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Economic Revival Program: The Yuan

ColeTrain
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11/23/2015 11:37:10 PM
Posted: 1 year ago
Introduction:
Since its establishment in 1969, the controversial creation of IMF"s (International Monetary Fund) creation of the SDR (Special Drawing Right) has included four separate currencies: the dollar (US), the euro (19 EU states), the pound (UK), and the yen (Japan). Its purpose is to "supplement its member countries" official reserves." [http://www.imf.org...] Recently, after robust increase in usage, China is petitioning to add their currency, the yuan to this exclusive set [http://www.economist.com...]. Essentially, the IMF is considering China"s proposal like this: is it necessary to include the yuan, and can it (and will it), sustain its country concurrent the recent devalue?

Considerations:
The argument for adding the yuan to the SDR is not really complex. When added to the SDR, there comes the subsequent reserve of a currency that is tradable and contains a reputable store of wealth. The yuan, specifically, would gain value internationally, as its currency would be regarded with more security. Moreover, the value of the yuan has been increasing in net since China devalued its currency in August. [http://si.wsj.net...]

But why would China devalue their currency in the first place? The answer isn"t exactly what a lot of people propose. A common theory, albeit slightly flawed, is to help its exports. Competitiveness in the market would render a near 20% devaluation rather than the yuan"s 2% [http://fortune.com...]. Clearly, it"s not simply to keep its exports competitive, as a 2% devaluation is negligible in achieving this end. Rather, China devalued the yuan to keep in closer alignment with its trading partners" currencies. Because of the recent spike of the US dollar [http://fortune.com...], China needs to level its currency closer to that of its trading partners to keep exports contributing the most value as possible.

This is important for worldwide economy too, though, as China is and has been the world"s largest exporting country [http://www.economist.com...]. Regardless of specific numbers, the devaluation should boost their economy, which has been slowing over the past year [http://www.latimes.com...]. This also indicates the devaluation or depreciation of the yuan shouldn"t continue or become a steady fall [http://www.theguardian.com...]. The dynamics of the economic impact doesn"t render the devaluation a broad-scale detriment. Instead, the devaluation helps China while simultaneously preserving other economies via trade.

It"s still unclear whether or not the yuan should be included in the SDR, and the ramifications of its inclusion on global economics. The yuan is indisputably a large part of global payments, as it overtook the yen in regards to usage in October [http://www.ft.com...]. This graph indicates it"s usage over the past few years, and it"s global rank [http://assets.bwbx.io...]. Its increase is quick, especially in regards to the recent devaluation, about which it is evident the devaluation hasn"t had a drastic negative impact on its usage. Any implications as such are being dealt with by China"s change in market strategies, which have given way to more subtle techniques [http://www.wsj.com...]. However, it is still shown of no serious concerns to global economics regarding the inclusion of the yuan in the SDR. Furthermore, the inclusion of the yuan in the SDR has finally, after earlier resistance, gained the support of the United States. The yuan has yet to prove and severe detriments in its proposed inclusion, and as it currently stands, it will likely be added, as the IMF is increasing its exposure to yuan-bonds [http://www.reuters.com...].

Conclusions:
The economic benefits of doing so have consistently pointed positive, as devaluation concerns have been dispelled by statistics showing its usage is only increasing and the IMF would gain another currency asset that"s popular, tradable, and wealthy. Moreover, the economic reform upon which China has embarked may cause the depreciation and devaluation of the yuan currency, but these short term effects will, in the long run, largely benefit global economy [http://www.ft.com...]. For the success and sustenance of global economics, as well, the world must not inhibit their economic performance. China"s pursuit of their own national, rather than state, success builds on future success. These reforms, though, do include entrance into the SDR and the initial devaluation of the yuan. Insofar as data has shown, there"s no reason not to include the yuan in the SDR. Only time will tell.

We encourage your response and thoughts regarding this topic, so please provide it below!
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
ColeTrain
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11/24/2015 10:51:14 PM
Posted: 1 year ago
Bump...
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
ColeTrain
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11/25/2015 7:09:34 PM
Posted: 1 year ago
The revival program is a failed one if it is unsuccessful in facilitating discussion. Perhaps we should have started with something more pertinent to the US, though the yuan's inclusion in the IMF's SDR is quite significant.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
TheProphett
Posts: 520
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11/25/2015 11:37:12 PM
Posted: 1 year ago
At 11/25/2015 7:09:34 PM, ColeTrain wrote:
The revival program is a failed one if it is unsuccessful in facilitating discussion. Perhaps we should have started with something more pertinent to the US, though the yuan's inclusion in the IMF's SDR is quite significant.

