random thoughts after a trip home:
politics:I had the idea that you can view different political philosophies by how they respond to (or acknowledge) a certain axiom, that the state is effectively the ultimate master of all people, that any individual is subject in all ways to the power of the government. Fascists acknowledge the axiom and embrace it, they treat the state as a parent and the people as children, and they endeavor to make the state worthy of this status and authority. Anarchists, while they also acknowledge the axiom, view it as the reason that there can be no state, why the state has to be overthrown and dismantled and prevented from recurring. Anarchists will say that people should be their own masters (or not even that), and that no one should ever make himself master of any other. Socialists are the third group that acknowledge the axiom, but they seek to make the state somehow equivalent with the people - through democratic means - so that while it is still true, it becomes unconcerning, since now the people are their own masters, through the mechanism of the state. American libertarians - and the model American political philosophy that is given lip service but not much actual credit - believe that the state has the potential, which has usually been fulfilled, to take on the role of master of all its subjects, but that it can be contained and controlled like a pack animal. I think that Americans in fact, in their popular political system, actually take on aspects simultaneously of socialism and fascism, believing that the state is a function of democracy at the same time that it is - and I think this is a contradiction with the first property - a benevolent external force that requires respect and adoration. The American left and right both take this attitude, but toward different aspects, although in my systematization they are mostly deluded into thinking that they are model Americans, i.e. libertarians. I guess I am closer to a libertarian than anything else, though if there is some label that applies to a half social anarchist half american libertarian, it would mostly cover me (I like NASA and public healthcare and the NIH).
headache: A really irritating headache on Friday, which I think was partly provoked by jumping jacks in the afternoon and magnified by beer in the evening. Two aspirin either did nothing to help or kept it from getting much worse. Not sure this was a migraine, but I think it was. I could feel it mostly above my right eye, and could actually touch it at the supraorbital foramen. By this I mean that by pressing on this spot, I could modulate the main locus of pain; this is a common sort of property of my headaches. This is just one specific branch of the trigeminal nerve, and except for some slight twinge of pain in my right maxilla, I couldn't find any other specific locus. So, I don't know if this qualifies as 'migraine', or if it's actually some sort of ophthalmic nerve neuritis, but just by scanning a google search of 'migraine and trigeminal nerve', you can see that there is thought to be a strong link between migraine pain and over-excitatory dysfunction of neurons in the trigeminal nucleus, so...
Also, had a nice conversation with my aunt about migraine. So along with my mother and her, she says that my grandmother also had headaches, but not my grandfather, so that must be where it comes from.
work/writing: I realized that the project I'm currently working on would be good to divide into two papers: one on the broader aspects of blur adaptation and the connection to contrast adaptation (which I hope to have data on by the end of this week), and the other on the absence of phase-blur adaptation. The latter might make a good PLoS-1 paper.
Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts
Monday, February 11, 2013
Friday, October 26, 2012
government as a design problem
trying to work on a paper revision due sooner and sooner, but i keep thinking about politics. of course, it is The Time to think about politics, but i wish i could escape it.
anyways, here's what i've been thinking, a tiny idea:
from the institution of a new state or government, for a time, it is reasonable to expect the government to grow and acquire new features. this is just because upon its institution, the government must be incomplete or flawed. virtually nothing complex can approach perfection, especially in its first design.
however, at some point, we might consider the institution - or, and here's the real idea, a given version of the institution - to be complete. that is, we have this complex structure, with many parts and many layers and many functions, and it is intended to accomplish many things under particular constraints. presumably, changes made to this structure over time are intended to fulfill these intentions. we could think of this as efficiency, i.e., how much of what the system is meant to do is it actually doing? this is a funny idea, since it implies that if the system exceeds its mandate, it is being overly efficient. i will get back to this in a moment.
