China’s Oil Futures Contract Is Beginning to Show Its Teeth

3 hours ago, mthebold said:

I can agree with "less costly" - along with everything else you've said. I may also have to read both the Federalist Papers and the Cyropaedia now. 

Would you be willing to venture some specifics on what "fairness" looks like?  What are some specific behaviors that separate nationalism from mercantilism? 

The Cyropaedia is a wonder to behold.  It is the story of Cyrus the Great and it was written by Xenophon, who was a Greek soldier, who fought with the Spartans, and who was a student of Socrates.  The story attempts to inform the reader about what to look for in a good leader, and how to become a good leader.  There is some classical Greek tragedy and romance thrown in as well.

The Federalist Papers are a chore to get through, but they are filled with some remarkable insight about the US political system, especially into the concept of Federalism (not surprising, I suppose, given the name).  The core theme of Federalism is that the States are allowed to compete freely with one another in the area of laws and regulations.  The success or failure of each State's individual laws then allows for the bad laws to be weeded out while also allowing all of the other States to eventually copy the good laws that remain in each State's legal code.  In this sense, Federalism is about encouraging competition.  This concept of competition is key difference between nationalism and mercantilism, at least as I am using these words.  I do want to be clear that I am using a "working" definition for these two terms.  I'm sure a political science professor might have an "official" definition that looks very different than the one's I am using; however, I am trying to convey an idea, and sometimes that involves fudging a bit with Webster. 

So anyway, when you think of nationalism (at least as I am using the word), it means competition.  This is where the "fairness" concept comes in.  Fairness = the freedom to compete without barriers.  There are many ways to limit competition, one of which involves mercantilism.  Mercantilism operates according to monopolies.  For an example of mercantilism at its best (or worst, depending on which side you are on), you can look back to the famous Tea Act of 1773 that eventually culminated in the American Revolution.  Here we can see that the main purpose of this act was not to raise revenue from the colonies but to bail out the floundering East India Company, a key player in the British economy. The British government granted the company a monopoly on the importation and sale of tea in the colonies.  So, mercantilism limits the freedom to compete by creating monopolies.  There are other ways to limit free competition besides monopolies, such as those limits competition imposed by Socialism or Communism. 

In contrast to all of these, nationalism (at least as I am using the term) does the very opposite.  It attempts to create standardized laws so that everyone has a fair "race"...that is to say, so that everyone has a chance to compete fairly.  Nationalism, (which in this sense is really just being used as a synonym for capitalism), rewards both producers and consumers.  It reward consumers by pressuring costs downward while also driving up profits for the most effective producer, and it does this with the same methods used by Federalism: allow the bad ideas to be weeded out through competition, leaving only the best ideas for everyone else to emulate.  In the end, everyone wins, even those that went out of business through competition, because in the end, everyone ends up with the best ideas, and profits for both the consumer and producer are maximized.    

But there are a few important problems with nationalism.  First, it very easily devolves into mercantilism.  Secondly, even when it doesn't devolve into mercantilism, many people have a difficult time comprehending the difference between the two.  Ask any communist about capitalism, and they will say it is all about creating a monopoly to maximize profits!  Which, as I just explained above, not only does not maximize profits, but also has nothing at all to do with capitalism!  In fact, it is the very opposite of capitalism!  Capitalism = free competition.  Monopolies = no competition.  <==exact opposites.  

Another problem that occurs when understanding "fairness" is that the term is difficult to understand, as demonstrated by Socialism.  Socialism has a very different view of "fairness" than the definition I gave above, and so understanding the Socialist's view is important when discussing "fairness" of any kind.  So, as I mentioned above, I said "fairness" occurs whenever there is freedom to compete: such as a race in which there are no barriers to entry and the rules are the same for all participants....may the fasted person win.  All is fair, right?  Well, not so for the socialist.  They believe that a race is only "fair" if everyone who wants to race has the same chance of winning.  Therefore, they want to give an advantage to the guy with the shortest legs so that he can more effectively compete with the guy who has the longest legs.  So that means giving the short-legged guy an artificial advantage, such as a head-start.  Likewise in business and in society, socialists seek to give artificial advantages to those who are not best suited for the job, so that they can more effectively compete against those who are best suited for the job.  Can you say "affirmative action?"

I only mentioned the socialist aspects because I wanted to point out another way of comprehending "fairness" so as not to mistake it for the "fairness" that I was trying to explain.  Although in many senses of the word, the socialist's view of fairness is very much fair indeed: it is about having a fair end result.  But their version of the word does not lead to maximized economic gains for all.  In fact, it leads to the very opposite: diminished returns in both economic profit and human spirit.  After all, it is very hard to raise people up to new heights, but it is not so hard to pull people down.  To make everyone equal (and thereby fair), then, requires that we pull down those who are the greatest achievers and performers. 

This then, brings us full circle: the most noble purpose of the government is not to pull people down, but to allow them to raise themselves up by establishing fairness, and the proper definition of fairness in this sense is free competition.    

Lastly, I wanted to say that the US government is not some shining star upon a hill that upholds fairness without error.  It has and continues to make critical errors in this respect.  However, I do believe that the US government, with all of its flaws, does establish fairness better than any other nation in the history of the world (except for maybe Rome at certain times in its history).  Unfortunately, unless US citizens begin to wake up to the important role they play in ensuring the government does not overstep its bounds (either toward mercantilism or toward socialism), then I am worried one day the fairness we now have will be replaced by something else, and judging by the market cap of Netflix, I am worried that day will be here sooner rather than later.  