I hoped to have put out at least two articles already, but huge amounts of my time have been taken up lately. It would be good to post something regarding the U.S. because people are more familiar and could relate to it easier.
Topics I would like to debate: https://docs.google.com...

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ColeTrain
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11/26/2015 12:27:54 AM
Posted: 1 year ago
At 11/25/2015 11:37:12 PM, TheProphett wrote:
At 11/25/2015 7:09:34 PM, ColeTrain wrote:
The revival program is a failed one if it is unsuccessful in facilitating discussion. Perhaps we should have started with something more pertinent to the US, though the yuan's inclusion in the IMF's SDR is quite significant.

I hoped to have put out at least two articles already, but huge amounts of my time have been taken up lately.

Totally fine.

It would be good to post something regarding the U.S. because people are more familiar and could relate to it easier.

Yeah, I was thinking the same -- that's what spurred this latest post.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
Stefanwaal
Posts: 54
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11/27/2015 6:29:05 PM
Posted: 1 year ago
It would be good to post something regarding the U.S. because people are more familiar and could relate to it easier.

Yeah, I was thinking the same -- that's what spurred this latest post.

Maybe it can also help to start with topics that only require a basic knowledge about economics. If you want to discuss this topic at a decent level you need to have an understanding of all of the following things:
- The IMF and what it does (I have no idea and I also don't want to Google for hours just to discuss something)
- The SDR (never heard of it before this post. I also don't really know why I should care about it)
- The exchange rates of currencies
- What's going on in China

I suspect it's hard to pull members to this forum with topics they know little about.
ColeTrain
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11/27/2015 7:45:57 PM
Posted: 1 year ago
At 11/27/2015 6:29:05 PM, Stefanwaal wrote:
It would be good to post something regarding the U.S. because people are more familiar and could relate to it easier.

Yeah, I was thinking the same -- that's what spurred this latest post.

Maybe it can also help to start with topics that only require a basic knowledge about economics.

You're right.

If you want to discuss this topic at a decent level you need to have an understanding of all of the following things:
- The IMF and what it does (I have no idea and I also don't want to Google for hours just to discuss something)
- The SDR (never heard of it before this post. I also don't really know why I should care about it)
- The exchange rates of currencies
- What's going on in China

I suspect it's hard to pull members to this forum with topics they know little about.

As embarrassing as it may be, you're right. Most people wouldn't have a clue what I'm talking about, and I didn't do well to explain that. Hopefully our next post will be more basic. Thanks for your feedback, Stefanwaal, it's much appreciated.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
fire_wings
Posts: 5,539
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11/29/2015 5:23:56 AM
Posted: 1 year ago
At 11/23/2015 11:37:10 PM, ColeTrain wrote:
Introduction:
Since its establishment in 1969, the controversial creation of IMF"s (International Monetary Fund) creation of the SDR (Special Drawing Right) has included four separate currencies: the dollar (US), the euro (19 EU states), the pound (UK), and the yen (Japan). Its purpose is to "supplement its member countries" official reserves." [http://www.imf.org...] Recently, after robust increase in usage, China is petitioning to add their currency, the yuan to this exclusive set [http://www.economist.com...]. Essentially, the IMF is considering China"s proposal like this: is it necessary to include the yuan, and can it (and will it), sustain its country concurrent the recent devalue?

Considerations:
The argument for adding the yuan to the SDR is not really complex. When added to the SDR, there comes the subsequent reserve of a currency that is tradable and contains a reputable store of wealth. The yuan, specifically, would gain value internationally, as its currency would be regarded with more security. Moreover, the value of the yuan has been increasing in net since China devalued its currency in August. [http://si.wsj.net...]

But why would China devalue their currency in the first place? The answer isn"t exactly what a lot of people propose. A common theory, albeit slightly flawed, is to help its exports. Competitiveness in the market would render a near 20% devaluation rather than the yuan"s 2% [http://fortune.com...]. Clearly, it"s not simply to keep its exports competitive, as a 2% devaluation is negligible in achieving this end. Rather, China devalued the yuan to keep in closer alignment with its trading partners" currencies. Because of the recent spike of the US dollar [http://fortune.com...], China needs to level its currency closer to that of its trading partners to keep exports contributing the most value as possible.