the idea is that a version of the institution can be considered complete, in that a time will come when it's clear to everyone that no changes, or only basic maintenance changes, are necessary to meet the objectives of the system; or, it might be decided that the objectives are outdated, and that new objectives have arisen, and that a new system needs to be designed to replace the old one. have we ever reached that point with the american federal government? i think maybe we have, and it was a long time ago: pre-civil war, really. in the 1850s, the federal government wasn't really creating many new responsibilities for itself, and was instead preoccupied with its intended functions of maintaining relations between the states, applying tariffs in international trade, occupying new territories that would eventually become states, etc. i think this is the tail end of what historians refer to as the "second party system": FED2.0. FED2.0 was rolled out in the 1830s, had some successes early on, and then crashed and burned.
it was around the time of the civil war that the government basically went through a big redesign, acquiring new responsibilities which then required new features to be fulfilled. this was the "third party system" that lasted until the 1890s, when it was replaced with FED4.0, which lasted until the great depression. versions 3 and 4, i think, are not really considered to be very good versions (and probably could be collapsed into subversions of FED3), while a lot of people are clearly very nostalgic for versions 1.0 and maybe 2.0 (and might see those as subversions of FED1).
in the 1930s, the government went through a huge redesign: FED5.0; the end of the 1960s saw a big advance on this (FED5.1), and now we're probably at version 5.3 or 5.4. version 5 is the longest-lived political system that the US has had (or similar with FED3/4). clearly, i think, it's time for a redesign. at this point, the two parties are just concerned with adding, subtracting, or modifying features, with a strong tendency towards addition (the 'ratchet effect' or 'featuritis'). i think that a lot of people thought that with o* and the d*s, after the 2008 election, we would be moving on to a new version 6; a lot of people thought that in 2004 with b* and the r*s. neither succeeded; i don't think that either really succeeded in moving a new subversion, either: we're stuck in beta, at 5.3.2 or something like that.
so, back to 'excess efficiency'. what is that? it's not what it sounds like. when a system isn't quite fulfilling its promised aims, if it wants to preserve itself (consider that institutions don't want to die), it might throw up new proxy aims. it can them give the illusion of accomplishment or fulfillment by moving to meet those new aims, thus obscuring the fact that the old aims aren't exactly complete; or, that they're no longer valid, and that the system thus is working to fulfill aims that no longer exist. i.e., excess efficiency is a sign that a system is desperate and needs to be replaced.
anyways, here's what i've been thinking, a tiny idea:
from the institution of a new state or government, for a time, it is reasonable to expect the government to grow and acquire new features. this is just because upon its institution, the government must be incomplete or flawed. virtually nothing complex can approach perfection, especially in its first design.
however, at some point, we might consider the institution - or, and here's the real idea, a given version of the institution - to be complete. that is, we have this complex structure, with many parts and many layers and many functions, and it is intended to accomplish many things under particular constraints. presumably, changes made to this structure over time are intended to fulfill these intentions. we could think of this as efficiency, i.e., how much of what the system is meant to do is it actually doing? this is a funny idea, since it implies that if the system exceeds its mandate, it is being overly efficient. i will get back to this in a moment.
the idea is that a version of the institution can be considered complete, in that a time will come when it's clear to everyone that no changes, or only basic maintenance changes, are necessary to meet the objectives of the system; or, it might be decided that the objectives are outdated, and that new objectives have arisen, and that a new system needs to be designed to replace the old one. have we ever reached that point with the american federal government? i think maybe we have, and it was a long time ago: pre-civil war, really. in the 1850s, the federal government wasn't really creating many new responsibilities for itself, and was instead preoccupied with its intended functions of maintaining relations between the states, applying tariffs in international trade, occupying new territories that would eventually become states, etc. i think this is the tail end of what historians refer to as the "second party system": FED2.0. FED2.0 was rolled out in the 1830s, had some successes early on, and then crashed and burned.
it was around the time of the civil war that the government basically went through a big redesign, acquiring new responsibilities which then required new features to be fulfilled. this was the "third party system" that lasted until the 1890s, when it was replaced with FED4.0, which lasted until the great depression. versions 3 and 4, i think, are not really considered to be very good versions (and probably could be collapsed into subversions of FED3), while a lot of people are clearly very nostalgic for versions 1.0 and maybe 2.0 (and might see those as subversions of FED1).