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20 hours ago, Epic said:

I agree that forcing politicians to address root causes would be a good outcome, but I want to disagree about ending the petrodollar.  Ending the petrodollar is a terrible idea, but not for the reasons most would probably suspect. 

...

Remarkable comment (quote snipped for brevity).

2 thumbs up.

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8 hours ago, Epic said:

This is the most noble purpose of government, with the emphasis on the word 'fair.' 

...

Another great comment (quote snipped for brevity).

2 thumbs up.

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6 hours ago, mthebold said:

Trump seems to have grasped that pleasing the world is a fool's errand and is refusing to suffer ingrates.

Bingo.

I'm really liking the discourse and ideas articulated in this thread.

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3 hours ago, Epic said:

This then, brings us full circle: the most noble purpose of the government is not to pull people down, but to allow them to raise themselves up by establishing fairness, and the proper definition of fairness in this sense is free competition.    

This is a remarkable sentence.  Well said.  And well written comment.

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(edited)

26 minutes ago, Tom Kirkman said:
3 hours ago, Epic said:

This then, brings us full circle: the most noble purpose of the government is not to pull people down, but to allow them to raise themselves up by establishing fairness, and the proper definition of fairness in this sense is free competition.    

This is a remarkable sentence.  Well said.  And well written comment.

How many times I have had to explain to my local relations: do not allow the forces around you (old classmates, friends, even relatives) to pull you down.  People seem to do this without even knowing they are doing it.  Example: A bright young person finds themselves in a position, after hard work and encouragement along the way, to continue their education by going to college/university.  Right away people all around them will start to tell them not to be afraid to fail.  I say, WHAT?  Don't be afraid to succeed!  You absolutely have a chance at succeeding, but you may have to accept that you will have little in common with old friends, and yes even relatives, going forward.  People seem to be naturally (unfortunately) resentful that others can succeed around them, thus making them look like failures(at least in their own minds), going as far as to exerting enormous peer pressure to make bad decisions that will knock their friends/relatives off track to becoming successful.  You see it with high potential athletes in the U.S. all the time:  Leave high school as the star, go to college and excel, go home for a visit and talk about your progress, your friends take you out for drinks and drugs with enormous pressure to participate, get caught up in it and "realize" you are just a guy/gal from the neighborhood, maybe get caught in a car with booze and drugs, and BAM there goes the scholarship, and any hope for a promising career.  Don't worry, your friends/relatives understand.  What a waste!  Unfortunately it happens all too often, especially in the poorer sectors.

Epic, your comment explains this phenomena at an all new level and I certainly applaud you for making the point.

Edited by Dan Warnick
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On 8/3/2018 at 4:03 PM, jaycee said:

You quoted the Marshal plan as the reason the $ became the world's reserve currency at the beginning of the discussion it did not come into effect until 1948 whereas it was 1944 that the Bretton Woods Agreement came about making the $ the worlds reserve currency instead of gold now you are saying military power was what decides who gets the reseve currency title.  I remain confused and stick by my point it was the Bretton Woods agreement that spelt the end of £'s reign as the reserve currency..

I have to strongly disagree on that as well oil will never run out it will become too expensive to produce maybe but there is a lot of substitiuon that has to take place before that. One example below of the oil yet to be commercially produced.

https://oilprice.com/Energy/Crude-Oil/Can-Russia-Develop-Its-Shale-Reserves.html

Occupying an area the size of Ethiopia, roughly 1 million square kilometers spreading from the Russo-Kazakh border to the Kara Sea along Western Siberia’s most prolific oil fields, the Bazhenov Suite has been keeping Russian geophysicists awake at night for more than 50 years. Although it is one of the most researched subjects in Russian petrogeology, there still is no authoritative estimate on Bazhenov’s reserves (most reasonable located within the 15 to 20-billion-ton interval) and will not be for some time. There is no unified method for the quantification of Bazhenov reserves, moreover, most oil discoveries within it were carried out on a rather hit or miss basis. Yet we know a lot already about the Bazhenov Suite - the 70 known oil fields in the Bazhenov Suite are located at depths ranging from 600m to 3800m, while the thickness of the Suite mostly ranging from 20 to 40 meters, with an organic matter content of 16-17 percent.

The probability of hitting the rock-fracture zone with a standard vertical well is quite low - all companies have opted for multistage hydraulic fracturing as primary means of extraction. It remains to be seen how commercially viable RITEK’s attempts with the pyrolysis of kerogenic shale will be.

Bretton woods agreement also came because of vast USA manufacturing and the destruction caused in WW2 to other leading powers. The dominance of USA was due to its military might and industrial production. But the most important reason was USA involvement in WW2A in which it supplied massive quantity of goods which made the world powers then depend on USA. Eventually, it lead to marshall plan and then Petrodollar.