This is important for worldwide economy too, though, as China is and has been the world"s largest exporting country [http://www.economist.com...]. Regardless of specific numbers, the devaluation should boost their economy, which has been slowing over the past year [http://www.latimes.com...]. This also indicates the devaluation or depreciation of the yuan shouldn"t continue or become a steady fall [http://www.theguardian.com...]. The dynamics of the economic impact doesn"t render the devaluation a broad-scale detriment. Instead, the devaluation helps China while simultaneously preserving other economies via trade.

It"s still unclear whether or not the yuan should be included in the SDR, and the ramifications of its inclusion on global economics. The yuan is indisputably a large part of global payments, as it overtook the yen in regards to usage in October [http://www.ft.com...]. This graph indicates it"s usage over the past few years, and it"s global rank [http://assets.bwbx.io...]. Its increase is quick, especially in regards to the recent devaluation, about which it is evident the devaluation hasn"t had a drastic negative impact on its usage. Any implications as such are being dealt with by China"s change in market strategies, which have given way to more subtle techniques [http://www.wsj.com...]. However, it is still shown of no serious concerns to global economics regarding the inclusion of the yuan in the SDR. Furthermore, the inclusion of the yuan in the SDR has finally, after earlier resistance, gained the support of the United States. The yuan has yet to prove and severe detriments in its proposed inclusion, and as it currently stands, it will likely be added, as the IMF is increasing its exposure to yuan-bonds [http://www.reuters.com...].

Conclusions:
The economic benefits of doing so have consistently pointed positive, as devaluation concerns have been dispelled by statistics showing its usage is only increasing and the IMF would gain another currency asset that"s popular, tradable, and wealthy. Moreover, the economic reform upon which China has embarked may cause the depreciation and devaluation of the yuan currency, but these short term effects will, in the long run, largely benefit global economy [http://www.ft.com...]. For the success and sustenance of global economics, as well, the world must not inhibit their economic performance. China"s pursuit of their own national, rather than state, success builds on future success. These reforms, though, do include entrance into the SDR and the initial devaluation of the yuan. Insofar as data has shown, there"s no reason not to include the yuan in the SDR. Only time will tell.

We encourage your response and thoughts regarding this topic, so please provide it below!

Nice information, interests me, but I do not really get it, and so will some members.
#ALLHAILFIRETHEKINGOFTHEMISCFORUM

...it's not a new policy... it's just that DDO was built on an ancient burial ground, and that means the spirits of old rise again to cause us problems sometimes- Airmax1227

Wtf you must have an IQ of 250 if you're 11 and already decent at this- 16k

Go to sleep!!!!- missmozart

So to start off, I never committed suicide- Vaarka
ColeTrain
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11/29/2015 5:45:05 AM
Posted: 1 year ago
At 11/29/2015 5:23:56 AM, fire_wings wrote:
At 11/23/2015 11:37:10 PM, ColeTrain wrote:
Introduction:
Since its establishment in 1969, the controversial creation of IMF"s (International Monetary Fund) creation of the SDR (Special Drawing Right) has included four separate currencies: the dollar (US), the euro (19 EU states), the pound (UK), and the yen (Japan). Its purpose is to "supplement its member countries" official reserves." [http://www.imf.org...] Recently, after robust increase in usage, China is petitioning to add their currency, the yuan to this exclusive set [http://www.economist.com...]. Essentially, the IMF is considering China"s proposal like this: is it necessary to include the yuan, and can it (and will it), sustain its country concurrent the recent devalue?

Considerations:
The argument for adding the yuan to the SDR is not really complex. When added to the SDR, there comes the subsequent reserve of a currency that is tradable and contains a reputable store of wealth. The yuan, specifically, would gain value internationally, as its currency would be regarded with more security. Moreover, the value of the yuan has been increasing in net since China devalued its currency in August. [http://si.wsj.net...]

But why would China devalue their currency in the first place? The answer isn"t exactly what a lot of people propose. A common theory, albeit slightly flawed, is to help its exports. Competitiveness in the market would render a near 20% devaluation rather than the yuan"s 2% [http://fortune.com...]. Clearly, it"s not simply to keep its exports competitive, as a 2% devaluation is negligible in achieving this end. Rather, China devalued the yuan to keep in closer alignment with its trading partners" currencies. Because of the recent spike of the US dollar [http://fortune.com...], China needs to level its currency closer to that of its trading partners to keep exports contributing the most value as possible.