in the 1930s, the government went through a huge redesign: FED5.0; the end of the 1960s saw a big advance on this (FED5.1), and now we're probably at version 5.3 or 5.4. version 5 is the longest-lived political system that the US has had (or similar with FED3/4). clearly, i think, it's time for a redesign. at this point, the two parties are just concerned with adding, subtracting, or modifying features, with a strong tendency towards addition (the 'ratchet effect' or 'featuritis'). i think that a lot of people thought that with o* and the d*s, after the 2008 election, we would be moving on to a new version 6; a lot of people thought that in 2004 with b* and the r*s. neither succeeded; i don't think that either really succeeded in moving a new subversion, either: we're stuck in beta, at 5.3.2 or something like that.
so, back to 'excess efficiency'. what is that? it's not what it sounds like. when a system isn't quite fulfilling its promised aims, if it wants to preserve itself (consider that institutions don't want to die), it might throw up new proxy aims. it can them give the illusion of accomplishment or fulfillment by moving to meet those new aims, thus obscuring the fact that the old aims aren't exactly complete; or, that they're no longer valid, and that the system thus is working to fulfill aims that no longer exist. i.e., excess efficiency is a sign that a system is desperate and needs to be replaced.
Monday, October 22, 2012
taxes and politics
a friend posted this link on facebook, along with a quote to the effect of, "raising taxes to pay for investments in the middle class creates jobs". i resisted posting a response there because i don't like to argue about these things and would rather keep my opinions to myself, and because (relatedly) i am afraid to affect others' opinions of me in ways that i don't have close control over. so i thought i'd post a response here, where no one can read it:
***
while i agree generally with sentiment that says the rich should be taxed relatively more, the idea that this is then turned around by the federal government into "investment in the middle class" is not obvious to me. i think that very little of taxation, at least in a developed country like the US, translates directly into economic growth. in fact i think it tends to be the opposite, and i agree more with the idea that raising taxes tends to suppress growth.
a large portion of government spending put in place by the democratic party (which is presumably the favorable political dimension for the approving audience of this talk) is in the form of political favors to constituencies that have an insignificant impact on the economy (poor, elderly); institution of new bureaucracies which have to be funded at the same time that their mandate is usually to impose some form of *restriction* on certain types of economic activity; increased funding of dysfunctional programs without improving function ("education"); and, you can be sure that the more the US government collects in taxes, the more it will spend on the military, or on foreign aid, etc.
interesting case in point relevant to our livelihoods: significant government spending goes into biomedical research, which winds up making people live longer at the same time that it makes all forms of healthcare more expensive (MRI for everybody! one-of-a-kind cancer drug for my grampa! YOU CAN LIVE FOREVER NOW). i guess this creates jobs in the hospital/rest home industries.
*not that any of these things are wrong per se*, but it's not clear how any of this works as investment in the consumer class that generates net jobs. i think the government of a developed country actually has very little capacity to "create jobs", except in managing trade policy and maintaining transportation infrastructure. i.e. i think this guy's argument is pretty arguable.
***
while i agree generally with sentiment that says the rich should be taxed relatively more, the idea that this is then turned around by the federal government into "investment in the middle class" is not obvious to me. i think that very little of taxation, at least in a developed country like the US, translates directly into economic growth. in fact i think it tends to be the opposite, and i agree more with the idea that raising taxes tends to suppress growth.
a large portion of government spending put in place by the democratic party (which is presumably the favorable political dimension for the approving audience of this talk) is in the form of political favors to constituencies that have an insignificant impact on the economy (poor, elderly); institution of new bureaucracies which have to be funded at the same time that their mandate is usually to impose some form of *restriction* on certain types of economic activity; increased funding of dysfunctional programs without improving function ("education"); and, you can be sure that the more the US government collects in taxes, the more it will spend on the military, or on foreign aid, etc.
interesting case in point relevant to our livelihoods: significant government spending goes into biomedical research, which winds up making people live longer at the same time that it makes all forms of healthcare more expensive (MRI for everybody! one-of-a-kind cancer drug for my grampa! YOU CAN LIVE FOREVER NOW). i guess this creates jobs in the hospital/rest home industries.
