Russia Plans War Against US Dollar

[LeveragedBuyout]

Depreciation and hyper-depreciation are very different things. Slow depreciation allows the nation's economy to adapt to the change. Hyper-depreciation does not and what are you talking about, not acquiring assets? For example, per negotiation with IMF, Thailand has to "reorganize" 58 of its financial and monetary agency/company with emphasis on allowing foreign capital unrestricted investment into them. This is really a polite way of saying your country's financial flow is now my bitch.

Now, China is different from Thailand. Primarily because it is way larger and capable of policy intervention at levels not seen in other country aside from the old USSR. As a result, you can't really destroy Chinese economy the same way as you do with Thailand, but what was done by Goldman and co is hyper-heating the stock market. As we have seen in time and again, hyper-heating stock market tends to attract large amount of capital from the nation. In fact, it attracts so much capital there is often not enough capital left for investment into other sectors and when the stock market crashes, the capital accumulated will be gone and domestic investor are left without money to keep other parts of the economy running. While it may not outright destroy an economy like China, it can still do a lot of damage. This is why the Chinese government responded with this such force. BTW, the housing market in 2010 is pretty much the same thing. The Chinese government was only able to force Goldman Sachs away from Chinese real estate market (cutting off a hand in the process) after two years of non-stop multipronged policy intervention.

I'm having some trouble following this. To substantiate your claim, you would have to prove the following:

1) Actors in the US (let's just shorthand to US) planned to harm the Asian economies
2) The US decided that the best way to harm the Asian economy would be through a sudden depreciation of the Thai baht
3) The US conspired with Europe to have the IMF impose harsh reform measures on Thailand (the same measures it had been imposing for decades)
4) The US forced Thailand to accept the IMF reforms in return for an IMF loan, instead of rejecting the IMF loan and taking a different course
5) The US was the primary benefactor of Thailand's financial sector liberalization
6) None of the capital flows into Thailand actually benefited Thailand
7) None of the disruptions of the Asian financial crisis harmed US interests

Let's just say that I view the probability of such an outcome as low.

As far as China's resilience, I credit the following factors:
1) enlightened leadership
2) economic reform at exactly the right time (as the re-engineering streak of the 1980s ended, and the offshoring paradigm began)
3) size (Thailand is much easier to influence than China)
4) opacity (China is able to obscure bad news to a far greater degree than the US, since it is not an open society. In common parlance, "fake it 'till you make it")

If China is able to engineer a soft landing in its real estate market, it will probably be an unprecedented achievement--or at least, I am not aware of a precedent. If it succeeds, it will be because of the same four factors above. If China fails, it will be all too easy to blame outsiders.

 

[tranquilium]

I'm having some trouble following this. To substantiate your claim, you would have to prove the following:

1) Actors in the US (let's just shorthand to US) planned to harm the Asian economies
2) The US decided that the best way to harm the Asian economy would be through a sudden depreciation of the Thai baht
3) The US conspired with Europe to have the IMF impose harsh reform measures on Thailand (the same measures it had been imposing for decades)
4) The US forced Thailand to accept the IMF reforms in return for an IMF loan, instead of rejecting the IMF loan and taking a different course
5) The US was the primary benefactor of Thailand's financial sector liberalization
6) None of the capital flows into Thailand actually benefited Thailand
7) None of the disruptions of the Asian financial crisis harmed US interests

Let's just say that I view the probability of such an outcome as low.

As far as China's resilience, I credit the following factors:
1) enlightened leadership
2) economic reform at exactly the right time (as the re-engineering streak of the 1980s ended, and the offshoring paradigm began)
3) size (Thailand is much easier to influence than China)
4) opacity (China is able to obscure bad news to a far greater degree than the US, since it is not an open society. In common parlance, "fake it 'till you make it")

If China is able to engineer a soft landing in its real estate market, it will probably be an unprecedented achievement--or at least, I am not aware of a precedent. If it succeeds, it will be because of the same four factors above. If China fails, it will be all too easy to blame outsiders.

Well, if you want to know George Soros' involvement in 1997 financial crisis. You can simply read up
1997 Asian financial crisis - Wikipedia, the free encyclopedia
Or just search google with the key words. It is not really a secret at this point.