This is important for worldwide economy too, though, as China is and has been the world"s largest exporting country [http://www.economist.com...]. Regardless of specific numbers, the devaluation should boost their economy, which has been slowing over the past year [http://www.latimes.com...]. This also indicates the devaluation or depreciation of the yuan shouldn"t continue or become a steady fall [http://www.theguardian.com...]. The dynamics of the economic impact doesn"t render the devaluation a broad-scale detriment. Instead, the devaluation helps China while simultaneously preserving other economies via trade.

It"s still unclear whether or not the yuan should be included in the SDR, and the ramifications of its inclusion on global economics. The yuan is indisputably a large part of global payments, as it overtook the yen in regards to usage in October [http://www.ft.com...]. This graph indicates it"s usage over the past few years, and it"s global rank [http://assets.bwbx.io...]. Its increase is quick, especially in regards to the recent devaluation, about which it is evident the devaluation hasn"t had a drastic negative impact on its usage. Any implications as such are being dealt with by China"s change in market strategies, which have given way to more subtle techniques [http://www.wsj.com...]. However, it is still shown of no serious concerns to global economics regarding the inclusion of the yuan in the SDR. Furthermore, the inclusion of the yuan in the SDR has finally, after earlier resistance, gained the support of the United States. The yuan has yet to prove and severe detriments in its proposed inclusion, and as it currently stands, it will likely be added, as the IMF is increasing its exposure to yuan-bonds [http://www.reuters.com...].

Conclusions:
The economic benefits of doing so have consistently pointed positive, as devaluation concerns have been dispelled by statistics showing its usage is only increasing and the IMF would gain another currency asset that"s popular, tradable, and wealthy. Moreover, the economic reform upon which China has embarked may cause the depreciation and devaluation of the yuan currency, but these short term effects will, in the long run, largely benefit global economy [http://www.ft.com...]. For the success and sustenance of global economics, as well, the world must not inhibit their economic performance. China"s pursuit of their own national, rather than state, success builds on future success. These reforms, though, do include entrance into the SDR and the initial devaluation of the yuan. Insofar as data has shown, there"s no reason not to include the yuan in the SDR. Only time will tell.

We encourage your response and thoughts regarding this topic, so please provide it below!

Nice information, interests me, but I do not really get it, and so will some members.

I'd love to see you're analysis of this topic, if you don't mind. You are Asian, so it's probably more applicable for your area than mine, in America haha. :P

Sorry if it's confusing -- we/I should have started with more basic economics. Still, I'd desire your feedback if you have anything to add.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
Stefanwaal
Posts: 54
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11/29/2015 11:58:37 AM
Posted: 1 year ago
At 11/29/2015 5:45:05 AM, ColeTrain wrote:
I'd love to see you're analysis of this topic, if you don't mind. You are Asian, so it's probably more applicable for your area than mine, in America haha. :P

*your
ColeTrain
Posts: 4,291
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11/29/2015 8:53:16 PM
Posted: 1 year ago
At 11/29/2015 11:58:37 AM, Stefanwaal wrote:
At 11/29/2015 5:45:05 AM, ColeTrain wrote:
I'd love to see you're analysis of this topic, if you don't mind. You are Asian, so it's probably more applicable for your area than mine, in America haha. :P

*your

That's what happens when I stay up too late... xD
I rarely make mistakes like that, it bothers me that I did. Lol.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
ColeTrain
Posts: 4,291
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11/30/2015 9:42:42 PM
Posted: 1 year ago
UPDATE:

The yuan has now been included in the International Monetary Fund's Special Drawing Right. [http://www.economist.com...] This is a historical event, as China's economic "heft" is becoming a recurring theme, and its addition, being an elite currency, only underscores this idea. [http://www.nytimes.com...] It marks the end of an era, but starts a fresh beginning of a new one. The consequences, for now, require we play the waiting game.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
fire_wings
Posts: 5,539
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12/9/2015 12:14:00 PM
Posted: 11 months ago
At 11/30/2015 9:42:42 PM, ColeTrain wrote:
UPDATE:

The yuan has now been included in the International Monetary Fund's Special Drawing Right. [http://www.economist.com...] This is a historical event, as China's economic "heft" is becoming a recurring theme, and its addition, being an elite currency, only underscores this idea. [http://www.nytimes.com...] It marks the end of an era, but starts a fresh beginning of a new one. The consequences, for now, require we play the waiting game.

you stopped?
#ALLHAILFIRETHEKINGOFTHEMISCFORUM

...it's not a new policy... it's just that DDO was built on an ancient burial ground, and that means the spirits of old rise again to cause us problems sometimes- Airmax1227