Yes, Russian shale oil is the last reserve to be found. But that is the end. Russian shale reserves will be about 30-40GBL expected. That will be 1 year's usage. What after that? EIA had been playing smart. EIA hasnot released any reserve data for 2017 or 2018. The last data was for 2016. EIA can't tell its bleak reserves now. Earlier they used make excuses like oil prices are low and hence economic feasibility is low. But now they will have to tell the true reserves

 

 

USA polices the world for maintaining control over trade and hence maintain petrodollar. World did function even in 1980s when USSR was still a major power and USA did not police every place. USA policing is not needed except to benefit USA

On 8/3/2018 at 4:48 PM, mthebold said:

 

Responding to all of both your posts, it sounds like the petrodollar allows the US to profitably police the world, and the strength of the petrodollar may depend more on our economic influence than anything else.  I.e. we could maintain it simply by keeping our economy strong and being fair to work with.  That said, I have some gripes with the current system:

1)  Playing world police has cost the US population immensely in terms of young men sent to war, loss of manufacturing, and our leadership failing to tend to local concerns.  Stabilizing 3rd world countries may be good for the Californians who built their businesses around importing, the bankers collecting profits from sanctions, and the firms enjoying cheap labor, but it's done nothing for the rest of us.  My communities have been left impoverished and emotionally damaged from the loss of manufacturing and generations of young men sent to fight other people's battles.  If that's how we're repaid for our sacrifice, the rest of the world can burn for all I care. 

2)  Prior to grand international organizations, we had small, local wars.  After grand international organizations and treaties, we had world wars.  Right now, we seem to have America fighting wars while other nations reap the benefits.  Have we really prevented war, or is America simply bearing the cost?  Is a few decades of "peace" enough to prove we've ended war, or are we headed toward a catastrophic conflict?  I'm not yet convinced the current system is an improvement. 

Personally, I didn't vote for Trump, but I like the direction he's taking this: keep the local economy strong, keep the military strong, expect allies to pull their own weight, only do business with people who play fair, and let the rest of the world do as they please.  Once the ingrates get a taste of China, they might actually develop an appreciation for America.  Why force a petrodollar when we could let the relative benefits of our system speak for themselves?  Is that not the most sustainable way to increase influence? 

 

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22 minutes ago, Bhimsen Pachawry said:

Yes, Russian shale oil is the last reserve to be found. But that is the end. Russian shale reserves will be about 30-40GBL expected. That will be 1 year's usage. What after that?

What I said was 'One example below of the oil yet to be commercially produced.' The world is full of currently uncommercial oil plus much that has not been found I gave one large example. We will not run out of oil electric cars will eventually reduce some of the consumption and substitution as oil gets more expensive due to extraction costs will slowly remove the rest off our consumption. The rest of the oil will remain untouched but that is far in the future.

24 minutes ago, Bhimsen Pachawry said:

Bretton woods agreement also came because of vast USA manufacturing and the destruction caused in WW2 to other leading powers. The dominance of USA was due to its military might and industrial production. But the most important reason was USA involvement in WW2A in which it supplied massive quantity of goods which made the world powers then depend on USA. Eventually, it lead to marshall plan and then Petrodollar.

I think we are reaching common gorund. You now agree there was an international standard curreny bfore the $ ie the £.

The quote above does not disagree with what I have said already so I agree. You then quote the Marshall plan and the Petrodollar which came after Bretton Wood well in the latter case it would have to since if you have the worlds reserve currency you by definition will trade oil in $s so nothing you say disagrees with my earlier statements the Bretton Woods was when the UK handed over the last piece of their empire to the US. Getting into debt with the US and having the world trade oil in $s is irrelevant.

27 minutes ago, Bhimsen Pachawry said:

USA polices the world for maintaining control over trade and hence maintain petrodollar. World did function even in 1980s when USSR was still a major power and USA did not police every place. USA policing is not needed except to benefit USA

Have to agree with that too. Controlling trade is the key to prosperity always has been right back to ancient Greece so Trump's decision to withdraw from trade if he doesn't like the terms is a high risk strategy it may push the world to start looking at other currencies for trading in.

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18 hours ago, Bhimsen Pachawry said:

The dominance of USA was due to its military might and industrial production.

Since you pointed out that the dominance of the USA is due in a major part from its industrial production (thereby highlighting the importance of a growing industrial production base), I thought I would point out some interesting facts concerning US industrial production.  

In the last 18 years (since 2000 until present), US industrial production has increased by 11%.

Now, compared to the previous 18-ish years ('83 to '00), US industrial production had increased by 98%

Anyone see a problem with those two numbers?

And so you know I am not cherry-picking data, if we go back another 18 years ('65 to '83), industrial production grew by 60% (and this amount of growth happened during the time of stagflation and Vietnam!)

Going back another 18 years ('47-'65), we see 114% growth, despite the Korean war.  

Source: https://fred.stlouisfed.org/series/INDPRO

...now just let those numbers sink in for a minute...

...

18 hours ago, Bhimsen Pachawry said:

USA polices the world for maintaining control over trade and hence maintain petrodollar. World did function even in 1980s when USSR was still a major power and USA did not police every place. USA policing is not needed except to benefit USA

^There are two problems with this statement.  First, if the US really did "control" trade as you stated, then they wouldn't be losing at it as badly as they are.  Second, you suggested that the world functioned just fine when parts of the world were policed by the USSR, and yet time later proved that the USSR functioned so badly that today it no longer even exists.  Clearly, the "USSR parts of the world" did not at all function as well as you suggested they did, since those were the parts of the world that failed.  Moreover, the world (including Russia) seems to be doing much better now that the US started filling in for the USSR's failures.  As a result, the only thing your statement seems to demonstrate is that the world very much does need the USA to police it, and if the US ever decided to stop policing the world, then, at least by your statement, it seems more likely than not that the world would eventually go the way of the USSR.      

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17 hours ago, mthebold said:

Trade has its advantages, but I'm not aware of a single case where it could replace a solid foundation at home

I can, the Britsh Empire largest the world has ever seen it controlled world trade with seapower without that trade a small island like the UK world be nothing as it is now.