*not that any of these things are wrong per se*, but it's not clear how any of this works as investment in the consumer class that generates net jobs. i think the government of a developed country actually has very little capacity to "create jobs", except in managing trade policy and maintaining transportation infrastructure. i.e. i think this guy's argument is pretty arguable.
Thursday, April 19, 2012
Memes and Pharmacies
That rivalry proposal went in last Monday with no problems, along with a long-festering manuscript, so it seems I took a week off from writing. Now I have progress reports to do, presentations to prepare, other manuscripts to complete, on and on.. I need to make sure I keep up with this journal, which seems to be helping in keeping my writing pace up.
Vacation is over!
About 12 years ago, I read the Meme Machine by Susan Blackmore. It was around the time that I decided to major in psychology, and I was reading all this Dan Dennett Douglas Hofstadter stuff, but it was her popular science book that really had a big effect on me - I would say that it changed my worldview completely, to the extent that I would identify myself as a memeticist when discussions of religion or that sort of thing came up (it was still college, see) - I really felt like it was a great idea, that human culture and human psychology could be explained as essentially a type of evolutionary biology. I still believe it, and so I suppose this book still really sits near the base of my philosophical side, even though I don't think about these things so much anymore.
I bring this up because the other night Jingping and I were talking about being tricked, since this was the topic of a Chinese textbook lesson I had just read, and I recounted the story of being completely conned by a thief once when I was a clerk working at CVS. I wound up going on more generally about working there, and I remembered that I had worked out a memetics-inspired 'model' of that store, which I hadn't thought about in a long time. One of the things about the memetics idea that had really gotten to me was that you could see social organizations as living creatures with their own biological processes - not that this is an idea original to Blackmore, and I'm sure that's not the first place I had heard it (like I said, I was also reading Dennett and Hofstadter at the time), but she did work it into a larger sort of scientistic system which seemed to simplify and unify a lot of questions.
Now I realize that the criticisms of memetics that I heard from professors in college (when I questioned them about it) were mostly right, in that it mostly consists of making analogies between systems; only in the last few years, with the whole online social networking advent, has a real science of something like memetics actually gotten off the ground (this is a neat example from a few weeks ago), and it's very different from what had been imagined when the idea was first getting around.
Anyways, I thought I'd detail here my biology-inspired model of a CVS store, ca. 2001. I have a notebook somewhere where I had detailed a whole system, with functional syntax and everything, for describing social organizations in terms of cellular, metabolic systems. This might have been the first time that I had tried to put together a comprehensive model of a system, now that I think of it. The store, I thought, was itself a cell in a larger CVS system dispersed across the city, which itself was a system dispersed across the country. I was mainly interested in the store level, where you could see different components acting as reagents. It was a strongly analogical system, but not completely analogical, to plant metabolism: a plants needs carbon, so it uses sunlight to break down carbon dioxide, releasing the unneeded oxygen back into the world. A store needs money, so it uses salable products to break down a money-human bond, releasing the human back into the world.
Of course, with plants the sunlight comes free from heaven - all the plant can do is spread out and try to catch it - while salable products must be delivered from another part of the CVS system: the distribution center. The distribution center emits reagents to the stores, where the money-human bond is broken down. The CVS system also emits catalytic agents into the world - advertisements - to facilitate the crucial reaction. The money absorbed by the system is energy which is used to drive the system through a reaction not unlike oxidation - the money-human bond is reformed systematically, with employees as the human component. This reformation is what really drives the system. Those new human-money bonds then go out into the world and fulfill the same function, breaking apart, as they interact with other businesses.