Wtf you must have an IQ of 250 if you're 11 and already decent at this- 16k

Go to sleep!!!!- missmozart

So to start off, I never committed suicide- Vaarka
ColeTrain
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12/9/2015 1:59:47 PM
Posted: 11 months ago
At 12/9/2015 12:14:00 PM, fire_wings wrote:
At 11/30/2015 9:42:42 PM, ColeTrain wrote:
UPDATE:

The yuan has now been included in the International Monetary Fund's Special Drawing Right. [http://www.economist.com...] This is a historical event, as China's economic "heft" is becoming a recurring theme, and its addition, being an elite currency, only underscores this idea. [http://www.nytimes.com...] It marks the end of an era, but starts a fresh beginning of a new one. The consequences, for now, require we play the waiting game.

you stopped?

Stopped what? I provided an update, and we've opened a couple more EFRP threads about GDP and economic inequality. What do you mean?
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
ResponsiblyIrresponsible
Posts: 12,398
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12/9/2015 2:26:27 PM
Posted: 11 months ago
At 11/30/2015 9:42:42 PM, ColeTrain wrote:
UPDATE:

The yuan has now been included in the International Monetary Fund's Special Drawing Right. [http://www.economist.com...] This is a historical event, as China's economic "heft" is becoming a recurring theme, and its addition, being an elite currency, only underscores this idea. [http://www.nytimes.com...] It marks the end of an era, but starts a fresh beginning of a new one. The consequences, for now, require we play the waiting game.

It's largely overstated, tbh. Ben Bernanke likened it to receiving a gold star on your homework, lol. More on this later.
~ResponsiblyIrresponsible

DDO's Economics Messiah
ColeTrain
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12/9/2015 2:40:13 PM
Posted: 11 months ago
At 12/9/2015 2:26:27 PM, ResponsiblyIrresponsible wrote:
At 11/30/2015 9:42:42 PM, ColeTrain wrote:
UPDATE:

The yuan has now been included in the International Monetary Fund's Special Drawing Right. [http://www.economist.com...] This is a historical event, as China's economic "heft" is becoming a recurring theme, and its addition, being an elite currency, only underscores this idea. [http://www.nytimes.com...] It marks the end of an era, but starts a fresh beginning of a new one. The consequences, for now, require we play the waiting game.

It's largely overstated, tbh. Ben Bernanke likened it to receiving a gold star on your homework, lol. More on this later.

Hm. Alright, cool. :) Insofar as my personal research has shown, it's likely to be at least slightly beneficial.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
ResponsiblyIrresponsible
Posts: 12,398
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12/9/2015 3:49:14 PM
Posted: 11 months ago
At 12/9/2015 2:40:13 PM, ColeTrain wrote:
At 12/9/2015 2:26:27 PM, ResponsiblyIrresponsible wrote:
At 11/30/2015 9:42:42 PM, ColeTrain wrote:
UPDATE:

The yuan has now been included in the International Monetary Fund's Special Drawing Right. [http://www.economist.com...] This is a historical event, as China's economic "heft" is becoming a recurring theme, and its addition, being an elite currency, only underscores this idea. [http://www.nytimes.com...] It marks the end of an era, but starts a fresh beginning of a new one. The consequences, for now, require we play the waiting game.

It's largely overstated, tbh. Ben Bernanke likened it to receiving a gold star on your homework, lol. More on this later.

Hm. Alright, cool. :) Insofar as my personal research has shown, it's likely to be at least slightly beneficial.

Sure: it pressures China to liberalize its financial markets, which eats into its "twin surplus." The problem is, insofar as (a) the yuan still maintains a relatively minor role in global financial transactions and (b) insofar as trade deficits are irrelevant (and they are), the effect is miniscule.

In actuality, the big scare here that goldbugs might cite--oh my goodness, the yuan is overtaking the dollar!--is (a) bullsh1t, which anyone with the ability to access FRED and read numbers off a graph can tell you and, (b) even if it weren't bullsh1t, it would actually be a good thing, because the benefits of "reserve currency status" are heavily overstated.
~ResponsiblyIrresponsible

DDO's Economics Messiah
ColeTrain
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12/9/2015 8:24:11 PM
Posted: 11 months ago
At 12/9/2015 3:49:14 PM, ResponsiblyIrresponsible wrote:
At 12/9/2015 2:40:13 PM, ColeTrain wrote:
At 12/9/2015 2:26:27 PM, ResponsiblyIrresponsible wrote:
At 11/30/2015 9:42:42 PM, ColeTrain wrote:
UPDATE:

The yuan has now been included in the International Monetary Fund's Special Drawing Right. [http://www.economist.com...] This is a historical event, as China's economic "heft" is becoming a recurring theme, and its addition, being an elite currency, only underscores this idea. [http://www.nytimes.com...] It marks the end of an era, but starts a fresh beginning of a new one. The consequences, for now, require we play the waiting game.

