:13 PM
What I mean is that if the CNY properly appreciates relative to the US dollar, that CNY60k ($8,000) EV becomes a CNY60k ($16,000) EV. The median Chinese wage goes from CNY 34k ($5,000) to CNY 34k ($10,000). Meanwhile imports of agricultural products and other things into China becomes cheaper, and the cost of food gets lower.Most expenses an average Chinese worker pays might be unaffected given how self-reliant China is, but in theory at least the wage gap between Chinese and US workers would close significantly this way, even if the gap in living standards do not.
by mitthrowaway2
5/20/2025 at 4:18:42 PM
> Meanwhile imports of agricultural products and other things into China becomes cheaper, and the cost of food gets lowerFood costs are already dropping in China [0]. That is not what is dampening Chinese spending.
> if the CNY properly appreciates relative to the US dollar, that CNY60k ($8,000) EV becomes a CNY 60k ($16,000) EV. The median Chinese wage goes from CNY 34k ($5,000) to CNY 34k ($10,000).
But a critical surgery will still cost $8k-16k nominal (or $16-32k using your purchasing power multiplier) and education spending by households is rising in nominal, and that is what is dampening consumer spending in the middle and lower quartile.
> Most expenses an average Chinese worker pays might be unaffected given how self-reliant China is, but in theory at least the wage gap between Chinese and US workers would close significantly this way
But the products which a median American consumer purchases doesn't directly overlap with that which the median Chinese consumer purchases (and vice versa). So it's a moot comparison.
[0] - https://www.statista.com/statistics/1446926/china-monthly-fo...
by alephnerd
5/20/2025 at 5:00:04 PM
... Yes. Although, you've phrased that like it's in some way a rebuttal to what I wrote, when it's actually consistent with what I said.by mitthrowaway2
5/20/2025 at 5:05:31 PM
Because your point is that the wage gap between the US and Chinese household would close significantly - yet it does not.Even with those multipliers, the wage gap between your median Thai and Malaysian household and your median Chinese household is significant, let alone with an American household.
The wage gap cannot be solved until there is a serious expansion in China's social safety net if China wishes to continue to use a production driven growth model.
This is what Japan, Germany, the US before Reagan, South Korea, and much of Eastern Europe did when they reached similar developmental precipices to China today.
China can see a significant jump in living standards similar to that which Poland saw over the past 15-20 years if the social safety net is expanded.
by alephnerd
5/21/2025 at 3:07:53 AM
It must be sad to have this kind of beliefs and still see median salaries and consumption growing all across China for the last 20 years.by coliveira
5/21/2025 at 3:46:29 AM
Nothing which I said detracts from that.China has been one of the most significant economic growth stories in modern history, but the policies used to grow from 1980-2019 are differnet from those that China needs from 2020-2060
China is now in the same developmental band as Thailand, Malaysia, Mexico, Brazil, etc. And if China does not wish to get stuck in the middle income trap, holistic growth across all income strata is needed - not the current k-shaped economy that has developed.
And this is a fairly mainstream position in Chinese economic academia as well, but policymakers are stuck between a rock and a hard place.
by alephnerd
5/21/2025 at 1:30:08 PM
That's just another strain of the doomsday economics that has been applied to China at least since 2005. Yet, the Chinese economy and its government have proven to be able to overcome all these supposed huge obstacles that would stop the Chinese growth at any moment... So I urge you to rethink your theories based on reality of what the Chinese people are capable of doing.by coliveira
5/20/2025 at 5:16:51 PM
Thai workers are not paid in the global reserve currency, so that is irrelevant. The wage gap will shrink because USD will come down relative to CNY. I make no argument that Chinese wages will increase in CNY, nor that the gap will close all the way to zero.by mitthrowaway2
5/20/2025 at 6:01:53 PM
My point is a reserve currency doesn't help the median Chinese in any shape or form, nor does the USD being a reserve currency help the median American.There are benefits to being a reserve currency at the macro-scale, but they are not felt by the vast majority of households, and any attempts at making the CNY a competitive reserve currency would require dramatically reducing currency controls along with increasing the independence of the PBOC from political leadership, and leave the lower tier of Chinese workers open to job loss and outsourcing [0][1][2][3] as low-to-medium complexity industries remain the primary employment generator in Chinese manufacturing.
This is the exact same thing that happened to Thai, Malaysian, and Mexican manufacturing workers during the 2000s when they hit plateaus similar to China today.
Finally, the US's dominant position is the cause of the USD as a reserve currency, not the other way around [4]. Having a reserve currency is orthogonal to having great power status, as can be seen with the rise of China.
A rising tide lifts all ships - the China story will stagnate if a serious effort at helping the bottom half of Chinese does not develop.
[0] - https://www.degruyterbrill.com/document/doi/10.1515/cfer-202...
[1] - https://www.tandfonline.com/doi/abs/10.1080/13602381.2025.24...
[2] - https://sysengi.cjoe.ac.cn/EN/10.12011/SETP2023-0562
[3] - https://www.nature.com/articles/s41599-024-03797-6
[4] - https://www.ussc.edu.au/the-reserve-currency-myth-the-us-dol...
by alephnerd
5/21/2025 at 2:12:17 AM
"the China story will stagnate if a serious effort at helping the bottom half of Chinese does not develop"So 800,000,000 people raised out of extreme poverty is a lie? Sounds like the bottom half is being well taken care of over there.
by pacifist
5/21/2025 at 4:08:23 AM
None of what I said detracts from China's success in eradicating extreme poverty.That said, the majority of Chinese households are still significantly less well off than their peers in other upper middle income countries as stats have shown multiple times.
I don't see why anyone would be so virulently opposed to moving some industrial subsidy spend to expanding healthcare, revamping the current insurance system, providing better quality schools to reduce the cost burden lower tier Chinese households have when spending on education, increasing rural retirement pensions, reforming Chinese income taxes to be less regressive, etc.
Raising household disposable incomes by $2000 a year would help increase GDP growth from 4% to 5% (back of the napkin math) - and that too in a sustainable manner. And this is something that is fairly doable by expanding social services and welfare accessibility. This would also solve much of the overproduction problem that has lead to trade wars globally.
by alephnerd
5/21/2025 at 6:56:19 AM
> I don't see why anyone would be so virulently opposed to moving some industrial subsidy spend to expanding healthcare...This is because many media outlets, whether intentionally or unintentionally, promote the 'China collapse theory,' making it difficult to draw reliable conclusions from curated information.
Take the FT article you cited earlier as an example. As someone living in China with parents who have chronic illnesses, let me describe what healthcare is actually like here:
My father and grandfather both have diabetes. They use NovoRapid insulin at about 40 RMB(6 USD) per pen, requiring 1-2 pens monthly (totaling 100 RMB, 14 USD). Domestic Chinese brands cost roughly half that price.
My mother and I have hyperlipidemia. Lipitor costs about 70 RMB(10 USD) monthly, while domestic alternatives cost around 10 RMB (2 USD).
China's healthcare system features centralized procurement policies where the government negotiates directly with pharmaceutical companies. To have your products included in the insurance formulary and reach more patients, manufacturers must reduce prices.
While this system has some issues (which we could discuss later), nearly all medications—including imported ones—are significantly cheaper in China than in the US.
Two years ago, my grandfather spent his final two weeks in ICU at a cost of 120,000 RMB (16700 USD). Insurance covered 100,000 RMB (14000 USD), leaving us with 20,000 RMB (2700 USD) out-of-pocket.
Regarding insurance coverage:
Rural and urban insurance have different reimbursement rates, but generally cover over 50%. My parents' retirement income is about 4,000 RMB (560 USD) monthly—relatively high for urban workers. In tier-3/4 cities, most retirees receive over 1,000 RMB (140 USD)monthly.
Now examining your cited article: Those two farmers never participated in any insurance programs. Having never contributed to:
- Pension funds (hence receiving only the minimum 150 RMB, 20USD monthly—standards vary by city, e.g., ~1,400 RMB,200USD in Shanghai)
- Medical insurance (400 RMB lowest level, 55USD annually, fixed.), making them ineligible for reimbursements. Rural insurance even allows retroactive payments-coverage begins three months after payment, regardless of preexisting conditions.
While such cases exist, they're exceptionally rare. In my entire life, I've only known two families who didn't enroll in insurance—both were wealthy enough to purchase private coverage.
by ammo1662
5/21/2025 at 6:22:54 AM
Could it be possible that the CCP is concerned that such an increase in household disposable income could lead to an increased risk of uprising?by Teever
5/21/2025 at 5:33:36 AM
> In isolation an $8,000 EV looks cheap to us earning a salary in the West, but that is still 1.7x the median household income (so half of all Chinese households have even less money to spend).You're looking at China the wrong way. A better way to view it is as two countries - a developed urban one, tied to a developing, rural one.
The latter is currently bigger than the former, so it drives any median wealth metrics down. A lot.
But for the past 40 years, the developing part of it has been shrinking - while the developed part has been growing. On that kind of trajectory, that median divide of wealth is currently where the 60th percentile was a decade ago, and in a decade, will be where the 40th percentile is today.
Where does the median urbanite in China stand, compared to her Thai or Malaysian counterpart?
by vkou
5/21/2025 at 5:53:38 AM
> You're looking at China the wrong way. A better way to view it is as two countries - a developed urban one, tied to a developing, rural oneThis is how I am looking at China, and this is ALL THE MORE reason that development needs to be spread out much more equally.
Urban China isn't that much richer either - median urban household income is CNY 43,000/$6,000 [0] - so on par with Thailand and half that of Malaysia's.
And rural China is in a worse position - CNY 19,600/$2,700 [0]
Ignoring the bottom half of China (urban and rural) is going to set China up for failure long term.
Having well developed cities (in reality a couple megacities that are also 直辖市) but a significantly underdeveloped hinterland and urban underclass will only lead to extended instability.
Furthermore, it isn't that expensive to expand the social safety net in China. The Chinese income tax system is severely regressive and is comparable to the US system, and the provinces and municipalities that generate the majority of growth for China can easily divert portions of their total production to either expanding their own social safety nets or subsidizing those of adjacent provinces.
Just by my back of the napkin math, expanding social services such that it becomes the equivalent of $2,000 per household would automatically add 1% to China's GDP growth rate, and also alleviate the overproduction trade war issue, as that would give significant breathing room to the bottom half of Chinese consumers.
It's just pigheadedness to not divert some amount of spending into education and healthcare.
> On that kind of trajectory, that median divide of wealth is currently where the 60th percentile was a decade ago, and in a decade, will be where the 40th percentile is today
Past trajectory cannot be used to predict future trajectory. Even the IMF forecasts Chinese GDP growth to drop to 3% by the end of this decade. It is much more difficult to lift the bottom 50% of Chinese households in that kind of a macro environment.
It is just plain complacency to ignore this trend.