 

17 hours ago, mthebold said:

Historically, empires are gutted by what you might call "moral rot".  Excessive wealth breeds a population unable to care for itself - much less venture forth and contend with the world.  Unable to face their decline, bureaucrats struggle in vain to maintain their international presence, bankrupting their nation in the process.

Well the British Empire collapsed due to the 1st and 2nd World wars bankrupting it nothing to do moral rot. The Ottoman Empire collapsed due to the 1st World war, however it was weak before that due to the collapse of trade between East and West due to large amounts of precious metals coming from the Americas instead of the East, so collapse of trade brought down an Empire in this example. I think your generalisation goes too far the only commonality I see is trade is the foundation stone of them all.

17 hours ago, mthebold said:

What's interesting about Trump is that he seems to understand we've lost the foundation of our power.  Our only option is to retrench and strengthen that foundation.  *If* this is, in fact, what he's thinking, then he's accomplished something nigh unprecedented.  That alone would classify him as a great leader.

You have the first part right America is losing power over trade however retrenching and losing more of it I would say is the wrong option. The solution is to compete on the world stage not try and rewind the clock. China is a real threat to trade for America and by ceding more to them by retreating will create a mountain to climb tif/when they try and restart global trade as they will be doing it with overpriced goods as they can never compete on price with China in a world market or any of the successor nations that are developing fast and provide cheap labour, Vietnam etc. America like the rest of the West has to trade with something the East cannot produce that is the basis of all trade I do not see isolationism working all it will do is slow the decline not reverse it.

The UK has the city of London as its one asset on the World stage it is very hard to create the amount of trades that are needed to run this, lawyers, bankers, accoutants etc plus a stable law that is universally accepted as fair. America has New York but stepping back from World Trade is going to ruin it. I can see a lot of manufacturers, farmers etc in the US celebrating this however what have they got that the can do cheaper than the East?

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(edited)

1 hour ago, mthebold said:

You're forgetting that Britain was first to industrialize.  Strength at home was the foundation it built its trade on.  While it did lose assets during the World Wars, you could argue this wasn't a "collapse".  There was no revolution.  Their government was not overthrown.  They did not feel the need to change their foundation.  After the wars, Britain rebuilt and remained relevant (you can be relevant without being a superpower) until it started giving up its industrial base

Being first to industrialize plays to my narrative of having something others don’t have ie cheap industrially produced goods. During the empire the UK carpet industry put the Indian hand made ones out of business in no time.

All empires do not end in revolution usually it’s a war with an outside force that has got stronger and wants what the old Empire has.  I do not believe your ‘rotten core’ example works for all Empires as I said.

1 hour ago, mthebold said:

If you removed all tariffs, VAT taxes, government subsidies, currency manipulations, and other barriers, American products would compete just fine in the world.  The lack of fairness - usually in the name of uplifting poor, ungrateful cultures - is what Americans have grown tired of. 

2 hours ago, jaycee said:

I don’t recognise this beneficent America you tell me off. US trade always came with strings the UK did the same. Cheap goods usually came with American bases being set up etc. America is helping Kurdistan right now with armaments etc and guess what they are building the biggest American army base outside of America. Being in America you get news tailored to America outside we get biased news as well but our media is not as bad plus we get many more sources.

Edit

In the UK we have a fund called the International Aid fund this is supposed to help countries less fortunate than ourselves. Many of the population say we should stop paying this and use it to fix our own problems just like your argument for America stopping generous trade terms. The UK government always refuses this obvious request as this fund is actually used to get concessions from corrupt states ie its a bribe fund, the USA does the same thing with trade terms they use them as bribes only much of the US population cannot see this. We give international aid to India yet prosecute oil companies for bribing Arab countries all governments lie to their people and have double standards. Always question why your government does something.

 

1 hour ago, mthebold said:

America has the natural resources, the system of laws promoting business, and - most importantly - the innovation.  China, for example, did not play by the rules.  They stole or copied technology they were unable to develop themselves and kept manufacturing costs low by treating their people terribly.  

Japan was once a industrial backwater copying goods and selling cheaply now its somewhat different I suggest China will very quickly get past the copying phase America does not have a monopoly on innovation.

1 hour ago, mthebold said:

The latter won't work for them forever, though.  With manufacturing rapidly automating, innovation matters more than labor rates.  Cut off China's supply of free, American innovation, and they have nothing left.  The same is true of most low-cost nations. 

Cheap labour is not a problem once the Chinese master the basic manufacturing techniques they will outsource the manufacture to other developing countries eg Vietnam and continue by making more innovative products. Just because they live in a communist style one party state system does not make them innovative history tells us the Chinese were once the most innovate country in the world.

Edited by jaycee
adding example of double standards

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23 hours ago, jaycee said:

We will not run out of oil electric cars will eventually reduce some of the consumption and substitution as oil gets more expensive due to extraction costs will slowly remove the rest off our consumption.

The electric car also needs oil. The electric cables, packaging of batteries, the organic solvent of lithium batteries etc are all petroleum. 30% of petroleum in USA goes to making petrochemicals. Similar figure exists elsewhere too. So, this petrochemicals are also to be considered, not just transport energy. There is no replacement to petroleum except coal liquefaction

5 hours ago, Epic said:

Since you pointed out that the dominance of the USA is due in a major part from its industrial production (thereby highlighting the importance of a growing industrial production base), I thought I would point out some interesting facts concerning US industrial production.  

