Trade War of 1930s, Extended the Great Depression

Sure, if China dumps US bonds, someone else will own them . . . eventually. But since they own so many more than any other sovereign, and since they would dump a billion dollars worth at a time, they wouldn't be sopped up all that quickly. Not only that but a herd effect goes into play. When the bonds lose pricing, people would flee this market. I'm not saying I think China would do that, but that selling US bonds would be their nuclear option. One thing is for sure: dumping US bonds in wholesale fashion would wreak havoc in the bond market globally, and while the US bond is still the haven of last refuge, the price would fall dramatically and damage the global marketplace for months. I personally think the trade war is stupid, that markets move according to supply and demand. Right now, people in the US are willing to pay up for a German made car, and why not, they're the best. If they become of lesser quality, or if they get too expensive, the US market will shrink. Accordingly, if so much intellectual property is being stolen from Apple, well then, they will retreat from China as the place to assemble their products. That hasn't happened. Just the converse, a new plant is being opened for their screen manufacture. A lot of this depends on whether you like the president, and Peter Navarro, and whether you actually participate in the free market. Well, it was a free market until lately. The ones worst hurt? Soybean farmers, anyone who uses steel or aluminum, anyone who raises meat, the Cummins engine and generator company (located in Mike Pence's home town). 

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indeed I did not say the depression start because of the tariffs, and there is no reason to say that, since that is fact. But that after the depression they  started the tariffs, and that extended the depression by a couple of years.

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On 7/16/2018 at 6:43 PM, Dan Warnick said:

Interesting take, Jan.  I like the optimism and believe it is true.  Americans, I think, are ready for a reset and also believe they can go it alone if necessary, hence their hopes for the Donald's "plans".

I will reserve my comments about the China portion of your submittal for a later time, just let me say that the Chinese could put down ANY internal uprising no matter how many casualties would be necessary, close their borders, sacrifice for 100 years, and come back on their own terms once again at a later date.  One other little thing: I think by and large people go for the cars before they go for upgraded housing.  Car/trucks make money and show your "wealth" on a mobile basis while a house does not necessarily do either (remember I live in Asia).

you are making more sense and you sound like someone who lived in China in the past as opposed to the vermont guy. yes a lot of chinese prefer that nice car to the house. I found that a lot of people underestimate the power of the chinese, but at the same time we all know that the US has more favor over this war. 

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15 minutes ago, Mike Marone said:

you are making more sense and you sound like someone who lived in China in the past as opposed to the vermont guy. yes a lot of chinese prefer that nice car to the house. I found that a lot of people underestimate the power of the chinese, but at the same time we all know that the US has more favor over this war. 

Hi Mike. Just adding my perspective and yes I lived and worked in the P. R. C. for 9 years.  I don't take anything away from Jan, he is way more intelligent and useful than I am, I just have that bit of different perspective.  It is incredible how much people underestimate the Chinese, and have for many decades.  In fact, I would say that is true of most nationalities and races.  All things being equal, when men and women are given a good education, opportunities and at least some amount of freedom to act on them, great things can be accomplished.  The one trait about the Chinese that sets them apart over most others, in my opinion, is their long term planning ethic.  As to the current trade battles, I think they are long overdue and necessary.  But I also agree with Donald Trump (did I just type that?  Ha-ha!) in that the Chinese are not to blame for the West's idiocy in negotiation "skills" as exhibited over the last 40 years.  In the eyes and system of the Chinese, they have done nothing wrong and they could not and can not believe the immaturity that so many so called advanced Western businesses and governments have displayed and in fact acted on.  My two cent's worth.

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Yes i agree. A lot of the things Jan said is true, and i like his and your bit of humour to it :)  After all, the policies we see here are implemented by a communist regime so it can only be normal. I see a bubble in the property market in China and he is right about the Ghost cities but i don't think that has any implications with the trade war for the moment. What is worrying for China is that the financial market is now officially in a bearish situation and Uncle Sam knows how to worsen the condition. I think in the short term China will fold but who knows what trick they will bring out in the future.  

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3 hours ago, Mike Marone said:

Yes i agree. A lot of the things Jan said is true, and i like his and your bit of humour to it :)  After all, the policies we see here are implemented by a communist regime so it can only be normal. I see a bubble in the property market in China and he is right about the Ghost cities but i don't think that has any implications with the trade war for the moment. What is worrying for China is that the financial market is now officially in a bearish situation and Uncle Sam knows how to worsen the condition. I think in the short term China will fold but who knows what trick they will bring out in the future.  

Good points, Mike.  I agree with your well thought out remarks.  Cheers!

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