> Where does the median urbanite in China stand, compared to her Thai or Malaysian counterpart
On par with their Malaysian or Thai urban counterparts based on HDI [1][2], but based on household income, they are roughly at the same median household income of Thailand, and half that of the median Malaysian household, so worse off than their Malaysian or Thai urban counterparts - and let's be honest, there's a reason you bump into plenty of "Cina" migrant workers doing blue collar work in KL, Johor, Klang, or Penang like bus driving or working as the help at Malaysian Chinese owned businesses, just like how there are plenty of white collar Chinese immigrants in Malaysia.
And if we decide to use a subnational lens as you insisted on your post, we can see that the majority of Chinese provinces are much more deprived than their Malaysian or Thai counterparts, which itself highlights the need for the Central and Provincial governments to really concentrate on expanding social welfare.
[0] - https://www.stats.gov.cn/english/PressRelease/202501/t202501...
[1] - http://www.dosm.gov.my/portal-main/release-content/malaysia-...
[2] - https://globaldatalab.org/shdi/table/shdi/CHN+THA/?levels=1+...
by alephnerd
5/21/2025 at 8:24:29 AM
I mostly agree with your points. Social inequality in China is pretty serious, and it’s gonna take a lot of smart policy moves to fix it.But when we compare China to other countries, we do have to consider some unique factors. The cost of living in China is really low, which means that even if people have similar income levels to places like Thailand, their actual quality of life can be better in some ways. For example, China’s “vegetable basket project” keeps food prices super low across the country. There’s no property tax, firefighting services are free, and rural healthcare is cheap—even if it's not on par with what you'd get in big cities.
That said, the government still needs to do more to boost domestic consumption. The current setup is okay, but it’s still nowhere near the living standards in developed countries.
by yanhangyhy
5/21/2025 at 7:16:22 AM
>> ...median urban household income...You seem to miss the word 'disposable' when you cited the chart and table in [0] you linked to.
China's nominal GDP per capita is already on par with Malaysia's.
https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...
Does your analysis on the relative standards of living of China's and Malaysia's populations still stand?
It's been more than 10 years since I last visited China. I've been to Malaysia a couple of times not too long ago. From what I see from random social media clips of regular people, their urban standards of living do not differ much.
by nopinsight
5/21/2025 at 3:15:04 PM
The idea that the hard goods are sold for "imaginary numbers" is popular but a bit of a misnomer.These "imaginary numbers" are actually claims on future income generated by the United States economy. It is true that they are "imaginary", in the sense that any property ownership is imaginary in a way that a toaster is not. The most common form is Treasuries, which the government then pays interest on and which must eventually be either repaid or rolled over.
So it would be more correct to say that China is trading hard work building goods in exchange for claims on future US income.
by mediaman
5/21/2025 at 8:27:20 AM
GDP numbers can be "imaginary" but production numbers are not.China produces more ships in a year than the US. Generates More Power from Hydro than the whole of Africa.
We could dig more -- but that's just on top of my head. Just like how the US was able to help the allies win WW2 by producing more. It will lose a war against China - because of incredible chinese production
by dzonga
5/20/2025 at 2:23:17 PM
Even more sad that the US chose NOT to invest this surplus, for instance in infrastructure, education and a sensible health system.by actionfromafar
5/20/2025 at 3:33:12 PM
The US spends $1T on education. It is extremely difficult to justify spending more when the US already spends far more per student than other developed countries. Same with infrastructure and healthcare. Without accountability for where that money went it would be foolish to throw even more money at it.Also, in the US, infrastructure, education, and healthcare is primarily the responsibility of individual States, so it really needs to be measured on a per State basis. For some of these things, some States deliver high quality at low cost and other States deliver low quality with an order of magnitude higher spending for the same thing. The correlation between spending and results is surprisingly weak. Competency and focus seems to play a greater role.
by jandrewrogers
5/20/2025 at 11:11:51 PM
If there's so much money, why do American schoolteachers buy classroom supplies out of their own pocket?by triceratops
5/21/2025 at 12:25:08 AM
Because like most US systems, the institutions are far too fragmented and therefore overly complex and inefficient. So, a lot of the money just goes towards the overhead of logistics and managing the beast - aka, administration.It's the same problem in healthcare. We spend a lot of government dollars on healthcare. But when you have thousands of insurers and then boards per state and extremely complex billing, you're going to be putting the majority of your money into not-care.
by const_cast
5/21/2025 at 12:22:15 AM
It’s up to the local school board to carve up the budget. Usually the top items are salaries, pensions, and health insurance for teachers and staff.If we’re looking for contributors to differences in education spending between the US and other countries, those school boards are one place to look. The overhead of administrative staff at thirteen thousand local school districts is significant.
The US also has quite high salaries by international standards, which increases per-capita spending on pretty much anything.
by ashdksnndck
5/21/2025 at 11:19:18 AM
I wonder how much of the budget goes to sports.by Gravityloss
5/21/2025 at 4:25:07 AM
b/c they're not very bright?by giardini
5/20/2025 at 3:55:17 PM
Its never competency and focus. Individual influence averages out, its the system that creates the result at scale.To some extent higher per-student fees are expected in certain areas, most countries with heavily funded education aren't facing the same issues of rural population density. There's a lot of overhead costs to run so many schools.
Then state policies and regulatory capture is the other side of course, all schools need X teaching aid from Y company for some obscene markup...
by Vicarium
5/20/2025 at 4:44:33 PM
Rural population density isn't a real problem for education. Some rural school districts have to run longer bus routes to service their students but those aren't particularly expensive.by nradov
5/20/2025 at 3:58:15 PM
The system can’t do anything if academics and discipline aren’t instilled at home.by lotsofpulp
5/21/2025 at 6:39:11 AM
The 1800s called and they want their moral standards back.by kiitos
5/20/2025 at 4:32:18 PM
It’s interesting. Whenever someone says “the US needs to do a better job of funding education” someone always comes out with this exact comment. Yes, the world knows that your country spends more per capita on education than other countries. That’s been made abundantly clear time and time again.But, if the system is so good and utopian, why do so many children get shot at school? And why do so many American elected officials have such a poor understanding of the US constitution?
Absolutely no signs of trouble, hey?
by hluska
5/21/2025 at 2:16:16 AM
The problem here is with the assumption that the problems can be solved by throwing money at them. Typically they can't.To a very large degree what schools turn out is based on the students that come in. It's the home and the neighborhood far more than it is the schools themselves. You get a better result if you put students with other students of like ability and motivation. This works pretty well at the university level, but historically it was used to discriminate and thus doesn't get done earlier. And, likewise, we are very focused on equality even when it comes at a detriment to the students. (Once again, legacy of it being used to discriminate.)
by LorenPechtel
5/20/2025 at 4:37:55 PM
No one said the current system is good, just that it can’t be fixed with more money nor can it be fixed at the Federal level. None of the issues you mention have anything to do with education spending.by jandrewrogers
5/20/2025 at 7:46:03 PM
Sure it can. The president can declare a national emergency(IEEPA) and regulate international commerce by taxing capital inflows ie: A tariff on money. The only reason he doesn't is because the political backlash resulting in making the dollar undesirable as a reserve currency would have massive political fallout. In short he can, he just doesn't want to enough.by kelseyfrog
5/20/2025 at 7:39:55 PM
And how much of that money actually goes to educating children vs. In the back pockets of all the private enterprises that so many love to espouse.It's like the majority of us were born to be peasants, so many people are quite happy to give the rich tax breaks for example, as long as their own taxes don't go up. Money's gotta come from somewhere.
by fennecbutt
5/21/2025 at 5:08:50 AM
okay, but if the system is corrupt and inefficient then throwing more money at the problem will just make it worseby beeflet
5/23/2025 at 1:11:48 PM
That's my point aha. That corruption needs to be burnt out.by fennecbutt
5/20/2025 at 8:28:23 PM
The amount of dollars the US gives to school districts does not tell you how much the US spends on education, because only a portion of that money actually goes to pay for the school or teachers. The rest goes to nonsense like obscene administrator salaries, which have seen the same stupid growth as CEO salaries.Why are Teacher salaries still so low and teacher:pupil ratios continuing to get worse if we spend so much on education? Why is it that literally the primary thing that education tax dollars should be spent on, educators, is not what it is spent on?
Consider that one of the best states in the US for education, supposedly new jersey, pays it's teachers a MEDIAN of $82k. Starting is above $50k according to teachers.
In pretty much every state, the median teacher wage is equal or within 5% of the state's "living" wage.
Most places require a college degree for teachers. If they don't, that's scary in other ways. But why the hell am I spending $40k on a college degree to make barely living wage for the rest of my life? You know who does that? People who aren't very smart. Gee, I wonder why we struggle to find good teachers.
40% of our nation's teachers have a second job. That's funny, because I assure you that damn near any teacher that actually does their job works twice as hard as most other professional jobs. You don't actually get any time in your day to grade student work most of the time, so you have spend your own personal time to do your job. Every single piece of homework your child brings home is at least an hour of grading for that teacher, and that's just a niche subject or small class size. Good teachers are also running their departments, designing lesson plans, building entire portfolios of tests and work, and none of the promises of technology have done anything to improve these parts of the job. Digitized grade books are pretty good, but now they mean teachers have to deal with the worst parents bitching about their kids getting a bad grade because they didn't study, which is not something the teacher can help.
by mrguyorama
5/21/2025 at 1:12:19 AM
is that trillion with some PPP correction or without?by 8note
5/20/2025 at 4:49:21 PM
Because the population has been tricked way too many times with the "we're allocating these taxes to education" dogwhistle.When every fucking time they open a lottery or have a new tax, and promise it will go to the schools, but they defund what's coming out of the general fund to the schools by that exact amount, you can only cry wolf so many times before that doesn't work anymore.