In the last 18 years (since 2000 until present), US industrial production has increased by 11%.

Now, compared to the previous 18-ish years ('83 to '00), US industrial production had increased by 98%

Anyone see a problem with those two numbers?

And so you know I am not cherry-picking data, if we go back another 18 years ('65 to '83), industrial production grew by 60% (and this amount of growth happened during the time of stagflation and Vietnam!)

Going back another 18 years ('47-'65), we see 114% growth, despite the Korean war.  

Source: https://fred.stlouisfed.org/series/INDPRO

...now just let those numbers sink in for a minute

There have been several technological breakthroughs which happened rapidly in means of communication and transport which caused this surge. But the latest one - supercomputing was in about 1990. After this, every technology appears to have stagnated and the edge which continual growth had has diminished. So, others are getting chance to do a catch up and the west is losing quickly. China is the major challenger of USA due to vast natural resource reserves in China. China produces half of all steel, copper, lead, zinc, phosphate, coal etc of the entire world! This amount of natural resource is what makes CHina take on USA.

The only other countries with such amount of resources are Australia, Russia and may be Canada. Also, the higher population of China and their lower standard of income would mean that CHinese are able to work for much more than Americans and able to produce much more goods than USA while importing little.

The technology stagnation has amde it easier for others to match the USA techology and thereby remove any advantage USA possesses.

 

5 hours ago, Epic said:

There are two problems with this statement.  First, if the US really did "control" trade as you stated, then they wouldn't be losing at it as badly as they are.  Second, you suggested that the world functioned just fine when parts of the world were policed by the USSR, and yet time later proved that the USSR functioned so badly that today it no longer even exists.  Clearly, the "USSR parts of the world" did not at all function as well as you suggested they did, since those were the parts of the world that failed.  Moreover, the world (including Russia) seems to be doing much better now that the US started filling in for the USSR's failures.  As a result, the only thing your statement seems to demonstrate is that the world very much does need the USA to police it, and if the US ever decided to stop policing the world, then, at least by your statement, it seems more likely than not that the world would eventually go the way of the USSR.   

USA controlled petroleum which in turn controlled transportation. USA fears that any disruption, wars can mothball like in WW1 and result in disruption of trade and in turn petrodollars. So, USA polices the world. USA gives aid to countries like Somalia, Afghanistan and other African countries to ensure wars don't escalate. But USA can't control everything and hence is losing when CHina started to produce. Chinese did not initially import but extracted their own resources internally. Chinese trade was essentially one way - export only and hence USA was unable to stop the raw material supply or do other things. This is why USA is losing.

USSR did not fail because of inherent problems but because USSR held on to too many baggages by the policy of generosity. Russia had vast resource which it would give to other countries without taking anything back. USA, on the other hand took things from others while giving back only services like technology but no concrete raw materials. This is why USSR had started facing problems when the baggage became excessive. USA on the other hand will face problems once it has little to take from others or when petrodollars is eroded in legitimacy. It is just a cycle and USSR fell first. Now, Russia is rising and USA will fall. This warrants a small poem for fun:

Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall.
All the king's horses and all the king's men
Couldn't put Humpty together again

 

9 minutes ago, mthebold said:

If you removed all tariffs, VAT taxes, government subsidies, currency manipulations, and other barriers, American products would compete just fine in the world.  The lack of fairness - usually in the name of uplifting poor, ungrateful cultures - is what Americans have grown tired of. 

That is not true. The inherent pay for an Americn is too high. USA for example, consumes 20.7 million barrels a day of petroleum. This would amount to 3.27billion litres a day. Per capita is about 10 litres a day. Such kind of consumption is unheard of and hence is unsustainable without petrodollar based geopolitics. 

9 minutes ago, mthebold said:

You're forgetting that Britain was first to industrialize.  Strength at home was the foundation it built its trade on.  While it did lose assets during the World Wars, you could argue this wasn't a "collapse".  There was no revolution.  Their government was not overthrown.  They did not feel the need to change their foundation.  After the wars, Britain rebuilt and remained relevant (you can be relevant without being a superpower) until it started giving up its industrial base

Britain lost assets in WW@ and its colonies. Without vast resources from colonies, UK was nothing and was bound to go down

10 minutes ago, mthebold said:

America has the natural resources, the system of laws promoting business, and - most importantly - the innovation.  China, for example, did not play by the rules.  They stole or copied technology they were unable to develop themselves and kept manufacturing costs low by treating their people terribly.  The latter won't work for them forever, though.  With manufacturing rapidly automating, innovation matters more than labor rates.  Cut off China's supply of free, American innovation, and they have nothing left.  The same is true of most low-cost nations. 

The fact that foreign countries rely on our generosity explains why the world is so desperately opposed to American nationalism.  The lady doth protest too much, methinks

USA is bloated economy and has to come down to be sustainable. USA overcharges for technology taking advantage of being the first mover. But over time, it is bound to equalise. Blaming Chinese for copying is meaningless. Scientific research can happen only if it is done in open manner whereby ideas are collected and discussed. USA just happened to have historical advantage which CHina or other easter countries did not and hence USA stayed ahead But now, technology is equalising and hence USA must lower its economy by accepting recession.

