Comments on: Fed “Spitting in the Wind”?

By: odograph

odograph — Thu, 27 Nov 2008 01:37:01 +0000

I heard that waste cardboard exports from the US to China were down. The painful part of that statistic is the nature of the trade: they sell us stuff, we unwrap it, recycle the cardboard, and they use it to wrap more stuff for us.

(Scrap in general is a big export isn't it? Probably some machine tools, still, I hope.)

By: Dave Schuler

Dave Schuler — Wed, 26 Nov 2008 23:54:37 +0000

China imports as little from us as they can get away with. Rather than use the dollars they get when we buy goods from them to buy from us, they're using them to buy T-bills or just sitting on the cash.

By: Steve Verdon

Steve Verdon — Wed, 26 Nov 2008 23:45:32 +0000

Well Matt to the extent that it stimulated exports from the U.S. it would help, but I believe we import more from China than we export to China, so I'm not sure how much it would help. Dave is more familiar with China issues, so your best bet is to wait for him to reply or see if he writes anything on his blog, the Glittering Eye (just click on his name up above).

By: another matt

another matt — Wed, 26 Nov 2008 22:11:46 +0000

I know next to nothing about economics. But in a global economy, would jump starting the Chinese economy eventually trickle back to the U.S. (this is a real question, not a jab at the original comment)?

By: Scott Swank

Scott Swank — Wed, 26 Nov 2008 20:55:32 +0000

But they might be going to college and still want to have access to student loans. Or maybe they're in good enough shape to buy a car, and hence might want access to an auto loan.

You are broadly correct, but that does not mean that no one wants credit.

By: Dave Schuler

Dave Schuler — Wed, 26 Nov 2008 19:57:46 +0000

One of the weird things about the strategy is that it's more likely to jump-start the Chinese economy than ours. Unless they think that people can be induced into buying another house.