To get this to work anymore you're going to have to create a constitutional amendment or something that the school gets X and there will be no fuck fuck games that they aren't just defunding the schools some other place so they can use it on the next corrupt "construction" project.
by ty6853
5/20/2025 at 3:40:39 PM
The US spends, per capita, more public funds on education and health care than any other industrialized nation in the world.Some of the worse performing schools in the US have the most per capita funding.
by mousethatroared
5/20/2025 at 7:31:55 PM
The U.S. can absolutely fund Scandinavian‑style social programs, it just chooses not to, in part because the reserve‑currency framework makes the optics of deficits uniquely skewed.This is one of the consequences of the US's self-inflicted burden of the Triffin Dilemma.
by kelseyfrog
5/20/2025 at 3:10:31 PM
Car infrastructure and sprawl is hugely expensive and we spend tons on itby rcpt
5/20/2025 at 10:17:42 PM
Even alon levy disagrees that maintaining suburban infrastructure is a huge driver of spendinghttps://pedestrianobservations.com/2024/10/07/taxes-are-not-...
by rangestransform
5/21/2025 at 3:39:18 PM
"Even alon levy" is worded to sound like "all the experts" but if you read the article it's clear that he's taking a minority opinion.And that's because he's wrong. The US spends huge amounts on car infrastructure. At every level of government numbers are just gigantic.
by rcpt
5/21/2025 at 6:15:51 AM
sad that you're being downvoted here, very clear that the US investment into society is low in relative terms. In fact, doing so in considered 'socialism' and widely condemned by almost all the political establishment.by hunglee2
5/20/2025 at 2:27:33 PM
The surplus came with alot of responsibilities, like policing the world. And that had a hefty price tag... nearly $1 trillion annually. Wasn't much left over for public transit and free foot massages. I can entertain arguments that it was a bad bargain.by NoMoreNicksLeft
5/20/2025 at 2:47:48 PM
"Policing the world" doesn't have to cost that much. Nearly $2tn spent just on the pointless Iraq misadventure. How much public transit and education could that have funded?by triceratops
5/20/2025 at 8:00:40 PM
Policing the world is a jobs program for all of the unionized factory workers at lockmart and Boeing that would otherwise be, at best, trades workers earning a more modest wage. We can thank the MIC’s placement of factories in strategic congressional districts for thatby rangestransform
5/20/2025 at 2:57:29 PM
> How much public transit and education could that have funded?Given the current costs for NYC to expand its subway, about 500 miles of track given the current costs per mile.
by dgfitz
5/20/2025 at 3:02:24 PM
The entire NYC subway, the busiest system in the country, has 660 miles of track. NYC has a GDP of $1.3tn and the subway system has a big hand in making that possible. So that's actually a pretty good RoI. It'll go a lot further (haha!) in a less expensive city.But that also goes back to the original comment about spending the surplus wisely.
by triceratops
5/20/2025 at 3:01:04 PM
That sounds great actually.by actionfromafar
5/20/2025 at 3:14:19 PM
That $1T isn't an expense. Part of it is operational, meaning keepiong boats and bases running around the world, which earns the US yet more influence and soft power and unearned media. Much of it is acquisition costs, meaning $ going into a US defense tech for research and procurement of the most advanced hardware and maintenance of those industrial bases to do so; that hardware then gets sold to allies, among other things. Saudi Arabie just purchased $142 billion of US hardware.Playing "world cop" is a net win for America, not a cost it bears.
by fatbird
5/20/2025 at 3:42:03 PM
Just because there is a soft power upside does not mean that it is a net positive. I often see this stated without any form of quantification. It is essentially a matter of faith.by s1artibartfast
5/21/2025 at 5:17:45 AM
The net upside is maintaining the market that allows for a trade deficit in the first place.The problem is really that the two aren't directly linked. If you operate at a trade deficit, you don't need to manufacture at home. But if you can't manufacture at home, you can't build war machines efficiently, so you can't be the world police and ensure the market needed to operate at a trade deficit.
By defunding the military you're pulling the rug out from under yourself in this sense. I would still agree that it's massively inefficient and needs to be fixed, but the working US-World system would still invest a lot of funding into the military.
by beeflet
5/21/2025 at 2:14:14 PM
Unfortunately, at some point the people who are trading products for dollar bills will catch on that there's nothing that they can buy with the dollar bills that are worth the value of the products they sent across the ocean. When that happens, people will stop accepting the dollar bills as payment... but by that point, you've hollowed out your manufacturing to such a degree that you can't ever start it back up. So you can't trade for those products (no products of your own to trade), you can't purchase them (your own currency is worthless), You can't purchase them with other nations' currencies (nothing to sell for that), and you can't make the products yourself.But "soft power". We traded long term prosperity for the short term ability to meddle in other people's countries and lives.
by NoMoreNicksLeft
5/21/2025 at 7:12:17 PM
Soft power is the smallest benefit.You're leaving out a large part of the equation, which is that countries can trade with each other in the reserve currency, which becomes a neutral medium of exchange with respect to the parties. The value of holding US treasuries currently is that everyone will accept them. By having the world's reserve currency, the US becomes the owner of the world marketplace. It's not just about trade with the US. I export to the US, get USD which I convert to US treasuries, and now I have near frictionless trades with everyone else in the world.
One huge impact of this over the last 50 years is that the world is effectively lending the US liquidity at the lowest possible interest rate, which the US then extends as credit to American businesses, universities, etc., fueling a boom in industry, commerce and academia.
Another big impact is that holders of US treasuries are strongly incentivized to support and protect America, because as America falls, so does the value of those holdings. Before China declares war on the US, it looks at its huge pile of treasuries that will become worthless at the first shot, and says "maybe not". It also allows the US to affect other countries through its monetary policy--another incentive for others to play nice with the US.
It's kind of boggling how little this is understood, how much short and long-term prosperity the US has created for itself by doing this.
by fatbird
5/20/2025 at 2:46:49 PM
IMHO that's a false dichotomy. The US has the worlds most inefficient health system, which is an incredibly large budget post, most of the money going to middlemen. Besides, it has also benefited from open shipping lanes as much as the rest of the world, if not more.by actionfromafar
5/20/2025 at 3:02:02 PM
Yeah, only that if you spend more per capita on health care than comparable national, not less. So the argument of "We can't do $A like other countries do, because of $B" doesn't really fly if you spend more to get a worse outcome.The problem the US has in regards to healthcare, that the goal of its system isn't to supply its population with the best quality healthcare for the lowest amount of cost — the goal instead is to allow all kind of market actors and middle man to make a profit without the population revolting.
by atoav
5/20/2025 at 2:53:03 PM
There is plenty to pay for public transit, education, and healthcare. There always has been, locked away in stock market value owned by precious few people.On healthcare, we already pay way more than any other developed nation for far worse outcomes, we're literally WASTING money on it to make some shitheel health insurance CEOs a little richer.
FOH with this woe is us bullshit, boo hoo it's so hard to police the world (something we also overpay for). We could have been taking care of each other the entire time, there is nothing stopping us but lies and attitudes like yours the lies beget.
by wpm
5/21/2025 at 5:28:18 AM
>health insurance CEOs a little richer.To be honest, I don't even think it's just the people at the top profiting. The whole system is like designed to create as many useless jobs as possible. If I want to get a blood test, I have to do like 4-5 referrals before I can just get my test done. If I want a diagnosis, I have to wait a week to talk with a doctor who is going to push sponsored medication anyways. I'm better off doing the research myself and buying drugs through telehealth service or the greymarket.
You would be better off just having a free market where consumers figure out what doctors/nurses/pharmaceuticals are safe on their own, and you strip intellectual property protections and legal requirements for prescription drugs. It shouldn't cost a million dollars to get an x-ray. It does because there are high legal barriers that allow rent-seekers to creep in.
by beeflet
5/21/2025 at 12:47:43 AM
Everyone gets something, or every country anyways. The export-led growth Asian miracles are really just a part of this. Maybe the Chinese worker gets screwed, but China maybe doesn't. Something like that.by cryptonector
5/21/2025 at 1:02:51 AM
Chinese workers got actual work vs being automated out of the farming industry and starving. China gets to import raw resources from other countries to feed both domestic production and foreign export.It was a rational strategy that’s getting outdated as China’s economy grew enough that exports can’t ramp up any more.
by Retric
5/21/2025 at 2:14:54 AM
The mental gymnastics here to justify the dollar's reserve status and trade deficits as some kind of genius economic strategy are incredible.First off, this ridiculous notion that the US "gets products and services enabling residents to live beyond their means" is classic ivory tower cope. Yeah, tell that to the average American worker whose real wages have been stagnant for DECADES while housing, healthcare, and education costs have gone full rocket ship. We're not living large - we're drowning in debt while our industrial base gets hollowed out and our cities rot. But sure, keep telling yourself those cheap plastic crap from China is some kind of economic superpower move.
And this nonsense about "imaginary numbers" - spare me. Try telling the Chinese worker breaking their back in a Foxconn factory that their labor is being exchanged for "imaginary" dollars when those same dollars buy real commodities on global markets. The only thing imaginary here is your understanding of how actual wealth transfer works. The Fed's money printer goes BRRR, Wall Street gets bailouts, and the working class gets hollowed-out towns and opioid epidemics.
This whole "trade deficit is fine because we export dollars" nonsense is cope. We get to print monopoly money and trade it for real goods sounds great until you realize it's turned the US into a hollowed-out consumerist wasteland. Our manufacturing base? Gutted. Middle class wages? Stagnant for decades. But hey, at least Wall Street gets to play financialization games with all those dollars floating around overseas, right? The petrodollar cope is particularly hilarious. "Oh but the USD is backed by oil and military power!" Yeah, how's that working out now that the BRICS nations are openly trading in local currencies? Saudi Arabia taking yuan for oil? Russia and China settling trade in rubles and yuan? The entire Global South is laughing at your "reserve currency" while they quietly build alternative financial systems. But sure, keep telling yourself that 1971 was some genius move rather than the beginning of the greatest wealth transfer scheme in human history.
Spare me the "political influence" argument. You know what else gives you influence? Actually MAKING things. The US used to be the arsenal of democracy because we had real industrial capacity. Now we're the ATM of the world. Sure, everyone takes our dollars, but they're laughing at us behind our backs while they build actual industries. China takes our funny money, build world-class infrastructure and tech, while we get... what? A service economy of Uber drivers and baristas? The MMT shills in this thread claiming deficits don't matter are smoking crack. Yeah, it's all fun and games until the music stops. The dollar's dominance isn't some natural law. It's propped up by petrodollar recycling and military bases in 800 countries. But guess what? The BRICS are building alternatives as we speak, and when the world finds a way to ditch the dollar, the inflation tsunami will make the 70s look like a picnic.
And don't even get me started on the "but manufacturing doesn't pay well" cope. Oh yeah, because working at Amazon warehouses or DoorDashing is such a step up from union factory jobs that could support a family on one income? The deindustrialization of America was the greatest wealth transfer from working people to corporate elites in history, dressed up as "free trade." The 1971 Nixon Shock was the original sin that decoupled money from reality. Since then it's been one giant debt orgy where the rich get richer by financial engineering while the country's real productive capacity withers. But sure, keep telling yourself that running perpetual trade deficits while offshoring our industrial base is "sustainable" because we have the money printer.
China now owns our supply chains, controls key industries, and is busy strong arming its way to global dominance. Walmart shelves full of $2 plastic junk don’t make up for the collapse of skilled labor wages. Go tell a factory worker in Ohio that his job loss was worth it because iPhone assembly got outsourced to Foxconn. The "cheap goods" argument is cope for elites who profit from globalization while real wages stagnate for decades.
The average American gets screwed by this system with stagnant wages, unaffordable housing, and a crumbling infrastructure while the elites jet around on private planes bought with Fed-printed junk money. The dollar's reserve status isn't a privilege. It's a curse that's let us paper over our decline with debt instead of making tough choices. Confidence in the dollar is not an infinitely sustainable glitch. When the world finally gets sick of funding our deficits, the reckoning will make 2008 look like a picnic. No fiat currency survives its own abuse. When the reckoning comes, it won't be the bankers and politicians who suffer.