It's largely overstated, tbh. Ben Bernanke likened it to receiving a gold star on your homework, lol. More on this later.

Hm. Alright, cool. :) Insofar as my personal research has shown, it's likely to be at least slightly beneficial.

Sure: it pressures China to liberalize its financial markets, which eats into its "twin surplus." The problem is, insofar as (a) the yuan still maintains a relatively minor role in global financial transactions

Wouldn't its inclusion increase its usage herein?

and (b) insofar as trade deficits are irrelevant (and they are), the effect is miniscule.

Hm... okay.

In actuality, the big scare here that goldbugs might cite--oh my goodness, the yuan is overtaking the dollar!--is (a) *censored*, which anyone with the ability to access FRED and read numbers off a graph can tell you

Knew that.

and, (b) even if it weren't *censored*, it would actually be a good thing, because the benefits of "reserve currency status" are heavily overstated.

This sounds logical. A reserve doesn't seem like it'd serve any meaningful purpose when the global market isn't frugal.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
ResponsiblyIrresponsible
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12/9/2015 8:40:09 PM
Posted: 11 months ago
At 12/9/2015 8:24:11 PM, ColeTrain wrote:
Wouldn't its inclusion increase its usage herein?

Sort of--it has a larger weight in the reserve-currency basket than the yen or the pound, but relative to the dollar and the euro, its usage in global financial transactions is still far too small from this to have any meaningful impact on the exchange rate. The PBOC has been trying as late to loosen restrictions on the renminbi--they lengthened the range today, for instance, to a 4-year low. The currency is still too tightly controlled for it to meaningfully move, and if it did, it would plummet, because China keeps its currency elevated by hoarding foreign-currency reserves (to sell off and buy renmimbi, should there ever be a speculative attack).

and (b) insofar as trade deficits are irrelevant (and they are), the effect is miniscule.

Hm... okay.

In actuality, the big scare here that goldbugs might cite--oh my goodness, the yuan is overtaking the dollar!--is (a) *censored*, which anyone with the ability to access FRED and read numbers off a graph can tell you

Knew that.

Lol, I knew that you knew.

and, (b) even if it weren't *censored*, it would actually be a good thing, because the benefits of "reserve currency status" are heavily overstated.

This sounds logical. A reserve doesn't seem like it'd serve any meaningful purpose when the global market isn't frugal.

That's what I'm saying: the only purpose of hoarding foreign currency reserves is the ability to intervene in forex markets to manipulate the exchange rate. Because foreign central banks hold onto the dollar and settle, for instance, international transactions--e.g., commodity sales--in dollars, that effectively means that the dollar is relatively "overvalued" at all times. So that puts a lid on long-term interest rates, sure, but it also inhibits us from exporting. If we were an emerging market and at risk of massive capital outflows, or something, because we were saturated with capital as investors flocked to our higher-yielding, relatively more risky assets, we'd be screwed--but the reason EME's are screwed is *because* investors are flocking back to dollars the first chance they get. So, in reality, there really isn't anything to be gained from "reserve currency status."
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ColeTrain
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12/9/2015 8:47:59 PM
Posted: 11 months ago
At 12/9/2015 8:40:09 PM, ResponsiblyIrresponsible wrote:
At 12/9/2015 8:24:11 PM, ColeTrain wrote:
Wouldn't its inclusion increase its usage herein?

Sort of--it has a larger weight in the reserve-currency basket than the yen or the pound, but relative to the dollar and the euro, its usage in global financial transactions is still far too small from this to have any meaningful impact on the exchange rate. The PBOC has been trying as late to loosen restrictions on the renminbi--they lengthened the range today, for instance, to a 4-year low. The currency is still too tightly controlled for it to meaningfully move, and if it did, it would plummet, because China keeps its currency elevated by hoarding foreign-currency reserves (to sell off and buy renmimbi, should there ever be a speculative attack).

Ah, okay. Isn't it also because of their crazy trade?

and (b) insofar as trade deficits are irrelevant (and they are), the effect is miniscule.

Hm... okay.