Looking at a business in this way totally changed the way I understood the world. Businesses, churches, governments, political parties, armies - all of them can be thought of as living creatures, or as organs of larger creatures, rather than as some sort of human means-to-an-end. By changing perspective between levels, we can see ourselves as means to the ends of these larger systems, just as our cells and organs are means to ours. Now I'm finally getting around to reading straight through Hofstadter's GEB, and so I can see that this general idea of shifting perspective across levels is an old one that has been astonishing people for a long time. But for me, coming to see human culture as as being alive was a fundamental shift in my intellectual development, one that hasn't really been superseded since. I haven't become a real memeticist yet, but it's all still there, underneath... these tiny tendrils of memetics live yet...
Vacation is over!
About 12 years ago, I read the Meme Machine by Susan Blackmore. It was around the time that I decided to major in psychology, and I was reading all this Dan Dennett Douglas Hofstadter stuff, but it was her popular science book that really had a big effect on me - I would say that it changed my worldview completely, to the extent that I would identify myself as a memeticist when discussions of religion or that sort of thing came up (it was still college, see) - I really felt like it was a great idea, that human culture and human psychology could be explained as essentially a type of evolutionary biology. I still believe it, and so I suppose this book still really sits near the base of my philosophical side, even though I don't think about these things so much anymore.
I bring this up because the other night Jingping and I were talking about being tricked, since this was the topic of a Chinese textbook lesson I had just read, and I recounted the story of being completely conned by a thief once when I was a clerk working at CVS. I wound up going on more generally about working there, and I remembered that I had worked out a memetics-inspired 'model' of that store, which I hadn't thought about in a long time. One of the things about the memetics idea that had really gotten to me was that you could see social organizations as living creatures with their own biological processes - not that this is an idea original to Blackmore, and I'm sure that's not the first place I had heard it (like I said, I was also reading Dennett and Hofstadter at the time), but she did work it into a larger sort of scientistic system which seemed to simplify and unify a lot of questions.
Now I realize that the criticisms of memetics that I heard from professors in college (when I questioned them about it) were mostly right, in that it mostly consists of making analogies between systems; only in the last few years, with the whole online social networking advent, has a real science of something like memetics actually gotten off the ground (this is a neat example from a few weeks ago), and it's very different from what had been imagined when the idea was first getting around.
Anyways, I thought I'd detail here my biology-inspired model of a CVS store, ca. 2001. I have a notebook somewhere where I had detailed a whole system, with functional syntax and everything, for describing social organizations in terms of cellular, metabolic systems. This might have been the first time that I had tried to put together a comprehensive model of a system, now that I think of it. The store, I thought, was itself a cell in a larger CVS system dispersed across the city, which itself was a system dispersed across the country. I was mainly interested in the store level, where you could see different components acting as reagents. It was a strongly analogical system, but not completely analogical, to plant metabolism: a plants needs carbon, so it uses sunlight to break down carbon dioxide, releasing the unneeded oxygen back into the world. A store needs money, so it uses salable products to break down a money-human bond, releasing the human back into the world.
Looking at a business in this way totally changed the way I understood the world. Businesses, churches, governments, political parties, armies - all of them can be thought of as living creatures, or as organs of larger creatures, rather than as some sort of human means-to-an-end. By changing perspective between levels, we can see ourselves as means to the ends of these larger systems, just as our cells and organs are means to ours. Now I'm finally getting around to reading straight through Hofstadter's GEB, and so I can see that this general idea of shifting perspective across levels is an old one that has been astonishing people for a long time. But for me, coming to see human culture as as being alive was a fundamental shift in my intellectual development, one that hasn't really been superseded since. I haven't become a real memeticist yet, but it's all still there, underneath... these tiny tendrils of memetics live yet...