The reality is brutally simple. Decoupling from gold removed all discipline from the system. Politicians could spend without consequence, financiers could gamble with abandon, and the productive economy got outsourced to slave-labor nations while we became a nation of paper-pushers and baristas. Now we're staring down the barrel of $35 trillion in debt, supply chains we don't control, and a currency that's one crisis away from a Venezuela-style collapse. But yeah sure, keep telling yourself everything's fine because some Keynesian academics drew you a pretty graph. The Romans probably had similar debates while their denarius turned to trash and the barbarians gathered at the gates.
by greenavocado
5/21/2025 at 3:03:42 AM
> The deindustrialization of America was the greatest wealth transfer from working people to corporate elites in history, dressed up as "free trade."You make it sound like this was a conspiracy, and perhaps it did devolve into that eventually, but this system was introduced at the time in order to deal with the stagflationary crisis of the 70s. Only because things had gotten so bad, did Reagan and Thatcher manage to get the democratic support for making the transition.
Very emotional post.
by xk_id
5/21/2025 at 3:13:34 AM
The gold standard didn't cause stagflation. Government overreach did. Germany conquered inflation in 1923 by re-pegging to land (the Rentenmark) then gold (the Reichsmark) a few months later. The rchitects of this system KNEW what they were doing. Treasury Secretary Connally's infamous quipped to European ministers: "The dollar is our currency, but your problem." This wasn't economic theory, it was a declaration of financial imperialism. They didn't solve stagflation but instead they exported inflation globally while buying time with an explosion of debt that future taxpayers (that's us) would inherit. The 1971 decision didn't solve stagflation it just kicked the can down the road while turning America from the world's greatest creditor to its largest debtor. Now we're living in the endgame: a debt-to-GDP ratio over 120%, a hollowed-out industrial base, and a generation that can't afford homes while wall Street racks up record bonuses.by greenavocado
5/21/2025 at 4:06:13 PM
Hyperinflation in Germany was deliberate. And Germany didn't just decide on its own to return to the gold standard. European countries drifted away from gold during WWI, and then they all slowly returned to it in the early 1920s. In the case of Germany, its return to the gold standard was required by the Dawes Plan, a plan by the US to ease the effect of reparations on Germany so they'd cease the hyperinflation shenanigans.Once Europe returned to the gold standard, it saw widespread deflation and consequent unemployment, particularly in the UK and Germany. The effects of deflation caused by a return to the gold standard, and related issues in the US and France which accumulated much of world gold reserves, is widely considered a major cause of both the Great Depression and the rise of fascism. Notably, deflation contributed to a rapid trade deficit increase in Germany.
Some light reading:
https://www.cato.org/blog/world-war-i-gold-great-depression
https://cepr.org/voxeu/columns/did-france-cause-great-depres...
https://www.brookings.edu/articles/germanys-trade-surplus-is...
by wahern
5/21/2025 at 7:24:31 AM
> The 1971 decision didn't solve stagflation it just kicked the can down the roadIt kicked the can down the road for half a century. It bought a lot of time. This approach, of betting on a miraculous solution in the future, is deeply ingrained in policy making; it’s not unique to the neoliberal reform. In fact, the next solution could just be figuring out how to kick the can again.
The next phase looks like it will entail gov intervention, by issuing loan guarantees, or by mandating the investment of national savings into specific industries, like manufacturing and energy. Capital misallocation and the return of stagflation will lead to another crisis, but in a few decades from now.
Pegging to gold by itself doesn’t really solve anything, if the overarching system remains based on relentless exploitation by selfish interests. Sooner or later, overdraft facilities will emerge for gold that doesn’t exist; so, the traumatic cycles of boom and crash will be repeated. Not to mention the deflationary dynamic, which will overwhelmingly favour those who already own gold. In general, you can’t de-politicise monetary policy (by fixing its supply), without inevitably amplifying the overarching system.
by xk_id
5/20/2025 at 8:35:58 PM
It seems like a bit of A and a bit of B, perhaps more A than B.How do we maintain global reserve status—what is the cost? Is it one of the reasons why have military bases all over the world? Back in the day, people used to say the U.S. went to war in Iraq because Saddam was going to switch away from the petrodollar. Under your reserve-currency theory, that seems quite possible, no?
by rayiner
5/20/2025 at 12:44:08 PM
Adam Smith already pointed out that a trade deficit is not really interesting, so I do not understand the American obsession about it ;)Also, the often-mentioned US-EU trade deficit is not that big if you count in services. Which I think should be done in the 21st century. Large parts of the US economy are focused on digital high-value services, and they are "exported" worldwide.
by codingbot3000
5/20/2025 at 3:33:30 PM
> Also, the often-mentioned US-EU trade deficit is not that big if you count in services. Which I think should be done in the 21st century. Large parts of the US economy are focused on digital high-value services, and they are "exported" worldwide.This is why, in case of reciprocal tarriffs on physical goods, the US ends up the big winner - they don't apply to digital services, which are a huge part of US exports.
Now the world had slowly been catching onto this fact that they'd been getting absolutely rinsed by the FAANGs who have gotten their populace addicted to their opium and made trillions off of them without contributing anything meaningful back. For the first time, we were seeing digital services taxes - a decade overdue. Brazil now has one in place - great on them. The EU was also planning one, but then the tarriffs came, and suddenly voices are saying they might abandon it. If the current US gov was any other US gov, the obvious conclusion would be that they're using tarriffs as a pawn to prevent the rise of digital service taxes.
Obviously, in the current timeline this wasn't the main reason. But there's no way Mark, Satya, Jeff and Tim haven't been whispering into big leader's ear just how "unfair" these DSTs are.
by maeil
5/21/2025 at 2:30:56 PM
Really good point. As a EU citizen, I hope the commission had at least the balls to put a retaliatory DST on the table in private. But I doubt it.by codingbot3000
5/20/2025 at 3:23:04 PM
In fact, according to US government published numbers, the US runs a goods+services surplus with quite a few countries.FWIW, I’m not sure I believe the official numbers, or at least I don’t believe that they measure anything useful. When a French customer buys an AMD CPU or Nvidia GPU that was made in Taiwan, the physical object may never touch US soil, but a lot of money flows in. Did we export a good, a service, or neither?
What about when a Spanish user sees an ad funded by a German company and four different US intermediaries are involved in showing that ad? What if the US companies play complex accounting tricks to redirect the income to a subsidiary in a low-tax jurisdiction like Ireland and then effectively materialize some of the dollars in the US by buying shares in the parent company’s stock but mostly just let the nominally Irish dollars sit in US accounts and let US people own very valuable stock?
(Interestingly, IMO none of this requires that USD be a reserve currency. One could easily imagine the same type of economy where gold earned in Europe in deposited in a vault in the US, held by an account that is nominally Irish, and used as investment collateral for various US or foreign investments denominated in XAU. Or it could be cryptocurrency or pretty beads or whatever.)
by amluto
5/21/2025 at 7:53:55 AM
You have to start somewhere though. The alternative, throwing your hands up and saying "this is too complex to track", isn't useful eitherby davedx
5/21/2025 at 1:18:13 PM
Like this?https://www.bea.gov/news/2025/us-international-trade-goods-a...
Of course, if you take these numbers and throw them into the USTR’s ridiculous “reciprocal” formula, you don’t even end up agreeing with the sign of the tariffs proposed for a lot of countries.
by amluto
5/20/2025 at 1:57:57 PM
It's useful as a political tool, that's about it.Up until now it was a fairly harmless political distortion. I suspect in the past we maybe had some executives who themselves bought into it but they took input from folks more educated on the matter and just let sleeping dogs lie.
But now we have an administration who at least seems to believe it whole heatedly and isn't interested in anyone who is educated on the subject providing input.
by duxup
5/20/2025 at 1:35:12 PM
The American obsession has to do with its value as a political weapon against the minds of dummies (with votes)by sorcerer-mar
5/20/2025 at 3:30:45 PM
The average American conflates trade deficits with the loss of domestic industries/jobs.by bdcravens
5/20/2025 at 2:35:51 PM
The obsession has at least one interesting question attached: ownership of real property. At the limit, at least, that becomes a genuinely interesting question.by jtc331
5/20/2025 at 12:47:52 PM
yes indeed - it has been conflated with the decline of US manufacturing. Reality is the most significant export of the US is the USD itself - that is the trade good which everyone must have (at US insistence)by hunglee2
5/20/2025 at 2:46:34 PM
Out of all the many industries out there, I don't understand why we keep glorifying and romanticizing manufacturing and trying to "bring it back." Depending on what you are manufacturing, it can be a very boring, stressful, stinky, physically taxing, or dangerous job. And it really doesn't pay well. It may have paid well 70 years ago, but it doesn't today, and you can't turn time back.A lot of customer service and telemarketing jobs have gone offshore. Nobody is romanticizing about bringing them back. Same with textiles and clothing. Nobody is calling for a return of sewing sweatshops. So why does manufacturing win elections?
by ryandrake
5/20/2025 at 3:27:40 PM
National security is the obvious reason. That includes the ability to switch to a wartime economy, which requires low-tech manufacturing and resource extraction to not be reliant (and thus vulnerable) on imports from potential adversaries. Maintaining a talent pipeline is also important, we’re not going to be able to produce enough high skill machinists quickly enough when we need them because that takes time.Manufacturing capital is primarily the value of onshoring manufacturing, the labor itself may not be particularly valuable at present, but the ability to repurpose it quickly is valuable. It would take the US much longer to build up the kind of manufacturing infrastructure and capital required to be self-sufficient than it will take China to build up the talent infrastructure and intellectual capital required to replace the US. China has no shortage of intelligent and driven people.
Advanced manufacturing (mainly thinking of semiconductors but there are other areas) is increasing in value with AI development, and has been increasingly valuable with prior digitization. It was a mistake for prior (pre-CHIPS) US administrations to not subsidize it.
There are other good reasons: not everyone in society can be upskilled. You need jobs for the lower and middle class that afford them decent lives. Only having high skill high education jobs and low skill low education jobs leaves people in the middle with limited opportunities for economic mobility.
by variadix
5/20/2025 at 3:59:02 PM
The best national security is for it to be in the interest of the counter party to trade with you rather than attack you.Tariffs and protectionism tilt the favor closer to attack. In the extreme, a nation that completely refuses to trade can't offer nor take anything beyond spoils of war.
by ty6853
5/20/2025 at 7:13:54 PM
> The best national security is for it to be in the interest of the counter party to trade with you rather than attack you.Sure, but if your biggest export is your country's particular flavor of monopoly money, is it actually in your counterparty's best interests to trade with you?
by laverya
5/21/2025 at 9:04:17 AM
> The best national security is for it to be in the interest of the counter party to trade with you rather than attack you.This assumes that governments are rational actors. This isn't always the case.
by int_19h
5/21/2025 at 5:34:59 AM
Why do I need to trade with you when I can just rob you blind at gunpoint? What you're describing isn't sufficient leverage because you won't have jurisdiction to control trade in the future.by beeflet
5/20/2025 at 6:54:29 PM
How is that working for Taiwan?by jonfw
5/21/2025 at 1:43:31 AM
Others have mentioned geopolitical priorities like self-sufficiency or wartime economics, but I'd like to focus on the popular-opinion side of things.It's misguided nostalgia: People recall a time of high wages which co-occurred with certain industries/jobs and strong labor unions. [0]
They (reasonably) want that kind of high earning-power to return... but incorrectly assume (A) the same products/processes are still highly profitable/scalable and (B) that they'll somehow (re-)capture a big slice of any pie without (re-)unionizing.
