Comments on: Grow the Economy, Print Bigger Currency http://cupofcha.com/2009/06/06/grow-the-economy-print-bigger-currency.html This is China Thu, 29 Jul 2010 19:05:09 +0000 hourly 1 http://wordpress.org/?v=3.0 By: JohnR http://cupofcha.com/2009/06/06/grow-the-economy-print-bigger-currency.html/comment-page-1#comment-3538 JohnR Wed, 24 Jun 2009 00:10:17 +0000 http://cupofcha.com/?p=460#comment-3538 Hey Josh, I noticed China Daily newspaper picked up this blog entry and published it a few days ago in the column "sweet and sour". It was in the "sour" column. It seems a rather American idea that consumption is how to grow an economy. Using an analogy, consumption of fat burgers everyday is great for building a much bigger fatter flabby body, but is it really the body you want? Big is not everything, healthy and strong is also important. Sensible controlled consumption balanced with exercise is required to have a healthy body. To connect the analogy, wise spending of money (durable goods, appreciating assets, infrastructure, public works) should be balanced with savings rather than spending on credit increasing debt. Credit card spending on computers and on non-durable, depreciating goods, is like eating fat burgers every day. Makes you fat, higher GDP, but not stronger. (GDP measurements don't discriminate on good vs bad consumption, all consumption is assumed to be good and increases the GDP). China is doing a lot of things right. Lots of savings, not much use of credit cards, these are all good things. When you are in China thinking twice about buying a computer with an Intel or AMD chip inside (both from US), with Nvidia / ATI graphics chip (US or US), plus Broadcom Wifi/LAN chip (US) plus Samsung/Kingston/Corsair memory chips (Korea/US/US) etc, which countries does it hurt most? (perhaps the ASUS/VIA motherboard is designed in Taiwan and if you are lucky, manufactured in Shenzhen). When you buy some cheap $5 or $10 piece of crap plastic nicknack from Walmart without thinking twice because it's a small denomination note (and the price of a cup of coffee), very good chance some guy in China makes a bit more money. John Hey Josh,

I noticed China Daily newspaper picked up this blog entry and published it a few days ago in the column “sweet and sour”. It was in the “sour” column.

It seems a rather American idea that consumption is how to grow an economy. Using an analogy, consumption of fat burgers everyday is great for building a much bigger fatter flabby body, but is it really the body you want? Big is not everything, healthy and strong is also important. Sensible controlled consumption balanced with exercise is required to have a healthy body.

To connect the analogy, wise spending of money (durable goods, appreciating assets, infrastructure, public works) should be balanced with savings rather than spending on credit increasing debt. Credit card spending on computers and on non-durable, depreciating goods, is like eating fat burgers every day. Makes you fat, higher GDP, but not stronger. (GDP measurements don’t discriminate on good vs bad consumption, all consumption is assumed to be good and increases the GDP).

China is doing a lot of things right. Lots of savings, not much use of credit cards, these are all good things. When you are in China thinking twice about buying a computer with an Intel or AMD chip inside (both from US), with Nvidia / ATI graphics chip (US or US), plus Broadcom Wifi/LAN chip (US) plus Samsung/Kingston/Corsair memory chips (Korea/US/US) etc, which countries does it hurt most? (perhaps the ASUS/VIA motherboard is designed in Taiwan and if you are lucky, manufactured in Shenzhen).

When you buy some cheap $5 or $10 piece of crap plastic nicknack from Walmart without thinking twice because it’s a small denomination note (and the price of a cup of coffee), very good chance some guy in China makes a bit more money.

John

]]> By: BlueUnderSun http://cupofcha.com/2009/06/06/grow-the-economy-print-bigger-currency.html/comment-page-1#comment-3508 BlueUnderSun Tue, 09 Jun 2009 21:18:42 +0000 http://cupofcha.com/?p=460#comment-3508 hehe, it never occurs me that we actually need a larger bill. But everytime when I get back to China, I am amazed how much cash my sister has to put in her wallet. In UK, I never had more than £20 in my wallet, since I can get cash very easily anywhere. There is a £50 notes, but I never see anyone uses it in UK. hehe, it never occurs me that we actually need a larger bill. But everytime when I get back to China, I am amazed how much cash my sister has to put in her wallet. In UK, I never had more than £20 in my wallet, since I can get cash very easily anywhere. There is a £50 notes, but I never see anyone uses it in UK.

]]> By: Jeremy http://cupofcha.com/2009/06/06/grow-the-economy-print-bigger-currency.html/comment-page-1#comment-3500 Jeremy Sat, 06 Jun 2009 03:22:15 +0000 http://cupofcha.com/?p=460#comment-3500 It's savings that has led to China's massive growth over the years, even if too much of it has been funneled to America as loans. And I think it might shake the cognitive dissonance of one too many people who realize their money has declined to a tiny fraction of its original value if they start putting out 1,000 Yuan bills. Imagine if they put out 10,000 Yuan bills - a 10,000 Yuan household used to be the equivalent of a millionaire as we all know. It could be a big mistake to remove one of the few restraints keeping China's central bank from monetizing ever greater amounts of money. It’s savings that has led to China’s massive growth over the years, even if too much of it has been funneled to America as loans.

And I think it might shake the cognitive dissonance of one too many people who realize their money has declined to a tiny fraction of its original value if they start putting out 1,000 Yuan bills.

Imagine if they put out 10,000 Yuan bills – a 10,000 Yuan household used to be the equivalent of a millionaire as we all know.

It could be a big mistake to remove one of the few restraints keeping China’s central bank from monetizing ever greater amounts of money.

]]> By: Bill http://cupofcha.com/2009/06/06/grow-the-economy-print-bigger-currency.html/comment-page-1#comment-3499 Bill Fri, 05 Jun 2009 23:51:34 +0000 http://cupofcha.com/?p=460#comment-3499 Watch what you wish for. They may print a bigger currency, as in size of the paper, but not the value, just to ensure that your monthly salary won't fit the money clip. Watch what you wish for. They may print a bigger currency, as in size of the paper, but not the value, just to ensure that your monthly salary won’t fit the money clip.

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