In actuality, the big scare here that goldbugs might cite--oh my goodness, the yuan is overtaking the dollar!--is (a) *censored*, which anyone with the ability to access FRED and read numbers off a graph can tell you

Knew that.

Lol, I knew that you knew.

;)

and, (b) even if it weren't *censored*, it would actually be a good thing, because the benefits of "reserve currency status" are heavily overstated.

This sounds logical. A reserve doesn't seem like it'd serve any meaningful purpose when the global market isn't frugal.

That's what I'm saying: the only purpose of hoarding foreign currency reserves is the ability to intervene in forex markets to manipulate the exchange rate. Because foreign central banks hold onto the dollar and settle, for instance, international transactions--e.g., commodity sales--in dollars, that effectively means that the dollar is relatively "overvalued" at all times. So that puts a lid on long-term interest rates, sure, but it also inhibits us from exporting. If we were an emerging market and at risk of massive capital outflows, or something, because we were saturated with capital as investors flocked to our higher-yielding, relatively more risky assets, we'd be screwed--but the reason EME's are screwed is *because* investors are flocking back to dollars the first chance they get. So, in reality, there really isn't anything to be gained from "reserve currency status."

I see. Would you agree, though, that it's better the yuan is now included than it not being included?
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
ResponsiblyIrresponsible
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12/9/2015 8:52:22 PM
Posted: 11 months ago
At 12/9/2015 8:47:59 PM, ColeTrain wrote:
At 12/9/2015 8:40:09 PM, ResponsiblyIrresponsible wrote:
At 12/9/2015 8:24:11 PM, ColeTrain wrote:
Wouldn't its inclusion increase its usage herein?

Sort of--it has a larger weight in the reserve-currency basket than the yen or the pound, but relative to the dollar and the euro, its usage in global financial transactions is still far too small from this to have any meaningful impact on the exchange rate. The PBOC has been trying as late to loosen restrictions on the renminbi--they lengthened the range today, for instance, to a 4-year low. The currency is still too tightly controlled for it to meaningfully move, and if it did, it would plummet, because China keeps its currency elevated by hoarding foreign-currency reserves (to sell off and buy renmimbi, should there ever be a speculative attack).

Ah, okay. Isn't it also because of their crazy trade?

Sort of, though their exports have been horrid recently, and the composition of its GDP is in transition toward consumption.

and (b) insofar as trade deficits are irrelevant (and they are), the effect is miniscule.

Hm... okay.

In actuality, the big scare here that goldbugs might cite--oh my goodness, the yuan is overtaking the dollar!--is (a) *censored*, which anyone with the ability to access FRED and read numbers off a graph can tell you

Knew that.

Lol, I knew that you knew.

;)

and, (b) even if it weren't *censored*, it would actually be a good thing, because the benefits of "reserve currency status" are heavily overstated.

This sounds logical. A reserve doesn't seem like it'd serve any meaningful purpose when the global market isn't frugal.

That's what I'm saying: the only purpose of hoarding foreign currency reserves is the ability to intervene in forex markets to manipulate the exchange rate. Because foreign central banks hold onto the dollar .and settle, for instance, international transactions--e.g., commodity sales--in dollars, that effectively means that the dollar is relatively "overvalued" at all times. So that puts a lid on long-term interest rates, sure, but it also inhibits us from exporting. If we were an emerging market and at risk of massive capital outflows, or something, because we were saturated with capital as investors flocked to our higher-yielding, relatively more risky assets, we'd be screwed--but the reason EME's are screwed is *because* investors are flocking back to dollars the first chance they get. So, in reality, there really isn't anything to be gained from "reserve currency status."

I see. Would you agree, though, that it's better the yuan is now included than it not being included?

For some reason, I misread your last comment as saying it sounded "illogical," lol.

Yeah, sure. I just don't see the hype over it.
~ResponsiblyIrresponsible

DDO's Economics Messiah
ColeTrain
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12/9/2015 8:53:43 PM
Posted: 11 months ago
At 12/9/2015 8:52:22 PM, ResponsiblyIrresponsible wrote:
At 12/9/2015 8:47:59 PM, ColeTrain wrote:
At 12/9/2015 8:40:09 PM, ResponsiblyIrresponsible wrote:
At 12/9/2015 8:24:11 PM, ColeTrain wrote:
Wouldn't its inclusion increase its usage herein?

