Journalism is Dead

[Strange Brew]

I'm pretty against profligate government spending, but do you really think that government spending (vs supply chain disruptions and shortages of goods) was what forced the fed to react?

In my line of work I deal with current and forward looking projections for a lot of commodity costs, and everything is (or at least was) up astronomically: steel, aluminum, iemi-conductors, nearly all food ingredients, etc. It's hard for me to tie that to government spending rather than a highly (perhaps dangerously) interconnected global supply chain that was severely disrupted. Goods became scarce and the people that had money were willing to pay more to get what they want.

I think that what we are seeing are some of the consequences of an over-reliance on China to produce critical goods, not just for the United States but globally as well. It's the flip side to $200 flat screen TVs. When China shuts down a major port because of 200 COVID cases, the bullwhip effect is massive.

I think it’s both and our recent domestic energy policies are also to blame for inflation and the supply chain issues.

Yes, China’s COVID/trade policies are to blame as well. Our energy policy also made Russia wealthy enough to invade Ukraine and will cause problems in Europe this winter.

[paulxu]

Here's an article about the US dollar:

https://www.cnn.com/2022/09/21/inves...ion/index.html

[boozehound]

I just posted examples.....there are scores more like them. The reality is when countries like China, Saudi Arabia, Iran start trading with currency other than the USD, it can not be viewed as a positive.

Why did you choose those examples, then? You started your post by acknowledging that your knowledge of global finance is pretty week, then posted some pretty weak sources as corroboration for a relatively controversial doom and gloom view of the US Dollar (which is arguably stronger than its ever been). If you have limited knowledge of global finance, how did you arrive at your conclusion? Articles from Indian news sources written in broken English, or is there another source of information?

Here are articles from Charles Schwab, Goldman Sachs, and Reuters highlighting the relative strength of the dollar.

https://www.schwab.com/learn/story/s...an-it-continue

https://www.goldmansachs.com/insight...oo-strong.html

https://www.reuters.com/markets/euro...ar-2022-09-01/

There are plenty of actual problems to worry about, but I struggle to see how the decline of the dollar is one of those problems. At least not for a long time.

Moving past that: What solution would you propose to keep countries like China, Iran, and Saudi Arabia from trading in other currencies?

[boozehound]

I think it’s both and our recent domestic energy policies are also to blame for inflation and the supply chain issues.

Yes, China’s COVID/trade policies are to blame as well. Our energy policy also made Russia wealthy enough to invade Ukraine and will cause problems in Europe this winter.

Specifically what energy policies are you referencing and how would they have prevented inflation and (especially) supply chain issues?

[Strange Brew]

Specifically what energy policies are you referencing and how would they have prevented inflation and (especially) supply chain issues?

Shutting down of pipelines and the extreme focus solely on non fossil fuel sources. Drives up the cost on energy, making everything more expensive to produce.

Higher gas and diesel costs makes anything the moves in the SC more expensive to do so. Which creates supply issues.

[boozehound]

Shutting down of pipelines and the extreme focus solely on non fossil fuel sources. Drives up the cost on energy, making everything more expensive to produce.

Higher gas and diesel costs makes anything the moves in the SC more expensive to do so. Which creates supply issues.

IMO this is a gross oversimplification that is misleading in that it picks one (relatively small) component and places outsized blame.

What pipelines did we shut down, how much oil and gas did they carry, and how much did that impact global energy prices? Are you talking about the permit for the Keystone XL pipeline being revoked or are there other major pipelines that we shut down that I'm not aware of?

Total global oil production is estimated at 100MM barrels per day and the Keystone XL pipeline was intended to carry about 800K barrels per day, which is less than a 10% increase in production even if it was fully operational. Even if the revocation of the permit resulted on 800K fewer barrels of oil produced (which is not the case) it's hard to imagine that the loss of less than a percentage of production caused the types of issues we are seeing today.

I'm not against domestic energy production, or the Keystone XL pipeline by the way. I'm against overly simplistic 'drive by' explanations to complex problems offered without appropriate context.

