The Other Side of the Trade

Weak dollar = good for USA exporters and foreign consumers, bad for USA consumers.

Notice in a dollar policy, there are two sides to the trade:

Strong dollar = cheap imports into USA,  good for USA consumers, bad for USA exporters.

Either policy, there are two sides to the trade, within the USA.

Now, the other side of the trade, from the Chinese point of view:

Strong yuan = cheap imports into China,  good for Chinese consumers

Weak yuan = good for Chinese exporters and foreign consumers

So a weak yuan is good for USA consumers.  A strong yuan is bad for USA consumers.
So a weak yuan is bad for USA exporters.  A strong yuan is good for USA exporters.
So a weak yuan is bad for Chinese consumers.  A strong yuan is good for Chinese consumers
So a weak yuan is good for Chinese exporters.  A strong yuan is bad for Chinese exporters.

When the USA govt wants a stronger yuan, is wants by definition a weaker dollar.

If you are thoroughly confused, don't feel bad.  Almost everyone is.  The point to apprehend is whatever the policy is, there is the other side of the trade.  Any policy they pursue, one side wins, one side loses.  Within the USA, whatever the policy, one side loses, one side wins.  Between USA and China, one side wins and one side loses.  So if a politician says, "blah blah blah policy is good for America," really he means only a certain group of Americans benefit, he ones who are paying him for the policy.  The other side loses.

Now there is no such thing as a strong or weak dollar in a free market, these terms only make sense in regimes where the currency is manipulated by govt fiat.

The policy of the USA is to promote exports, since the idea is that builds national wealth.  It does not, more than any other economic activity, but here is how it works:  USA heavily subsidizes our top three exports (in dollar value): agriculture, machinery and petrochemicals (oil). (Yes, oil.) We taxpayers pay money out of our pockets to get the price low enough for these items to sell on the international market. The huge companies exporting these goods launder the profits overseas and avoid paying USA corporate taxes, and enough is recycled back to USA to pay off the politicians who vote for the subsidies that get the ball rolling in the first place.  Archer Daniels Midland is "supermarket to the world" because none other gets such fantastic subsidies.  So, in exporting from USA, one side of the trade is Archer Daniels Midland, supported by the taxpayer bailout of every transaction the company makes, and the Chinese buyers on the other side.

This policy takes money from a wide group of people and super-enriches a tiny group of people.  Big biz and big govt work together to this end.

If the Chinese do not inflate their currency quick enough to make Archer Daniels Midland prices, especially at the heavily subsidized rate, competitive worldwide, then the flow of funds to launder overseas and support USA politicians is interrupted.  We cannot have that.  So the people on the other side of the deal are condemned.

Today USA Govt policy is to get the Chinese to make the yuan stronger.  The other side of the trade is it would make the dollar weaker.  This policy is bad for most USA citizens.  It might be good for some.

Check out the graph in the above link.  There is a problem with a graph Output Vs Jobs: it is a dollar total representation, and does not break down content. Sure takes a lot less USA labor to make a Cadillac today than in 1972, that is now that 50% of the content is plug and play parts made overseas. The chart would reflect a $50,000 cadillac, of which $25,000 was made overseas (or some such.)  So we don't really have $50,000 added to the USA economy, if $25 of that $50 actually went overseas.
And sure, the results are we get more money for less labor, but it misses another point. Now that the labor is free of constructing cadillacs, in a free market they would have moved on to higher level maglev transport, or some other innovation. Because we manipulate currencies, and because we elect 3rd and 4th stringers to office as opposed to the communist party who can field first stringers everytime, we are stupidly fighting wars we have already lost and bailing out companies that have already failed.
As someone who has been import/export for the last 35 years, let me tell you, the game is two part: one avoid pointless USA regulation by moving production overseas; two, launder profits overseas to avoid USA pointless tax collection. When you want those jobs to return, roll back taxes and regulations to the last year you were happy with USA production. 1990? 1980? 1970? 1960?

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