Wednesday, January 25, 2012
chinese american economics II
during this year's China trip, Jingping and I had a few discussions re the issue of $-元 exchange rate, and I noticed a few more points.
so, the Chinese state controls the international value of the RMB, for reasons including the cycle explained in that previous post. i didn't state there that there's a special factor making that cycle necessary, factor being that exchanges are only possible through government-controlled agencies (i.e. Chinese banks, which are all state-run). the Chinese state is slowly allowing the value of the RMB to appreciate, by a few percent a year over the past few years, because they recognize that the power of the Chinese economy has outstripped the exchange rate.
in other words, Chinese labor and land - i.e. export - is no longer as cheap and plentiful for foreigners as it used to be, and foreign labor and land - i.e. import - is no longer obviously prohibitively expensive. the Chinese don't want to damage their export system, and they don't want to get overwhelmed with a whole new system of imports, so they're making the RMB adjustment very, very slowly.
this isn't what I noticed, though. this trip, the topic of American investment kept coming up, especially in the context of wealthy Chinese sending their high school or college age children to study in the US. this must be barely affordable even for the upper-middle-class Chinese that are doing it, because private schools in the US are expensive even for Americans. the skewed exchange rate makes it even more expensive, probably by a factor of 2 or more.
on top of this, Jingping's parents gave us a good amount of money to use for her optometry school bills; this is money that they otherwise would have lent to people in China for a small return. they recognized that Jingping taking a large US loan ("financial aid") and paying a large amount of interest would be more costly than giving her the money and thereby giving up their Chinese interest. but, it's still a loss this way, because simply by moving the cash to the US and waiting any meaningful interval of time, the value of the money will decrease.
you can think about this more generally, and in bigger numbers. moderately wealthy Chinese, i.e. those just above Jingping's parents, have enough to invest in their child's education, accepting the exchange rate loss because, well, it's their child. but for the very wealthy - which in China often means state officials, investment abroad means business interests. wealthy Chinese own property abroad, have money in foreign accounts which they use to do international business. they do this because of the operational freedom it gives them, and because their profit margins must be larger than the decline in value of the foreign currencies (i.e. $$) they're using.
but if the drop were too fast... the foreign calculations wouldn't change, and business might actually pick up a bit if it had any connection to markets that were now becoming available to Chinese spending. but for the wealthy Chinese controlling those businesses, their domestic profits could drop precipitously. they might even lose money in the short term.
so, it's not just about protection of the Chinese export economy, or protection against foreign export economies; it's also about protection of domestic profits from profits on foreign investments.
so, the Chinese state controls the international value of the RMB, for reasons including the cycle explained in that previous post. i didn't state there that there's a special factor making that cycle necessary, factor being that exchanges are only possible through government-controlled agencies (i.e. Chinese banks, which are all state-run). the Chinese state is slowly allowing the value of the RMB to appreciate, by a few percent a year over the past few years, because they recognize that the power of the Chinese economy has outstripped the exchange rate.
in other words, Chinese labor and land - i.e. export - is no longer as cheap and plentiful for foreigners as it used to be, and foreign labor and land - i.e. import - is no longer obviously prohibitively expensive. the Chinese don't want to damage their export system, and they don't want to get overwhelmed with a whole new system of imports, so they're making the RMB adjustment very, very slowly.
this isn't what I noticed, though. this trip, the topic of American investment kept coming up, especially in the context of wealthy Chinese sending their high school or college age children to study in the US. this must be barely affordable even for the upper-middle-class Chinese that are doing it, because private schools in the US are expensive even for Americans. the skewed exchange rate makes it even more expensive, probably by a factor of 2 or more.
on top of this, Jingping's parents gave us a good amount of money to use for her optometry school bills; this is money that they otherwise would have lent to people in China for a small return. they recognized that Jingping taking a large US loan ("financial aid") and paying a large amount of interest would be more costly than giving her the money and thereby giving up their Chinese interest. but, it's still a loss this way, because simply by moving the cash to the US and waiting any meaningful interval of time, the value of the money will decrease.