Sort of--it has a larger weight in the reserve-currency basket than the yen or the pound, but relative to the dollar and the euro, its usage in global financial transactions is still far too small from this to have any meaningful impact on the exchange rate. The PBOC has been trying as late to loosen restrictions on the renminbi--they lengthened the range today, for instance, to a 4-year low. The currency is still too tightly controlled for it to meaningfully move, and if it did, it would plummet, because China keeps its currency elevated by hoarding foreign-currency reserves (to sell off and buy renmimbi, should there ever be a speculative attack).

Ah, okay. Isn't it also because of their crazy trade?

Sort of, though their exports have been horrid recently, and the composition of its GDP is in transition toward consumption.

Okay.

and, (b) even if it weren't *censored*, it would actually be a good thing, because the benefits of "reserve currency status" are heavily overstated.

This sounds logical. A reserve doesn't seem like it'd serve any meaningful purpose when the global market isn't frugal.

That's what I'm saying: the only purpose of hoarding foreign currency reserves is the ability to intervene in forex markets to manipulate the exchange rate. Because foreign central banks hold onto the dollar .and settle, for instance, international transactions--e.g., commodity sales--in dollars, that effectively means that the dollar is relatively "overvalued" at all times. So that puts a lid on long-term interest rates, sure, but it also inhibits us from exporting. If we were an emerging market and at risk of massive capital outflows, or something, because we were saturated with capital as investors flocked to our higher-yielding, relatively more risky assets, we'd be screwed--but the reason EME's are screwed is *because* investors are flocking back to dollars the first chance they get. So, in reality, there really isn't anything to be gained from "reserve currency status."

I see. Would you agree, though, that it's better the yuan is now included than it not being included?

For some reason, I misread your last comment as saying it sounded "illogical," lol.

Lol. :P

Yeah, sure. I just don't see the hype over it.

kk
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
ClaesTheilgaard
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12/10/2015 7:27:09 PM
Posted: 11 months ago
Interesting reading, that's for sure! I managed to get through it all and to understand it, even though I still haven't digged way too deep into economics yet.

Please keep posts like this one coming! And good luck with the revival program, I would like to see it become a success.
ironslippers
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12/12/2015 10:11:13 AM
Posted: 11 months ago
At 11/30/2015 9:42:42 PM, ColeTrain wrote:
UPDATE:

The yuan has now been included in the International Monetary Fund's Special Drawing Right. [http://www.economist.com...] This is a historical event, as China's economic "heft" is becoming a recurring theme, and its addition, being an elite currency, only underscores this idea. [http://www.nytimes.com...] It marks the end of an era, but starts a fresh beginning of a new one. The consequences, for now, require we play the waiting game.

PRO This will give China's conomy more transparency and IMF oversight.
Everyone stands on their own dung hill and speaks out about someone else's - Nathan Krusemark
Its easier to criticize and hate than it is to support and create - I Ron Slippers
ColeTrain
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12/13/2015 10:08:16 PM
Posted: 11 months ago
At 12/10/2015 7:27:09 PM, ClaesTheilgaard wrote:
Interesting reading, that's for sure! I managed to get through it all and to understand it, even though I still haven't digged way too deep into economics yet.

Good! Glad you enjoyed.

Please keep posts like this one coming! And good luck with the revival program, I would like to see it become a success.

Thanks, man! :) I have one about income inequality, too, if you'd like to check that out! I believe there's also one about GDP as well.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW
ColeTrain
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12/13/2015 10:08:40 PM
Posted: 11 months ago
At 12/12/2015 10:11:13 AM, ironslippers wrote:
At 11/30/2015 9:42:42 PM, ColeTrain wrote:
UPDATE:

The yuan has now been included in the International Monetary Fund's Special Drawing Right. [http://www.economist.com...] This is a historical event, as China's economic "heft" is becoming a recurring theme, and its addition, being an elite currency, only underscores this idea. [http://www.nytimes.com...] It marks the end of an era, but starts a fresh beginning of a new one. The consequences, for now, require we play the waiting game.

PRO This will give China's economy more transparency and IMF oversight.

Yep.
"The right to 360 noscope noobs shall not be infringed!!!" -- tajshar2k
"So, to start off, I've never committed suicide." -- Vaarka
"I eat glue." -- brontoraptor
"I mean, at this rate, I'd argue for a ham sandwich presidency." -- ResponsiblyIrresponsible
"Overthrow Assad, heil jihad." -- 16kadams when trolling in hangout
"Hillary Clinton is not my favorite person ... and her campaign is as inspiring as a bowl of cottage cheese." -- YYW