[0] https://www.epi.org/publication/unions-help-reduce-dispariti...
by Terr_
5/20/2025 at 2:59:52 PM
> Out of all the many industries out there, I don't understand why we keep glorifying and romanticizing manufacturing and trying to "bring it back."It’s a matter of national security. Look what happened during Covid when we couldn’t produce basic medical necessities at scale.
If you go to war, do you think your adversaries are going to supply you with tanks and medicine?
by koolba
5/21/2025 at 6:19:48 PM
That is a very good reason for trade barriers, much better than the trade deficit. And the barriers could be introduced in a far less disruptive manner, that allows companies to plan long-term. So I guess whoever stresses the US trade deficit, does not really care about national security, otherwise they would say so directly.by codingbot3000
5/20/2025 at 3:58:03 PM
I think it's because if you tour through the US, you'll come across hundreds of cities that are completly abandoned and rotting that all used to manufacture items. It's hard not to wonder what happened. Instead of working at those hard but well-paying jobs, those people get to work at walmart for minimum wage.by xeromal
5/21/2025 at 1:46:37 PM
But how many would still be around without the outsourcing? It's a convenient thing for the politicians to blame but the reality is that most jobs have been lost to machines, not overseas.by LorenPechtel
5/21/2025 at 5:05:29 AM
Because self-sufficiency is a prerequisite of control. “Things” are as essential as food or drinking water or energy in our modern world. Imagine if your country was reliant on another nation for all your food and water: they would have total control over you.Modern manufacturing is not like the factories of old. Go to China and tour some modern factories: you’ll be surprised. It doesn’t pay well _in the US, in 2025_ because it’s a dying industry. They could easily rise: manufacturing wages are a tiny cost of the sticker price of anything you buy today. Wages have been rising significantly in China for years with little impact to overall product costs. But that’s because they have a competitive manufacturing industry; no US factory owner is going to invest in top talent for a dying factory that has been uncompetitive for a decade.
by owenversteeg
5/20/2025 at 3:37:14 PM
China wouldn't be the number 2 economy and massively increasing in global power, military, and technology if domestic manufacturing wasn't valuable and important. The US itself wouldn't have risen to preeminent global power and technology center if not for post-WW2 being worlds manufacturer and supplier.by PKop
5/21/2025 at 7:38:56 AM
Beyond national security or nostalgia, there's also simply the issue of skill and expertise. Factories are full of people actually working the tools, materials and processes. This is where generational experience forms— people learn a lot when they're actually hands-on. Tim Cook famously said they don't manufacture in China because of the low labour cost, but the quantity of skill (specifically, in the case of Apple, with advanced tooling and materials) [1].This skill becomes innovation, quality, etc. and before you know it you're not inventing and designing devices for other people to build. You're buying devices designed, invented and built somewhere else.
I would also note that admiring and romanticizing capital over labour IMO is common in the USA than in other countries. I'd guess it's because the rest of the world saw some level of marxist influence that led to the formation of still-existing labour parties in the least, while the USA prosecuted marxism pretty strongly. Beyond how effective this marxist wave actually was in achieving better conditions for laborers, I'd say it at least did generally lead to ideological effects.
The general ideas that there's dignity in all work, that any job should pay a living wage, that money isn't the end all, that laborers deserve recognition, etc— I've noticed all those to be more prevalent outside the USA. Admiring people who make a lot of money with little work, or not working and living off rents, or wealth irrespective of the means to achieve it, etc— I've noticed that moreso in the USA.
So overall, you're right— I'm sure a lot of people in the USA wont actually want those jobs with how little protections labour has and how much people admire earning good money with little effort. Though nonetheless, I also believe there's a sector of the population —perhaps not in HN— that would appreciate those jobs.
[1]: https://observer.com/2025/04/apple-tim-cook-china-strategy/
by aylmao
5/21/2025 at 7:50:26 AM
I see it as a kind of misdirection, whether accidental or deliberate: Make the average person blame their malaise on the blend of industries, rather than their lack of bargaining power in the ones that exist.Like all the nonsense about "bringing back coal" when the number of people working in it has been declining for a solid century for good reasons.
"If only we bring back buggy-whips, I'll be able to support a family like my pappy did."
by Terr_
5/20/2025 at 2:56:37 PM
[flagged]by parpfish
5/20/2025 at 5:17:27 PM
> some segments of American men really glorify their work.What should they glorify instead?
Being valued by a community? Consumerism and mobility has fragmented communities such that most Americans aren't part of any meaningful social institutions anymore. Secularism (which I think is overall a good thing) has cut off church as another aspect of community.
Being a good friend? Again consumerism and mobility has led to a massive loneliness epidemic with many men reporting they have zero close friends.
Venturing into the unknown and discovering new resources to bring back home? The map is fully painted in. The exploring that's left to do is in the deep reaches of science that requires massive education investment in order to spend years in a lab making a tiny discovery.
Going off to war and protecting the innocent against violent invaders? The last arguably justifiable war was nearly a century ago.
It's hard world to find dignity and meaning in today, especially for men in the US, and especially for ones who by personality lean as much towards using their body as their mind. The US used to offer them form or factory jobs that were, yes, hard and dangerous, but (at least in our romanticized memory of it) enabled them to come home at the end of the day and feel they'd provided some value.
by munificent
5/20/2025 at 3:21:41 PM
Because manufacturing means widgets which has physical properties and dummies equate widgets with $$$. Software and services are too abstract and high falootin' and scary.by jasondigitized
5/20/2025 at 2:52:51 PM
Problem is that the USD factories don’t provide enough jobs for the US populationby cvwright
5/20/2025 at 3:14:34 PM
Neither will _modern_ manufacturing plants. Regardless, unemployment has not been a big problem in the US so far, and if you say that the recent mass gig/under employment is no longer sufficient for (american dream|middle class lifestyle|male ego), then the sweatshops and coal mines won't be better at all.by yks
5/21/2025 at 1:45:18 AM
The global demand for USD puts downward pressure on the price of US goods.by jaredhallen
5/20/2025 at 3:55:49 PM
Unemployment is roughly 4%.by analog31
5/21/2025 at 5:38:40 AM
It doesn't matter. Even if zero new jobs are created, it still represents a capital investment in robots and lights-off factories to increase national security going forwards.by beeflet
5/21/2025 at 1:46:25 AM
Then why allow over 10 million illegal immigrants?by arandomusername
5/20/2025 at 3:10:02 PM
- AI will devalue digital services- Trumpism might be a massive blow to American culture exports (which are also the digital services exports)
- the world is getting less secure, more "interesting" in the chinese proverb sense
- the trade deficit is related to decline in the middle class and manufacturing
by AtlasBarfed
5/20/2025 at 3:20:22 PM
There wasn't an obsession. Trump just weaponized the word deficit to justify tarrifs. Anyone with an IQ over 100 and two minutes to listen to an explainer video on this would quickly understand the con.by jasondigitized
5/20/2025 at 11:46:06 PM
As has been mentioned a couple times in this thread, the trade deficit does have a real negative impact on US industry. Whether or not that's good or bad for a particular person depends on their socioeconomic situation. One would reasonably assume that Trump's base is largely made up of folks for whom the trade deficit has real negative consequences.by jaredhallen
5/21/2025 at 6:33:18 AM
> They can then use these earned dollars to transact with other countries, as the US itself insists they do.I feel like people who post this have no idea of the "eurodollar"[1] or the fact that it was London (and the EU, at the time, in general) that benefited from popularizing the USD as a reserve currency versus pegging one to their previously decentralized currencies or risking their own currency control.
The US doesn't need to insist on anything. As you yourself stated in the paragraph previous to this, it's a natural side effect of being a large economy that everyone wants/needs to trade with. For the most part, the eurodollar has been a pain in the side of the US as it removes some control over their own currency. In some cases this has helped, as it's tempered certain recessive/depressive effects during downtimes (especially with Europe), but it's also caused inflationary issues that are outside the hands of the Fed. The US (like pretty much any nation minting their own currency) would prefer to have that control over some ephemeral benefits that very few can ever seem to articulate or meaningfully quantify.
by deaddodo
5/20/2025 at 1:48:59 PM
>> all USD transactions go through US institutions regardless of where those transacting partners are located.Do they? It is my understanding that the (originally London based) Eurodollar market deals in USD without US treasury oversight.
As will Hong Kong soon.
by ta20240528
5/20/2025 at 1:57:32 PM
You are correct and the original poster is wrong in this specific regard.Infact one of the most interesting/scary incidents for the US dollar was China selling USD denominated bonds and getting almost the same rate as the US government gets, which essentially means China can compete for USD with US government.
The implications of this is that if CHina wants, they now have another level to compete with the US. They can now issue USD denominated debt along the yield curve in areas where it would hurt the US hte most.
In the short term that is the frond end of the yield curve(short term under a year) where the US has to roll about $8 Trillion in debt over the next year.
With China competing by offering bonds here they will force up the interest rate the US has to pay pushing yields up with is the exact opposite of what Trump has publicly stated that he wants and making the US's already large fiscal deficit an even larger problem.
by chollida1
5/20/2025 at 9:22:39 PM
China certainly can issue dollar bills more cheaply than the US and it already does in small size, but scaling that up would concentrate currency, rollover and sanctions risk on Beijing while simultaneously reinforcing the dollar system it ultimately wants to escape. The trade-off is therefore asymmetric: the political sting to Washington would be modest and reversible, whereas the balance-sheet, legal and geopolitical liabilities for China would linger long after the bonds are sold.by tcgv
5/21/2025 at 5:48:05 AM
> Its Western assumption that China wants to escape the USD reserve currency.Nah, they have a lot of them, they don't want their value to drop.
What the world wants is to escape (at least in the medium term) is the US oversight that forces the USA's enemies to be everyone else's enemies.
From what I can tell, they are going to use (are using) Hong Kong as a ex-USA location to price and trade USD - modeled on the Eurodollar. With a lot of trade-with-China being settled in their e-CNY CBDC.
As a poster alluded to - the big loss for the USA is the insights into pricing and demand.