Too much automation will mean that entire system is run by fossil fuels with minimal human intervention. Tesla tried to increase automation and realised his mistake. Even if automation is possible to be increase, the very fact that people need to have jobs and Americans charge more for their work than Chinese makes Chinese more competitive. The only way USA can resist Chinese take over o manufacturing is by reducing standard of living to Chinese levels

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(edited)

33 minutes ago, Bhimsen Pachawry said:

We will not run out of oil electric cars will eventually reduce some of the consumption and substitution as oil gets more expensive due to extraction costs will slowly remove the rest off our consumption.

Yes and as I pointed out it will reduce consumption however we will still need oil products we are in agreement with what I said however the use of electric cars will reduce consumption as oil will not burn in the car. Regards petroleum replacement using coal liquification there will be new products developed as the price of oil rises this is how the world works. Something becomes too expensive replacements are found as there is profit to be had in looking at alternatives. Dont' assume we will never invent anything ever again, look at batteries for battery cars since we are talking about them look how much research has gone into that field a few years ago people said battery cars would never work as battery life was too short now we have battery sports cars with 600 mile range!

Edited by jaycee

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(edited)

1 hour ago, mthebold said:

You think success depends on trade which depends on... I'm not sure what, exactly, you think it depends on.  You've provided some correlations between trade and wealth, but that's all I'm seeing. 

Well according to the executive office of the President of the United States.....

https://ustr.gov/about-us/benefits-trade

Trade is critical to America's prosperity - fueling economic growth, supporting good jobs at home, raising living standards and helping Americans provide for their families with affordable goods and services.

1 hour ago, mthebold said:

It doesn't really matter what foreigners think though.  America has voted to take care of its own first, and we'll find out soon enough how that plays.

Oh it really does though foreigners are your trading partners and you do need them as much as you don't think so jsut now but it will take a few years before America realises the true cost of the policy. Good luck I honestly hope it works out but cannot see how.

Lets agree to disagree as you state and lets watch the show.

Edited by jaycee

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The yuan is currently less than it was 10 years ago. The Chinese have no interest in increasing the yuan value, not good for trade.

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16 hours ago, jaycee said:

You have the first part right America is losing power over trade however retrenching and losing more of it I would say is the wrong option. The solution is to compete on the world stage not try and rewind the clock.

I would argue that the US is unable to compete on the world stage, thanks to Europe's ridiculous VAT.  Although each country has slightly different tax rates, let's use the UK to illustrate:

UK: Corporate Tax Rate = 19%.  VAT = 20%.  Total = 39%

Until the 2018 tax cuts, US Corporate Tax Rate = 39%.  VAT = 0%.  Total = 39%

So, a US company attempting to sell goods to Europeans must now pay 39% in US taxes and an additional +20% in the VAT taxes (because VAT is added to imports).

A UK company attempting to sell goods to a US citizen must pay 19% in taxes (because VAT is removed from exports).

 

Now, just so I am clear:

US-manufactured product sold in US = 39% tax rate

UK-manufactured product sold in US = 19% tax rate

US-manufactured product sold in UK = 59% tax rate

OK-manufactured product sold in UK = 39% tax rate

 

Can you please explain to me how US corporations were supposed to "compete on the world stage" when they were required to pay 3x the amount in taxes?  "Rewinding the clock" is the only option that Europe's VAT has given to US corporations.    

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16 hours ago, Bhimsen Pachawry said:

But the latest one - supercomputing was in about 1990. After this, every technology appears to have stagnated

You are right.  Technology has stagnated since the 90s. 

retro.jpg

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16 hours ago, mthebold said:

The fact that foreign countries rely on our generosity explains why the world is so desperately opposed to American nationalism.  E.g.:

https://www.reuters.com/article/us-usa-trade-indonesia/indonesia-lobbies-u-s-to-maintain-special-tariff-treatment-idUSKBN1KQ04P

The lady doth protest too much, methinks.

Edited 16 hours ago by mthebold

Just a side note to say that I have recently begun noticing Sec. of State, Mike Pompeo.  I have watched a number of videos of him testifying before Congress, and I have to say I was impressed by the ease at which he handles himself.  He is prepared.  He appears deeply knowledgeable not only about his areas of responsibility but with the political divisions and partisan interests of Congress and other branches of government, and he is not at all afraid to stand up to them.  My opinion: this guy's good.  So I did a quick search of Google to find out more about his background and found that he has an incredible background.  The Wikipedia content does seem, shall we say, not entirely complete, so there may of course be a lot more to this guy than meets the quick analysis, and I'd welcome insight from anyone else.

https://en.wikipedia.org/wiki/Mike_Pompeo

Sorry to butt in on the thread.

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4 hours ago, Epic said:

Can you please explain to me how US corporations were supposed to "compete on the world stage" when they were required to pay 3x the amount in taxes?  "Rewinding the clock" is the only option that Europe's VAT has given to US corporations. 

I am not an accountant so cannot tell you whether its fair or not however lets assume it is unfair to America. So obvious question is why did America strike such a deal? I suggest you need to look at what they got in return. What if part of the deal was to allow American missiles and bases to be put, or remain, in Western Europe or even just keep Europe dependant on the US for trade thus ensuring their support in any wars America feels like starting. You will say America is protecting Europe with their bases however they are actually protecting America as if Western Europe came under Russian influence the front line of any war would then be the Eastern seaboard of America. By making Europe dependant on US trade they get to keep war at arms length plus have some strong allies. Now you may say that Europe would not be so stupid as to deal with Russia but they are already and in a very sensitive area, energy. Gas pipelines that feed much of Europe start in Russia or Russian controlled territory in a cold winter and with a big decision on a defence issue at NATO a sudden closure of the pipeline would cause immense suffering and perhaps focus some minds to reconsider their position. China is also trading with Europe and we get cheap goods from them thus making it more dependant on them. America retrenching to their own borders is all good and well but the consequences will be isolation in a world controlled by Russia and China and will bring threats closer to home. US soft power keeps many countries as its friends removing ties with trading partners will leave America venerable.

