China Markets trade

One Bank Reminds You That ‘The World Is Still Flat’

Trade still makes the world go round, sorry Mr. President.

Trade still makes the world go round, sorry Mr. President.
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10 comments on “One Bank Reminds You That ‘The World Is Still Flat’

  1. What’s gonna stop China from steamrolling anything left of the US tech growth narrative given any trade deal? That, for me, is a big question and I have no idea how to answer it with a positive spin beyond “Well, you know how much Americans left with disposable income love cheap shit from China.”

  2. Mikey Mike

    Kudlow has zero credibility in my book – I communicated w/ him a bit leading up to ‘housing crisis’ in 06, then during GFC. He was wrong about damn near everything imo. He was just a loud mouthpiece for a certain belief system.

    Now he works for Trump. That tells me pretty much NOTHING has changed. One self-important, attention-seeking clown aiding & abetting another.

  3. Harvey Cotton

    There is a deep rot in the world that our current understanding of politics and economics is not quantifying. Throughout the world, the major center-right and center-left parties have been gutted by populists, Socialists, and ultra-right nationalists of different shades of Fascist. This is not normal in times of even nominal economic growth, low unemployment, peace (the war on terror being conducted by a narrow band of the population), and low inflation. And speaking of inflation, in the United States at least, after years of tax cuts, deficit spending, money printing, and now, tariffs, consumer and producer prices and wages have remained flat. Japan is actively destroying their currency and they literally cannot buy inflation. I think we are approaching the limits of our understanding in the social sciences, and may need a paradigm shift the equivalent to quantum mechanics in physics.

  4. Sorry H, these are top-view diversionary charts/graphs. The natural assumption from your target audience is the Exports are to the USA. The diversion comes from using a USD denominated baseline. Whereas in reality, the exports from each individual exporting country go to more than one trading partner. For example, the majority of my dried tomato crop production from Chile SA go to North Africa food manufacturers, but usually LC’s are paid in USD.
    Globalization is equalizing market and production efficiencies, thereby flattening the world. The USA may control the language of money, but the means and tools are shared by all.
    God Bless Google Translate and Maersk Logistics.

    • clearly you didn’t read one of the caveats from BofAML and in addition to that, you should be careful about making assumptions about original material (in this case a note from the bank’s global economics team), that you haven’t seen/read.

    • This article is VERY relevant to those of us in the retail trash camp, who intuit Bitcoin and Iraqi Dinar as capable of only going up because that’s what pretty much all assets seem have done for decades now (I wish them luck). Everything is ultimately a USD story for me, and it’s even anecdotally confirmed among those who do or consider doing retirement in say Mexico or Thailand…even if few of us can claim to understand why (I have my own understanding but so what in the end? I am more likely wrong than right).

      And Japan is doing anything but destroying its currency. In fact, the BOJ is collecting meaningful assets from all over the world in exchange for its printed paper. Who is really winning there? The yen holder or the asset holder? Why is the Fed able to move US markets so violently with press releases and public announcements now? Because it prints more dollars or because it currently owns a much larger amount of assets for which the monetary value is also under Fed control? (Ergo the QE/QT controversy and confusion)

      The PBOC doesn’t even see the yuan as anything but a means to an end as it pressures spot oil as low as humanly possible by hook or by crook monetarily to modernize an economy that must support so many more people with relatively far fewer domestic assets.

      The answers are really right in front of our faces I think (and I hope…I don’t really want to live like Pink Floyd’s Echoes). The paper/asset relationship even extends to American citizenship for example, as it possesses strength yes because rights but also because of what those rights offer (e.g., gun ownership to protect oneself and one’s family from harm by others). So I think yen and USD matter ultimately because of the assets Japan and the US own as much as (maybe more than) any monetary theory thought train. For me, the national challenge is to bring intrinsic value back to people and labor to mend the circle that got shattered by the US “war” on borderline hyperinflation only 50 years ago. I think it can be done when we collectively recognize that asset value is ultimately imposition rather than derivation (gold, USD, SDR, crypto all evidence this imposition in currency)…but a bride from culture, worldview, and social systems need to be built first to get us consciously moving towards that also I think…

      Or maybe I’m just a gold bug at heart and am failing to see both the real problem and a cleaner answer for it..?

      • Yeah, trade itself is an imposition.

      • Harvey Cotton

        Would you rather hold Japanese Yen, or a 10-year Japanese Government Bond that yields a cool -0.02% because that is where a lot of Yen goes. The balance sheet of the Bank of Japan is larger than the G.D.P. of Japan, including over 440 TRILLION Yen in JGBs. Japanese public debt is twice national G.D.P, and there is a great deal of financial repression in order to finance this debt load. That the Yen yet remains a safe haven status is truly one of the great mysteries to me.

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