Nascent, but that's the trend AFAICT.
by ta20240528
5/20/2025 at 5:42:13 PM
appreciate the educationby hunglee2
5/21/2025 at 5:08:27 AM
Sure, but London is in the UK, and the UK is a member of the Five Eyes, and so is the U.S. It's pretty safe to say that if the U.S> wants that data, the U.S. gets that data. However, all those transactions are settlements transactions, so it's not that useful.by cryptonector
5/20/2025 at 3:11:46 PM
Correct.You can open up an USD account in maybe Zambia and transfer funds to another USD account in Dubai without it ever touching the US financial system.
by pstation
5/20/2025 at 3:17:32 PM
Yet interestingly the USA could put you in jail for wire fraud for 20 years for doing so even if you never interacted with the USA or any US citizens or ever stepped foot on their territory.by ty6853
5/20/2025 at 10:50:44 PM
The wire fraud laws seem like they are meant to catch everything?The law seems to get used whenever the US wants to jail someone it doesn't like (but doesn't have a good reason)
by robocat
5/20/2025 at 10:56:52 PM
Well there has to be something a little softer than the extrajudicial drone executions.by ty6853
5/21/2025 at 12:56:32 AM
Is that correct? My understanding is that the SWIFT transfer will go through a US correspondent bank in this case.by thresh
5/21/2025 at 7:38:34 AM
Not necessarily. A correspondent bank is simply a bank where the recipient bank has an account in the specified currency. For domestic currencies used only in certain countries, that bank will almost always be in that country. For currencies used globally - not necessarily.by sgjohnson
5/21/2025 at 1:16:19 AM
> At the expense of hollowing out domestic industryThis doesn’t seem obvious to me. Trade happens because it mutually beneficial.
The counter factual to reducing trade isn’t that we would manufacture the equivalent amount of goods here and be just as rich.
It’s that we would be poorer. And certain goods would cease to exist, and all of us would have to learn to live with less because it’s simply infeasible to manufacture everything here.
by materielle
5/21/2025 at 6:07:05 AM
> The counter factual to reducing trade isn’t that we would manufacture the equivalent amount of goods here and be just as rich.> It’s that we would be poorer. And certain goods would cease to exist, and all of us would have to learn to live with less because it’s simply infeasible to manufacture everything here.
This should be in billboards all over the US. I don't get what is so hard to understand.
Globalization made us all richer and gave us the luxury to pursue new technology.
Self-sufficiency points towards subsistence farming.
by huevosabio
5/21/2025 at 2:19:57 AM
It is utterly baffling to me that some Americans see the massive amount of free goods that they get as part of being the reserve currency with trade deficits, and somehow think "hollowed out manufacturing" rather than all that cheap stuff we get.The rest of those countries that are manufacturing things are far far poorer, and desperate to switch to industry higher up in the value chain, where the US is.
And a half-analysis of the situation, and a halfwit in charge of the country that thinks the trade deficit is like a budget deficit, and the US is throwing away the heart of its economic powerhouse over half understanding of the economy.
It's truly breathtaking. Like watching Brexit on repeat. Just utter economic suicide disguised as strength.
by epistasis
5/21/2025 at 8:31:59 AM
Play it forward a half century.Physical productive capacity is gone. Your global competitor is the de facto production hegemon. Debt has ballooned, and you can’t fund welfare programs. A big chunk of your country’s assets are owned by foreign investors.
But yes, you got a lot of cheap things before the music stopped.
by trade2play
5/22/2025 at 6:49:14 AM
Play it forward half a century and the US has climbed on to the next generation of industry while all those holding our debt are still trying to catch up, our economy has grown so much that the "debt" seems small, and we are far far more productive than the rest of the world still.The US has massive productive capacity in things where there's not enough supply and for which we gain a huge profit margin. We do not have massive productive capacity in cheap commodities with very low margins. This is a good thing. Switching our absolutely massive productive capacity into less productive jobs is a huge self-own.
If we have key industries, like food and computer chips, we subsidize them at a tiny tiny relative cost to the rest of the far more productive industries.
A small chunk of our countries t-bills are owned by foreign investors, something like 25%, and the biggest holder, Japan, is something like 3%. We are not in danger of being owned by foreign controllers, especially as long as we keep outgrowing all the other countries by keeping our workforce in highly productive areas instead of less productive areas like sewing T-shirts or assembling consumer electronics.
The biggest threat to our welfare programs, the biggest threat to the music stopping, is refocusing the workforce towards the industries of yesteryear. That's when we will stop outgrowing our debt and when we will face a world of hurt. And it's exactly where the masterminds in control are steering us right now.
by epistasis
5/21/2025 at 11:22:15 AM
They're not getting free goods and services, they are exchanged for debt, stocks, real estate.by RivieraKid
5/21/2025 at 8:04:09 PM
This is not really accurate.National currency as the defacto reserve currency does not necessarily guarantee a trade deficit. It just happens that way in history quite often, but it is unsustainable throughout the currency lifecycle.
> The solution is a non-national global reserve ... Keynes argument.
Keynes was wrong about a great many things which weren't really recognized until after the 1970s. His depiction of Say's law (and the disproving caricature of it which meant nothing), as well as the related actual failures of monetary policy in low interest rate environments, where his theories indicate contradictory outcomes.
I'd like to know why you think this would be a solution. It is not an obvious stance, and in fact the suggestion has been discounted in the past as impossible/intractable for a large number of reasons. First and foremost any system would be fundamentally unstable, and the risk of economic contagion unmitigated, there are cultural, sovereign, and other influences at the intersection of fiscal and monetary policy.
Most of the issues under that proposal are caused by the lack of economic calculation being possible, and growing chaos, and its a problem where the indicators lag behind the wave, so it comes without warning, or possibility to react.
by trod1234
5/20/2025 at 5:41:43 PM
> No one else can manufacture USD's, so other countries have to acquire them by shaping their economies to supply goods and services demanded by the US.They can just buy dollars from the other countries that already bought dollars. A huge amount of trade is dollar denominated, so there's no need to directly sell to the US.
> For the US, this is a simple trade off - gain massive political influence (and market intelligence - all USD transactions go through US institutions regardless of where those transacting partners are located), at the expense of hollowing out domestic industry and running a deficit in physical goods traded.
That's just false. There's no magic mechanism to force transactions to flow through US banks.
by nitwit005
5/21/2025 at 11:53:16 AM
Why does having a reserve currency status guarantee a trade deficit? For that to be true, (1) foreign-held dollar reserves would have to grow at a sufficient rate and (2) Americans would need to get increasingly indebted, which is a voluntary decision. The fact that foreign goods are cheap doesn't force Americans to get in debt in order to buy them.by RivieraKid
5/20/2025 at 2:05:10 PM
> all USD transactions go through US institutions regardless of where those transacting partners are locatedThis isn’t true.
by lurk2
5/21/2025 at 7:33:10 AM
> all USD transactions go through US institutions regardless of where those transacting partners are locatedThis is not true. See: Eurodollar - https://en.m.wikipedia.org/wiki/Eurodollar
by sgjohnson
5/21/2025 at 1:27:57 AM
I mean, the SDR exists, and currency baskets are not new or unheard of.USD has mostly been where it is because the alternatives are a lot less appealing:
* CHF - they explicitly would rather not be a strong reserve currency and threaten to print money whenever it starts strengthening
* JPY - they also don't want a strong reserve currency because it would tank their export led economy, plus Japan's debt and economy make the US look very healthy in comparison
* EUR - people remember the Euro crisis, and a lot of the fundamental issues with the currency were just papered over. It wouldn't ake a lot for a new Euro crisis to happen.
* GBP - post Brexit, not that attractive, and not so long ago the whole Liz Truss debacle happened to the currency
* CNY - China flirts with the idea of a reserve currency from time to time but would much rather have the ability to impose strict capitol controls quickly
It's only in the last year or so that USD has started to look very wobbly.
by bobthepanda
5/21/2025 at 7:11:56 AM
Compared to CHF and EUR the USD was on a downfall for a while now, more or less Corona or the last trump era.The new thing is that it's really getting worthless comparingly up to the point where it's not interesting anymore to keep any USD and no reason in sight to think it might get better
by herbst
5/21/2025 at 7:43:50 AM
SDRs exist only on paper. Regular individuals or companies can’t deal in them.by sgjohnson
5/21/2025 at 6:53:40 PM
What is in the SDR is public information, so if you wanted to track them, it's not that hard. https://www.imf.org/external/np/fin/data/rms_sdrv.aspxPart of the problem with a currency basket is figuring out which currency basket weighting you actually want to use, and maintaining it. USD just exists.
by bobthepanda
5/21/2025 at 10:33:14 PM
> What is in the SDR is public information, so if you wanted to track them, it's not that hard.The problem is the contents of the basket changes every 5 years. It is trivial to build your own “emulated SDR” just by holding appropriate amounts of the underlying currencies; but the problem is that in 2027 the IMF is scheduled to change the weights of the basket again; that means you may have to execute some (potentially very big) currency transactions to rebalance your “emulated SDR” to match the real one, and there’s a risk you won’t be able to do so at the rates the IMF assumed when it decreed the reweighting, especially since it doesn’t use spot rates, it uses 3 month average rates.
One option is to treat each edition of the SDR as a separate currency, so you might offer 2022 SDR and 2016 SDR in parallel. Another would be to have your “eSDR” aim to converge to parity with the SDR in the long-run, but allow it to temporarily deviate from parity whenever the basket updates.
SDR issued by the IMF don’t have this problem-whenever the definition changes, they all update accordingly-they are to a certain degree a “fiat” currency. There are two problems though-the first is that only sovereign states and certain international organisations established by treaty are legally allowed to possess them, private individuals and companies cannot. Some would like the IMF to change the rules to allow private ownership, but the US always blocks that because they are afraid of the SDR competing with the USD as the de facto global currency-and the IMF’s rules were architected to give the US a veto over all major decisions. The second issue: if you legally own SDR, you can take them to the IMF and ask to swap them (e.g.) for USD, and the IMF will work with the US Fed to ensure the transaction happens at the current official USD-SDR exchange rate. The problem is, the IMF rules only let holders carry out these transactions under quite restrictive conditions, meaning the SDR isn’t in practice freely convertible with its basket currencies-again, the IMF could loosen those rules, but the US would likely veto it.