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(edited)

On 7/31/2018 at 5:49 AM, Tom Kirkman said:

the inexorable, incremental, slow-moving financial tsunami that is the PetroYuan.

I think what you are witnessing is simply asian trader hedging. Nothing can replace the USA on the world stage outside a national catastrophe like yellowstone blowing up eliminating the us from the world stage. 

Why, because China's FAKE push to be a WORLD RESERVE currency nation is all fake. If they were sincere they would allow the Yuan to FLOAT!!! Repeat FLOAT!!! and they DO NOT. Why? Because it would SINK like a ROCK.

The Yuan is the main thing you should look at when you see these boutique concepts floated by countries like China Petro Yuan.. LMAO. It's all Great for CNBC talking heads types around the world to market a product, but in the end it matters little.

UNTIL CHINA, has proven itself as a historically verifiable SAFE PLACE for peoples FREEDOMS, LIBERTIES and most of all MONEY.

It's all a laughable kabuki theater orchestrated for the gullible on the world stage.

The USA is the BIG Dog BECAUSE of our 200+ years of LAW regarding property rights and integrity of the court system that protects INDIVIDUAL RIGHTS.

China Has ZERO history in this area and human nature will not flood them with their trusted capital.

You will see small hedges here and there sure with China, but they are such small potatoes because (READ Marcus Aurelius)  their cultural NATURE of Communism command and control will not allow for the masses to go gaga and turn over their capital in trust when there are other markets with a historically more friendly history towards that individuals capital protection.

  

 

Edited by Cowpoke
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On 8/5/2018 at 6:01 PM, jaycee said:

Yes and as I pointed out it will reduce consumption however we will still need oil products we are in agreement with what I said however the use of electric cars will reduce consumption as oil will not burn in the car. Regards petroleum replacement using coal liquification there will be new products developed as the price of oil rises this is how the world works. Something becomes too expensive replacements are found as there is profit to be had in looking at alternatives. Dont' assume we will never invent anything ever again, look at batteries for battery cars since we are talking about them look how much research has gone into that field a few years ago people said battery cars would never work as battery life was too short now we have battery sports cars with 600 mile range!

That is never the case. Just because something gets too expensive does not mean there will be alternatives. Just look at history for example. In history, when important things became too expensive, people died in large numbers mostly by famine. If there were always sustitute, there would be no famines. You must be remembering Ukraine famine of 1930s or Irish potato famine. This is the reality.

 

On 8/5/2018 at 6:49 PM, mthebold said:

We've hit a point where I think we're just going to disagree.  I think America would be better served by attending to local issues.  In essence, being more like Switzerland.  I also think America's trade will do just fine when we focus on the local.  Possibly better.  You think success depends on trade which depends on... I'm not sure what, exactly, you think it depends on.  You've provided some correlations between trade and wealth, but that's all I'm seeing. 

It doesn't really matter what foreigners think though.  America has voted to take care of its own first, and we'll find out soon enough how that plays. 

USA works because of petrodollar and its consequent economic benefits. The millions of highly talented Asians in USA stay in USA because of the large resource available. If USA ceases international trade, these people will flee. Silicon valley will be the first thing to be hit when this happens. It is likely that this industry will go in ruins when USA cuts off foreign trade. In addition, USA has current account deficit of over $400 billion which is the amount USA gains every year.

If USA leaves the arena, many will be very happy

 

9 hours ago, Epic said:

You are right.  Technology has stagnated since the 90s. 

retro.jpg

I did not say that 1990s technology stagnated. I only said that there has not been any more breakthrough after supercomputing and once supercomputing peaks out, it is over and that is about 2010.

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30 minutes ago, Bhimsen Pachawry said:

That is never the case. Just because something gets too expensive does not mean there will be alternatives. Just look at history for example. In history, when important things became too expensive, people died in large numbers mostly by famine. If there were always sustitute, there would be no famines. You must be remembering Ukraine famine of 1930s or Irish potato famine. This is the reality

What is it you are so worried about running out of exactly, apart from oil obviously, there are alternatives already for a lot of oil derived products e.g.

http://www.trendingpackaging.com/the-most-common-eco-friendly-alternatives-for-plastic-packaging/

The world will adapt and manage it wont happen overnight and as oil gets more expensive, or enviromentally unfriendly, substitutes will become more appealling for a variety of reasons.

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On ‎8‎/‎3‎/‎2018 at 2:29 PM, jaycee said:

You are seeing the world from America’s perspective from the world’s perspective America has never fought in a war or supported rebels, sorry freedom fighters, or backed countries against other countries unless it was in their benefit. Nobody is asking America to challenge Iran, who pleaded with America to invade Iraq, who says the Palestinians don’t have a right to live in their country etc America acts as policeman for its own reasons the ordinary American cannot see what these reasons are because they are fed the American government lies that they are upholding fairness etc.. If America was truly keen to uphold fairness etc why were they reluctant to join WW2 Hitler was only rivalled by Stalin as a murderer of innocents but it took Pearl Harbour to get them to join.