The supply chain issues existed before energy prices had increased. In fact, when the global supply chain issues started driving prices up fuel and energy were relatively cheap thanks to blunted demand due to COVID shutdowns at home and abroad. Then the savings rate actually surged in the United States for largely the same reasons, and we all were willing to pay more for good because we weren't spending money on vacations, restaurants, etc. Then, and this a big one, Chinese shipping

I'm responsible for the commercial (Go-to-market) strategy for a pretty sizeable business unit in the consumer goods industry so I got an inside look at how much China disrupted (and continues to disrupt) the supply chain. Like everyone else we had a just-in-time supply chain, so when it started taking months to get ships out of Chinese ports and into port in CA it disrupted nearly every facet of our business. My supply chain people were contracting tanker planes to transport key liquid ingredients from China to the US at exorbitant fees, that then got passed on to the consumer.

The COVID stimulus money domestically didn't help either, because when the ships finally arrived the ports didn't have workers to unload them, or short haul truckers to take the shipping containers away from the port.

It's a pretty complex global situation that energy costs played a pretty small role in, IMO. At least until Russia invaded Ukraine, but US Energy policy (at least in the short term) has pretty limited ability to influence that.

[Xuperman]

If you have limited knowledge of global finance, how did you arrive at your conclusion?

Moving past that: What solution would you propose to keep countries like China, Iran, and Saudi Arabia from trading in other currencies?

Well it's definitely not a supper table issue at all, but it's pretty simple. I happened catch a discussion on the radio about the subject....total doom and gloom. It peaked my curiosity, so I used the Google machine and typed in "US dollar in decline". Poof, all kinds of stuff popped up. There is no question that a lot of folks reputable enough to get articles published fear the direction the USD is heading.....I just tend to see it mostly like they do. Going from the USD accounting for 70% of global economy spending to 59% tends to back it up.

Basically, common sense says that the out of control government spending this century, that now has the Federal Debt over 30 TRILLION and rising, tells me the USD is being de-valued.....no question. At what number of debt, coupled with the USDT "printing money", does the USD collapse?

As far as the "trading in other currencies" question. Elect fiscally responsible politicians to hopefully reverse, or at least not continue, the above. Also, apparently, some experts believe that our penchant to recklessly "weaponize the USD" thru sanctions could be drawn back somewhat.

[94GRAD]

Well it's definitely not a supper table issue at all, but it's pretty simple. I happened catch a discussion on the radio about the subject....total doom and gloom. It peaked my curiosity, so I used the Google machine and typed in "US dollar in decline". Poof, all kinds of stuff popped up. There is no question that a lot of folks reputable enough to get articles published fear the direction the USD is heading.....I just tend to see it mostly like they do. Going from the USD accounting for 70% of global economy spending to 59% tends to back it up.

Basically, common sense says that the out of control government spending this century, that now has the Federal Debt over 30 TRILLION and rising, tells me the USD is being de-valued.....no question. At what number of debt, coupled with the USDT "printing money", does the USD collapse?

As far as the "trading in other currencies" question. Elect fiscally responsible politicians to hopefully reverse, at least not continue, the above. Also, apparently, some experts believe that our penchant to recklessly "weaponize the USD" thru sanctions could be drawn back somewhat.

Now type in "Dollar at all-time high" and see what pops up on the Google machine.

[Xuperman]

Specifically what energy policies are you referencing and how would they have prevented inflation and (especially) supply chain issues?

So are you trying to say that our energy independence under Trump, is no different than Biden's day 1 energy policy? This Administration is aggressively implementing Obama's "Fundamentally Transform America" war on the fossil fuel industry. This leads to the political motivated taping of our nations petroleum reserves and begging other countries to do the "green energy sins" of drilling for more oil.

[Xuperman]

Now type in "Dollar at all-time high" and see what pops up on the Google machine.

I did, but the reality of 30 TRILLION+ debt and the progressive movement running rampant, doesn't give me a warm cozy feeling.