Ultimately, some kind of private edition-based SDR emulation, or even a continuous emulation which closely tracks the SDR but temporarily diverges from it around reweighting time, is entirely feasible for a private actor (such as a bank or ETF issuer) to issue. I think the main reason why they don’t, is there just isn’t market demand for it - and an emulated SDR issued by a private actor is potentially at the regulatory mercy of the country to which that private issuer belongs, to a much greater extent than real SDRs would be.
by skissane
5/23/2025 at 3:23:35 PM
It’s not that crazy, nearly every USD stablecoin has the same problem.It does turn you into a bank during the transition period though where you may not be able to redeem all deposits at once.
by bobthepanda
5/20/2025 at 7:02:02 PM
>The solution is a non-national global reserve, calculated on a basket of national currencies. This was Keynes argument at Bretton Woods, but the US would not have it then, and does not want it now.But what does the US want now? It's government's actions are making it more difficult for other countries to trust it for the global reserve currency. If it really wanted manufacturing to return to it's shores, there's other ways to accomplish that without rewiring the global economy: carrots, not sticks.
by nilram
5/20/2025 at 12:40:26 PM
The US isn’t forcing anyone else to use USD. People around the world use USD because they are confident it will help them buy products and services they want in the future.by lotsofpulp
5/20/2025 at 3:21:24 PM
This. Fundamentally, the USD is the global reserve currency because the US is seen by the rest of the world as the most stable entity able to guarantee the future value of its currency: It's militarily powerful enough to guarantee its independence, and legally predictable as a "rule of law" nation and a stable democracy. If you want to park your assets anywhere, the safest bet is US treasuries. Everything else follows from that.by fatbird
5/21/2025 at 7:15:07 AM
Or because they designed they currency and economy to get there.Then one orange guy took about 3 months to break the trust they built into their currency for many many years.
by herbst
5/20/2025 at 3:27:48 PM
> The US isn’t forcing anyone else to use USD.I disagree. The petrodollar is a thing.
by throw_m239339
5/20/2025 at 3:36:53 PM
What kind of force is the US using to force oil sellers to only accept USD (assuming they only accept USD).Are Canada and Russia and Iran only accept USD for their oil sales?
https://www.investopedia.com/articles/company-insights/08231...
by lotsofpulp
5/20/2025 at 5:06:43 PM
> What kind of force is the US using to force oil sellers to only accept USDAsk Saddam Hussein, Hugo Chavez, or Muammar Gaddafi
by foobarian
5/20/2025 at 10:59:07 PM
20% of oil is traded in currencies other than the US dollar.by WrongAssumption
5/20/2025 at 1:27:31 PM
[flagged]by kylebenzle
5/20/2025 at 1:35:52 PM
> We literally murder people and bomb countries that even joke about not buying and using our worthless currency,Citation needed
by sorcerer-mar
5/20/2025 at 1:46:55 PM
There is a common thread in the 1991 gulf conflict that Iraq was going to sell oil in alternative currencies.The entire 1991 conflict is actually quite confusing, the majority western cold war apparatus moved to Saudi Arabia to fight the war. There aren't many reasons for why this was done.
by lumost
5/20/2025 at 1:56:06 PM
Seems at least equally probable (IMO far more) that was due to the whole invading Kuwait thing.Carter ten years prior: "Let our position be absolutely clear: An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force"
by sorcerer-mar
5/20/2025 at 3:24:08 PM
It appears that the US mislead¹ Saddam Husein into believing that the we would not intervene in the border dispute with Kuwait. This was enough assurance for him to go ahead with the decision to attack Kuwait. That action was then used by the US as a pretext for the invasion of Iraq.1. https://adst.org/2016/02/a-bum-rap-for-april-glaspie-saddam-...
by 20after4
5/20/2025 at 3:52:35 PM
What's the relevance?by sorcerer-mar
5/22/2025 at 3:33:36 AM
Just that they maybe were looking for an excuse and weren't genuinely that concerned about Kuwait.by 20after4
5/22/2025 at 2:46:44 PM
It seems much more likely they were concerned about disruptions to energy which can immediately cripple an economy than some abstract vague mentions of using a different currency.by sorcerer-mar
5/20/2025 at 6:28:57 PM
Plus one thing that was never really mentioned during the tariff bs where many American republicans demonstrated a total lack of understanding of what tariffs are and how they work is:The fact that, yes, China makes iPhones and America has to import them. However that completely ignores the fact that China is making iPhones for _Apple_ and that whilst I'm sure the Chinese factories make a little profit, Apple's is making much much more on their huge mark up when selling iPhones across the world.
Of course those iPhones are imported directly from China to place of sale, say the UK. But who sees the profit? An American company. _Even though_ those imports would not have counted against America's exports specifically as far as I'm aware.
by fennecbutt
5/21/2025 at 1:14:20 AM
A lot of corporate US does not declare their earnings in the US, but in tax heavens, thus further skewing the figures.by throttlebody
5/23/2025 at 1:15:24 PM
Follow up: and Trump again today with the 'The president also threatened to impose a 25% import tax "at least" on iPhones not manufactured in America.'Lmao the profit from Chinese companies (or India, etc) manufacturing the iPhone is so, so much less than the profit that Apple makes selling the iPhone.
Honestly just ridiculous. I was hoping he'd stick with the insane tariffs so I could watch Americans mob & oust him. But he's backpedaled as he is wont to do, the absolute cretin.
by fennecbutt
5/20/2025 at 3:02:15 PM
Another alternative to a non-national global reserve is of course gold (or dare I say the B asset which must not be named)by rax0m
5/21/2025 at 6:01:42 AM
This is also why China isn’t too keen on using the RMB yet in the same way, it is still not freely convertible. The question comes if the USA is insistent on giving up its top spot in the world economy, what currency will fill the void?by seanmcdirmid
5/21/2025 at 3:08:53 AM
Rather than thinking of it as demand for dollars, you could think of it as demand for US investments in general. The US is one of the better places in the world to invest. Why foreigners want to buy US tech stocks (for example) shouldn’t be a mystery.by skybrian
5/21/2025 at 3:42:08 AM
but it is a demand for dollars. if germany buys oil from saudi arabia and they have to use USD to buy the oil, that right there is a demand for us dollars and not us investments in generalby deadfoxygrandpa
5/21/2025 at 1:10:41 PM
Ultimately those dollars will be either spent or invested.by skybrian
5/21/2025 at 1:20:09 AM
> running a deficit in physical goods tradedThis is not a disadvantage. By your own admission: we send dollars overseas in exchange for goods. We never have to actually send goods of our own. We effectively get them for the price of printing dollars, so effectively free.
by JackYoustra
5/21/2025 at 1:54:52 AM
some one really need to explain this in a way I understand, because this sounds very much like "free lunch". Matt Levine explained it as exporting debt ("The US is better than anyone at manufacturing financial instruments"). He also said we get computers in return for entries in a database.This sounds... untenable? too good to be true? a shakey foundation on which to build an economy?
by hahajk
5/21/2025 at 2:59:29 AM
The entries in a database are IOUs. The US will have to return something at some point, but as we have complete control over our own currency, the terms of the deal are... very flexible on our side.It's effectively a bet on China's part that (1) it's worth it to build their own industrial base and (2) the US won't renege, at least severely, because of the consequences.
Worth noting that the current proposals to further blow up the deficit may actually accelerate this dynamic, regardless of tariffs, because somebody has to buy these IOUs.
by AnIrishDuck
5/21/2025 at 7:42:09 PM
It's a lot more than this, right. People want dollars because people want dollars, their motives we can guess at but don't know with certainty. With all likelihood it's to buy US G&S (which is very similar to investing in the US) but it could also just be to have dollars to trade amongst each other.by JackYoustra
5/21/2025 at 6:04:35 AM
When Apple wants to raise money, it could go issue more shares and sell them on the stock market, and their shares are in high demand because expected future earnings are high.With the US, the expected future utility of a dollar is very very high, at least far higher than most other currencies.
Combine that with the need for enough currency to be in circulation to support the size of the global economy, and you might call it a "free lunch" or you might call it "something that only an utter fucking idiot would ever risk giving away."
And it's certainly not the foundation of our economy, not at all. The foundation of our economy is large tech stocks, absolutely monstrously high GDP, massive investment in the future via scientific discovery, extremely robust protections against corruption that let entrepreneurs flourish, and a military backing it all. The "free lunch" is the reward for topping the rest of the world in all those areas.
by epistasis
5/21/2025 at 3:43:13 AM
it's called "exorbitant privilege" if you want to look it upby deadfoxygrandpa
5/20/2025 at 12:41:35 PM
The US dollar was the global reserve currency in the 1960s but the US was running a trade surplus then.by Symmetry
5/20/2025 at 12:49:14 PM
Nixon broke Bretton Woods by coming off the gold standard, leading to massive expansion of the money supply. Lyn Alden has good analysis of this process https://www.lynalden.com/fraying-petrodollar-system/by hunglee2
5/20/2025 at 1:39:46 PM
Imagine having to tell the economy it can only grow as fast as a specific rare metal is mined for money to continue to make sense. The gold standard was a system breaking up by its inherent contradictions, as another poster has phrased it, when Nixon went off it.by Attrecomet
5/20/2025 at 3:03:04 PM
>Imagine having to tell the economy it can only grow as fast as a specific rare metal is mined for money to continue to make senseThis is only the case if you have full reserve banking.
Under gold-backed fractional reserve there is no requirement that there be enough gold to back all the notes in circulation promising gold.
There are certainly problems with fractional reserve banking but gold backing is not a fundamental weak point here. Even IRL if everyone demands real dollar notes there is not enough in the banks and the FDIC reserves to pay it all out on demand if everyone recalled their deposits, they could not even run the money printer fast enough to cover it.
Yet somehow world trade still goes on, despite there being more value of goods in trade than currency than can back it.
Side note for completeness: theoretically all trade of any size happen with even a single gold coin by increasing velocity of money.
by ty6853
5/20/2025 at 10:55:55 PM
> Under gold-backed fractional reserve there is no requirement that there be enough gold to back all the notes in circulation promising goldWhat happens when foreign buyers want to withdraw gold and not hold "money" in an account?
Internally, gold-backed fractional reserve sounds reasonable.
by robocat
5/20/2025 at 3:26:37 PM
The growth rate of the economy wasn't limited by the rate of gold mining - people would just adjust prices relative to gold. And by most accepted measures I'm pretty sure the US economy was growing faster when it was on a gold standard.by roenxi
5/21/2025 at 3:35:50 AM
This isn't correct. The gold standard caused a lot of problems with money shortages; in the 1800s they were called panics. The shortages powered William Jennings Bryan to the Democratic presidential nomination after his "Cross of Gold" speech. https://en.m.wikipedia.org/wiki/Cross_of_Gold_speechby deeg
5/21/2025 at 7:01:00 AM
Were those panics ultimately bad for growth? The US in the 1800s was one of the fastest growing economies we've ever seen in all of human history; growing from ~0% to ~20% of the world economy. It isn't often someone outpaces that. The gold standard clearly didn't limit growth in any concerning way if you are associating it with one of the top 10 all time growing economies. In fact, dropping the gold standard has been associated with the economic weakness that characterises the modern US as they mean regress and the Asian powers regain economic ascendancy.Panics and crisises aren't automatically a bad thing. If people are doing something wildly stupid they need to stop and undertake alternative activities. Something has to make them do that; if it is a panic then that is better than persisting with stupidity. Besides, the US still has regular crisises. There is one every 10 years or so. They just don't see as much upside between them as they used to.
> The shortages powered William Jennings Bryan to the Democratic presidential nomination after his "Cross of Gold" speech.
If Trump says something does that automatically make it true in 100 years? No. Politicians aren't automatically right and neither are voters. People get stuff wrong in policy all the time. Popularity and truth are different.