I hate to say this but your government sends your troops to die for their own reasons not any other government's.

Sentiments sound a lot like Neville Chamberlain.  Not responding to a threat until the threat is imminent and deadly is foolishness.  If somebody tells you they are going to kill you, listen and act accordingly.  When someone tells your friend/ally they are going to kill them, listen and act accordingly.  Who knows how different WWII might of been in Europe if this philosophy had been applied sooner. 

If your hypothesis is correct, why didn't we stay and occupy all of Europe when WWII was over and extract a little, "repayment" in our own interest.  No, quite the opposite, Japan and Germany are better examples of what we do.  We helped rebuild Germany and Japan and damned if that didn't work out for them and everybody else in terms of their technology and manufacturing prowess.  

You speak of perspectives and mention the Palestinians living in their own country, well, lets just say it appears America isn't the only country whose citizens are being fed a line, by their government or media...………….. I cant find reference to a Palestinian Country/Nation, at least in a historical context prior to very modern history.  The U.S., the U.K. or any other nation; the BBC, CNN, MSNBC, lies and propaganda transcend nations and networks, your government and likely your favorite news source is lying to you, believe that.

We send our troops to make the enemy die.  True enough, our reasons have not always been altruistic.  But I'm damn glad we sent them to Europe when we did, late or not, aren't you?  Otherwise there would be a whole lot more German being spoken, maybe even here in the U.S.  Hopefully, we will stand firm and we wont all be forced to speak Farsi.

TXPower

 

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9 hours ago, jaycee said:

So obvious question is why did America strike such a deal? I suggest you need to look at what they got in return.

^Your statement is highly intelligent and well-stated.  Unfortunately, it misses the point altogether.  If we are looking at tariffs, then yes, you are very much correct...we need to ask why did the US strike such a deal with those tariffs.  Did the US choose to give one nation a particularly good deal on tariffs in exchange for missile defenses or military bases?  If so, then it would go along way to explain why the US has had such bad "tariff deals" with other nations, particularly in Europe...it is likely that the US got some other good deal on something else in return.  

But I wasn't talking about tariffs at all.

I was talking about taxes.  When it comes to taxes, nations do not make deals with other nations because taxation is an internal aspect of government.  Taxation doesn't involve a deal between nations (that's what tariffs are).  Rather, taxation involves a deal between one nation and that same nation's citizens.  But the VAT is different.  It is a tax that also applies to imports.  As a result of this, it effectively allows European governments to tax US citizens (or at least, it taxes the US citizens and shareholders who own US corporations that export to Europe).  Yet, those US citizens receive no voting rights in Europe despite being taxed by European governments.  Fair?  Nope.  Since exporting to Europe now requires double taxation, it creates a virtually impenetrable trade barrier against US goods.  Interestingly enough, this trade barrier ends up not showing up on the books when calculating "tariffs" simply because it isn't a tariff.  It is a tax.  However, it operates as a stealth tariff, and this stealth tariff has allowed Europe to take advantage of US citizens for over twenty years.    

Europe started the trade war with the US the day European nations started enacting VAT taxes.  It just took US citizens this long (and the loss of 50% of US industrial infrastructure) to start waking up to that reality.  

 

 

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(edited)

3 hours ago, TXPower said:

You speak of perspectives and mention the Palestinians living in their own country, well, lets just say it appears America isn't the only country whose citizens are being fed a line, by their government or media...………….. I cant find reference to a Palestinian Country/Nation, at least in a historical context prior to very modern history.  The U.S., the U.K. or any other nation; the BBC, CNN, MSNBC, lies and propaganda transcend nations and networks, your government and likely your favorite news source is lying to you, believe that.

Arabs lived in what is now Israel before the Jews arrived after WW2 that's a fact and all I am going to say on that subject.

As to me believing the UK government please read the thread I am sure I said I don’t believe any government and I am certain I said the UK media has a left wing bias. I am the most unbaised person you will meet I have travelled and worked round the world and because I live in London my friends range from Maori to South Koreans to Spanish and Americans I see many perspectives. One thing I have learnt there are always two sides to an argument so I debate online trying to hear others. So I am afraid you are creating a strawman trying to say I believe the UK government nothing I have said would have said that I am certain.

I cannot be bothered re reading the whole thread I have about 9 replies to answer on this and another thread so am saving time.

3 hours ago, TXPower said:

We send our troops to make the enemy die.  True enough, our reasons have not always been altruistic.  But I'm damn glad we sent them to Europe when we did, late or not, aren't you?  Otherwise there would be a whole lot more German being spoken, maybe even here in the U.S.  Hopefully, we will stand firm and we wont all be forced to speak Farsi.

America joined WW2 because Japan attacked them and they were allies with Germany. If America had genuinely cared about Europe it would have joined in 1940 when the UK was the last country fighting the Germans in Europe and were about to be invaded instead it was 1941 and only after Japan attacked that the US committed. They did not do it to help the UK they did it because they were attacked. Which is perfectly all right I see their point not their war etc but it was not done to save Europe that was a by product.

Regards Farsi I agree I have no desire to become a Muslin always seem to argue with them if I meet a very religious one and would fight to avoid that. Not many causes I would do that for I can assure you. I do have a conspiracy theory on where the sudden rise of Islam came from mind you and it is based on their main leader being trained in America and whose body was thrown out of a helicopter mysteriously with  some odd events in between but I digress.

As for speaking German you don’t know my family history but I can tell you I would not have been speaking German :).

Edited by jaycee

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