Now, it is very interesting you asked about whether it harmed US interest in the area. The answer is no and yes. From wall-street and bankers' perspective, the 97 crisis is excellent as they earned very heavy profit in the event, but from the perspective of US as nation and its long term interests? Of course it is harmful. After the 97 crisis, US heavy investment in Thailand is pretty much replaced by European investment. Also, there is a reason aside from Philippine no country in Southeast Asia welcomed the recent US pivot into East Asia. Nobody trusts a country that destroyed their economy barely a decade ago.

 

[Chinese-Dragon]

Let's not kid ourselves, everyone is involved in currency manipulation. The US does it, China does it, Japan does it, even Brazil does it. Brazil needs structural reform, not complaints about how US manipulation is more evil than Brazil's manipulation. Brazil can't respond effectively to the hot money effects on its economy because its economy cannot efficiently utilize capital.

Absolutely. Every country works for its own interests, that is the nature of geopolitics.

The purpose of QE was to benefit the American economy, not other economies in the world. That is understandable, they have to work to further the interest of their own nation, like everyone else.

QE (especially QE3) was essentially a monthly stimulus program, and its basic purpose was to help increase lending and consumption in the American economy. This was done because the usual monetary policy method, i.e. lowering interest rates, was no longer available to them.

So hopefully the US economy will further improve, allowing the US to raise interest rates to a more healthy level. Maybe then QE won't be necessary again.

Which will be just in time for our capital account reform, which will undoubtedly come last, after interest rate and currency liberalization.

China expected to fully open up capital account soon - China.org.cn

 

[LeveragedBuyout]

Absolutely. Every country works for its own interests, that is the nature of geopolitics.

The purpose of QE was to benefit the American economy, not other economies in the world. That is understandable, they have to work to further the interest of their own nation, like everyone else.

QE (especially QE3) was essentially a monthly stimulus program, and its basic purpose was to help increase lending and consumption in the American economy. This was done because the usual monetary policy method, i.e. lowering interest rates, was no longer available to them.

So hopefully the US economy will further improve, allowing the US to raise interest rates to a more healthy level. Maybe then QE won't be necessary again.

Which will be just in time for our capital account reform, which will undoubtedly come last, after interest rate and currency liberalization.

China expected to fully open up capital account soon - China.org.cn

Well said. QE was an interesting experiment, and it bought us time, but now the hard work begins. QE will end because it must end, and along with China, Brazil, and other major markets, we will have to adjust, sooner or later. The best possible solution would be for the US to engage in our own economic reform, to reduce structural friction on the economy and increase productivity growth. Sadly, that doesn't look like a realistic prospect at the moment. It's not hard to cast a scornful look at my own country's situation, but there you have it.

On a side note, I am deeply appreciative of the positive rating. Thank you.

Well, if you want to know George Soros' involvement in 1997 financial crisis. You can simply read up
1997 Asian financial crisis - Wikipedia, the free encyclopedia
Or just search google with the key words. It is not really a secret at this point.

Now, it is very interesting you asked about whether it harmed US interest in the area. The answer is no and yes. From wall-street and bankers' perspective, the 97 crisis is excellent as they earned very heavy profit in the event, but from the perspective of US as nation and its long term interests? Of course it is harmful. After the 97 crisis, US heavy investment in Thailand is pretty much replaced by European investment. Also, there is a reason aside from Philippine no country in Southeast Asia welcomed the recent US pivot into East Asia. Nobody trusts a country that destroyed their economy barely a decade ago.

I see allegations about Soros, but is there proof? He denies the allegations, which one would not expect if they were true, given his personality and his relative openness about his involvement in breaking the Bank of England. The key cause is mentioned in the Wikipedia article: those economies were maintaining a currency peg while running a current account deficit.

In any case, some small group did benefit from the crisis. But just to circle back to the genesis of this conversation, the US on the whole did not, and its reserve currency status didn't cause the crisis, so in this case, it's unclear how replacing the USD with some other currency, or a multi-currency regime, would have helped.

 

[mmkextreme_1]

How is this plan working out for Russia?