you can think about this more generally, and in bigger numbers. moderately wealthy Chinese, i.e. those just above Jingping's parents, have enough to invest in their child's education, accepting the exchange rate loss because, well, it's their child. but for the very wealthy - which in China often means state officials, investment abroad means business interests. wealthy Chinese own property abroad, have money in foreign accounts which they use to do international business. they do this because of the operational freedom it gives them, and because their profit margins must be larger than the decline in value of the foreign currencies (i.e. $$) they're using.
but if the drop were too fast... the foreign calculations wouldn't change, and business might actually pick up a bit if it had any connection to markets that were now becoming available to Chinese spending. but for the wealthy Chinese controlling those businesses, their domestic profits could drop precipitously. they might even lose money in the short term.
so, it's not just about protection of the Chinese export economy, or protection against foreign export economies; it's also about protection of domestic profits from profits on foreign investments.
Tuesday, May 18, 2010
chinese-american economics
unrelated to the internet, but i did realize this last night, so it may as well go down here.
i'm aware of two facts, to which we are all constantly exposed by various media:
A. the US buys lots of stuff from China, more than China buys from the US, so there's a trade imbalance. this means the Chinese are stuck with extra $$ that they can't spend, so they loan it back to the US to continue the cycle.
B. the Chinese 元 is tied, in part, to the US $$.
i knew these things already, but didn't realize they were directly related. but they are - and so far i think it's a one-way relationship, in that A) makes B) necessary. i understood it in terms of the following cycle:
1. China companies manufacture goods
2. US companies purchase China goods with $$
3. China companies purchase US goods with the $$ they accumulated
4. China companies have $$ leftover
5. China companies need to pay for domestic costs and profit, but can't spend $$ in China
6. China companies give their $$ to China govt, which gives them China 元 in exchange
7. China govt loans $$ to US treasury
8. US treasury loans $$ to US banks
9. US banks loan $$ to US companies
10. (back to 2.)
this seems to work. I don't know anything about how sustainable it is, though I think I see how you could get to know, or have a strong opinion about, something like that by looking at this process in detail.
anyways, why does A lead to B? because of 6). in order for 6) to be a fair deal, so that the China companies can know they're getting exactly their dollar's worth in the trade, the $$ and the 元 should be closely linked. in essence, those $$-linked 元 are like $$ printed in Chinese form, with the actual $$ stored away as ensured value, like gold - this is why they call $$ a reserve currency.
so apparently, this journal is entirely devoted to me figuring out things that everyone else knows already.
i'm aware of two facts, to which we are all constantly exposed by various media:
A. the US buys lots of stuff from China, more than China buys from the US, so there's a trade imbalance. this means the Chinese are stuck with extra $$ that they can't spend, so they loan it back to the US to continue the cycle.
B. the Chinese 元 is tied, in part, to the US $$.
i knew these things already, but didn't realize they were directly related. but they are - and so far i think it's a one-way relationship, in that A) makes B) necessary. i understood it in terms of the following cycle:
1. China companies manufacture goods
2. US companies purchase China goods with $$
3. China companies purchase US goods with the $$ they accumulated
4. China companies have $$ leftover
5. China companies need to pay for domestic costs and profit, but can't spend $$ in China
6. China companies give their $$ to China govt, which gives them China 元 in exchange
7. China govt loans $$ to US treasury
8. US treasury loans $$ to US banks
9. US banks loan $$ to US companies
10. (back to 2.)
this seems to work. I don't know anything about how sustainable it is, though I think I see how you could get to know, or have a strong opinion about, something like that by looking at this process in detail.
anyways, why does A lead to B? because of 6). in order for 6) to be a fair deal, so that the China companies can know they're getting exactly their dollar's worth in the trade, the $$ and the 元 should be closely linked. in essence, those $$-linked 元 are like $$ printed in Chinese form, with the actual $$ stored away as ensured value, like gold - this is why they call $$ a reserve currency.
so apparently, this journal is entirely devoted to me figuring out things that everyone else knows already.
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