And Wikipedia suggests that most people disagreed with him regardless, he lost the election and the US proceeded to adopt a gold standard. Which still doesn't tell us much about its policy merits I might add.
by roenxi
5/22/2025 at 3:51:22 PM
If you don't think panics are a bad thing I don't know what to tell you. Can you point to a panic that was good?My point about Bryan is that the gold standard was causing so much pain that he rode his solution to the nomination. That his solution (bimetallism) was terrible helps explain his loss.
by deeg
5/23/2025 at 12:09:55 AM
All panics are "good" in the sense that they represent the economy reorienting themselves to maximise returns. As you accidentally stumbled over, they are associated with the period of US history with the highest growth rate. The argument is basically that they are a necessary mechanism to purge inefficient actors from having capital. It isn't pleasant if the market tags a person as inefficient, but that is how to get to high growth.It isn't like getting rid of the gold standard has helped the US grow, since then we've have seen them mean regress from being an unchallengeable global colossus to arguably the #2 economy. The government printing money at will and handing it out to asset owners who by rights should be going broke is a component of that.
If you'd like a computer metaphor, possibly think a program unexpectedly spitting out a stacktrace. The stacktrace is not, in and of itself, the problem. The problem is the thing causing the stacktrace and the stacktrace is actually helpful for diagnosing. In the case of economies, panics don't draw attention to the problem but actually fix it directly.
> ...that he rode his solution to the nomination
A lot of nominees around that time thought the gold standard was a good idea, which doesn't prove anything either. The opinions of nominees more than a century ago aren't really evidence. It is an appeal to authority except he wasn't an authority in any meaningful way. He didn't know much about economics and turned out not to represent the consensus of ordinary citizens either.
The US has not actually put leaving the gold standard to a vote as far as I know. In fact I don't think the current situation is a result of big deliberations, at Bretton Woods people thought they were agreeing to a gold standard and as the US's economy is eclipsed we might easily see a rethink of the global trade system where it comes back.
by roenxi
5/20/2025 at 3:36:24 PM
> Imagine having to tell the economy it can only grow as fast as a specific rare metal is mined for money to continue to make sense.It makes intuitive sense that the gold standard would have limited economic activity, but did it actually do? If the gold standard had been constricting economic activity, one would expect GDP growth to have accelerated after the gold standard was eliminated, but as far as I can tell that didn't happen.
by marcusverus
5/20/2025 at 1:08:06 PM
The more I hear about this Nixon feller the less I like him. Seems like a real scoundrel.by franktankbank
5/20/2025 at 2:54:42 PM
Fruit vendor: You like these apples? That'll be $2.Buyer: Yeah I want them. But Fort Knox doesn't have enough gold yet, so I don't have the dollar bills right now.
Fruit Vendor: No problem. Bring me an IOU from your bank that says you're good for it.
(The Invention of Paper Money)
by triceratops
5/20/2025 at 3:07:26 PM
Dollar bills under the circa pre-Nixon gold standard were IOU for gold, there was no need to have enough gold to cover them as it was a fractional reserve.by ty6853
5/20/2025 at 3:08:05 PM
So why gold? Why not buildings or factories or railroads or ports?by triceratops
5/20/2025 at 3:10:57 PM
Not going to be answered in a one liner but the short answer is historically it had about the highest density of value that was relatively easy transport, divide, and the inflationary properties though highly imperfect were less susceptible than that of factories or railroads. Humanity came to it empirically.Many people have suggested alternatives such as units of energy or baskets of goods but at the end of the day there is no perfect unit, dollars being backed by essentially largely threat of imprisonment if you don't pay your taxes and scarcity of how many the government decides to 'print' is yet another arbitrary choice of backing.
by ty6853
5/20/2025 at 3:27:14 PM
How do you ship fixed infrastructure to another country when they want to redeem their USD?by mitthrowaway2
5/20/2025 at 3:43:15 PM
You don't. You give them a title to the infrastructure. Exchange paper for paper. Pretty neat right?by triceratops
5/20/2025 at 3:47:46 PM
Developed real estate titles are notoriously one of the least fungible assets in existence.Relatively uniform rural undeveloped farmland titles might work but I doubt it would get the same historical inertia since gold outlasts governments more reliably than land titles.
by ty6853
5/20/2025 at 3:49:35 PM
That's a problem for any foreign holder of USD who wants to redeem it. So far they've been ok with it.(I didn't mean the government hands out land titles. The holder of USD uses it to buy assets in the country)
by triceratops
5/20/2025 at 4:05:18 PM
I've re-read your statement several times and I'm still not quite getting it. If your point is that railroads or factories are as valid a basis as 'can be used to bail someone out of IRS agents with machine guns shooting their dogs and putting them in a little cage' than I agree with you.Although it brings me back to, you can see how maybe it was simpler historically for people to just settle in a fungible, transportable, easily dividable hard asset that had essentially as good inflationary properties as anything else they could find.
by ty6853
5/20/2025 at 4:24:33 PM
I can see how it was simpler historically, when factories and buildings and patents weren't worth all that much.by triceratops
5/20/2025 at 4:05:47 PM
The point of backing currency with gold is to overcome low trust, or a potential future breakdown in trust. A claim to infrastructure that can simply be nationalized during a dispute / a military coup / etc, is not really serving the same purpose that a gold standard serves.Plus, now you've somehow got to manage price controls on ports and infrastructure...
by mitthrowaway2
5/20/2025 at 4:12:27 PM
I've tried this point before but it always fails because the argument is, if I may contrive a straw man, that the government can simply machine gun everyone at the exits, take all the gold reserves, and cancel the notes. Therefore any government enforced asset is basically as good as gold in this regard because the government can and has (circa great depression) simply cancelled the trustless or bearer properties of gold.Although you're right that this is historically a large element of gold exists it won't be accepted as reasoning, and it's not worth bothering on places like HN.
by ty6853
5/20/2025 at 4:18:21 PM
I think the hope that international bearers would have is that thet can get their gold out when the future is looking risky, but before a breakdown in trust comes to that level. Once the revolution actually happens, Fort Knox is in enemy hands.by mitthrowaway2
5/20/2025 at 4:38:32 PM
> A claim to infrastructure that can simply be nationalizedIf your currency is in such high demand that people still accept it, even knowing this, that's a feature not a bug. You hopefully never have to use but it remains as a nuclear option.
by triceratops
5/20/2025 at 1:26:11 PM
Dumping the gold standard was one of the best moves nixon made. The gold standard was directly responsible for untold economic suffering in the country.by HDThoreaun
5/20/2025 at 1:46:36 PM
[flagged]by franktankbank
5/20/2025 at 3:37:28 PM
Second worst economic period in US history directly caused by the lack of fiat currency. https://en.wikipedia.org/wiki/Long_DepressionWorst economic period in US history directly caused by the lack of fiat currency. https://en.wikipedia.org/wiki/Great_Depression
Fiat currency is just below electricity and insulin as the greatest inventions of the recent centuries.
by HDThoreaun
5/20/2025 at 1:24:59 PM
he may have had no choice - there are inherent contradictions in every monetary system - there is a reason they all collapse in the end.by hunglee2
5/21/2025 at 3:24:02 AM
Do you find Lyn Alden insightful? I remember studying her articles a few years ago on the inevitability of hyperinflation due to oil shortages, which never materialised.by xk_id
5/20/2025 at 2:23:01 PM
There were no free floating currencies back in the 1960s nor open capital markets as we understand them today. Cannot really compare the two eras.by jcfrei
5/20/2025 at 1:29:28 PM
Remnants of the massive industrial effort of WW2 plus China/Japan had not entered the chat yet.by elteto
5/22/2025 at 12:11:44 AM
> The solution is a non-national global reserve, calculated on a basket of national currencies. This was Keynes argument at Bretton Woods, but the US would not have it then, and does not want it now.The US is getting that now whether they want it or not. The financial confidence in them has been destroyed by the insane off-the-cuff trade tariff jumps and I don't think it will ever recover. The trust in the dollar is gone, it's just not so obvious yet because financial systems don't get changed in a day. It's a slow ship to turn but it's also slow to turn back. Europe is now working on replacing the Visa/MasterCard duopoly which currently backs all our payment cards. It'll take a while but when it's there it will never come back.
Even consumer confidence (and affinity) is now gone and I see a lot of people proudly avoiding American products and services. Tariffs or not, this will only increase the deficit. You can't force people to buy your stuff, not if you so strongly advocate a free market.
Even when there's hopefully a sane president again, the US has shown it's always possible there'll be another Trump out of the blue that screws things over again just from one day to the next. Financial markets can't handle that huge risk. The world is going to move on from trusting the US.
by wkat4242
5/21/2025 at 2:26:07 AM
The non-national global reserve suggested by Keynes was to be called Bancor, however Harry Dexter White's plan was pursued instead.by tap-snap-or-nap
5/20/2025 at 5:07:14 PM
The issue is that the US now wants to have the cake and eat it too. Trump wants the rest of the world to subsidize the US industry. It'll be interesting how this will pan out.by csomar
5/21/2025 at 6:10:23 AM
You say "interesting" but as a US resident, I say "terrifying."Biden showed a great way to subsidize industry and catalyzed the biggest expansion of building factories in generations, in forward-looking sectors that will reduce the cost of energy for all future generations in the US, providing us security and reducing the chance of another inflation spike like that caused by Russia starting wars that threaten the energy supply.
All that nascent industry is at risk of being thrown away for being too "woke" all so that we can send all the fired NCI cancer research to factories for assembling iPhones. From pipetting to tiny screws may be slightly related job skills, but it's capturing the least possible value from a generation of highly trained workers...
by epistasis
5/21/2025 at 6:47:40 AM
> the expense of hollowing out domestic industry> Post WW2, US leadership [deliberately] traded the domestic manufacturing industry [capability] for national security, by making the US dollar the default international trade currency. [This] gave America benefits, but increased the value of the dollar astronomically, which made it impossible to manufacture anything locally ... the logic at the time was that Americans would up-skill en-masse, away from the menial manufacturing jobs [of history] -- but everyone is too much of a dumbass to stay in school [which is required for all of this to work] ... Let's Go Brandon!!
by kiitos
5/20/2025 at 3:13:56 PM
Keynes's argument of the International Clearing Union and the associated Bancor was primairly concerned with the need to manually balance trade balances rather than rely on FX exchanges. That would be achieved via manually setting FX exchange rates to heavily punish surplus countries (which should be happening normally in FX but isn't for various reasons).The US chose to maintain a reserve USD pegged to gold instead back when they were running a massive trade surplus, but with the collapse of Bretton-Woods the situation in many ways has inverted. In any case, there is increasingly call by many in recent administrations, from Trump's policy advisors to Biden's Katherine Tao to return to the proposals of the ICU. While I don't think Trump's attempt to rebalance trade while still having the US reserve currency will work, I also don't think the Americans are that attached to that prestige to be willing to give it up in order resolve global trade balances and at home. It's not difficult to deal currency freezes with the right friends if you really wish, the real sting of US sanctions has always being barred access to the lucrative US market.
Of course, in the event that the ICU emerges, it would greatly harm the interests of surplus economies like China, Europe, Vietnam, Japan, etc, hence why they largely support the status quo of the US reserve currency rather than changing it, because they've decided that the benefits of surpluses exceeds the benefits of a deficit as a reserve currency.
by corimaith