"As opposed to what? Somebody else trading 15 hours of THEIR life simply so YOU can live a healthy life?"
"Why should money I earn be taxed and used to pay for benefits for you?"
Uh, if you pay for your own insurance and file a claim, where do you think your insurance company acquires the money to pay for your claim? Do you honestly believe they simply pay you with the money you already gave them?
No matter what insurance you pay into, you *will* be paying for somebody else's benefit, as they will be paying for your benefit as well. That is the *very nature* of insurance.
If you *still* feel different, you should put your money where your mouth is and cancel all your health insurance policies and simply put those monthly payments into a self-guided investment account.
Sure, Japan can try to sell the USD to buy back yen, but not that many countries hold that much yen. Tell me, who is going to sell yen back to Japan?
More than $4 trillion dollars worth of currency is traded every single business day. There is absolutely no problem finding someone to sell Yen, especially since Yen is the Carry Trade currency of choice, the only question is at what price. The fact that you made such a statement tells me that you really don't know how money, or foreign exchange markets operate.
They can't buy oil from Saudi Arabia in yen. So Saudi Arabia has very little yen to sell back to them.
Again, you're making the gross misunderstanding that the trade of commodities *settles* in the currency they're *priced* in, when most do not. They are almost always settled in the traders' native currency (on both sides of the deal).
I can't even respond to anything else you've written because it's painfully obvious that what you know of finance comes from news articles, not from studying it in depth, nor does it come from any real or meaningful experience. You think the article (about China) still upholds your position because you've simply picked and chosen what you've wanted to see in it, and simply ignored everything else in it and and everything else I've written because you simply repeat your *very* incorrect understanding of how financial markets work.
You keep asking me to point out where you're wrong, and when I do you simply ignore it and repeat yourself.
Reading your arguments is like... reading an alchemists reasoning how adding fire to earth and a dash of water should produce another elemental form.
Instead of picking and choosing what to see, ignoring everything else, and repeating yourself, (which works very well with religion but falls flat with science) you really need to pick up a book (the one I suggested is *very* good) and gain a level of understanding that's beyond what you've currently pieced together from what bits you've read online. Again, this is painfully obvious from the 3 or 4 posts that you've made (actually, fewer... because you simply repeated yourself).
I would go so far as to say that you're simply sticking to what you currently believe because you *really* don't like to be wrong. Scientists on the other hand, *LOVE* to be wrong. Why? Because scientists love to be right!
So seriously, buy that used text and study it. Ditch this financial alchemy and gain financial science.
Although commodities are *priced* in USD, their trade does not *only* involve USD. What you're saying would be true if USD were the *only* currency in the world.
The world is *not* Zimbabwe, because all the central banks in the world are NOT inflating their currencies at the printing press.
For you analogy to be comparable:
the *U.S.* is Zimbabwe,
the Fed is Mugabe,
U.S. citizens are "the rest of Zimbabwe",
the rest of the world is the rest of the world.
You're rational, but it's clear that there is some kind of misunderstanding of how international trade and finance operate.
- Devaluation of USD is *not* fine because although they are *priced* in USD they are produced and sold by foreigners who want to be paid in their *own currency*. This means the Japanese take the USD they received on the sale of their cars and Nintendo Wii's and sell them to take home Yen. The Koreans take the USD they received on the sale of their cell phones and LCD tv's and sell them to take home Won. The Vietnamese sell the USD they receive from the sale of their rice to take home Dong.
Although commodities are *priced* in USD, the trade ends with somebody selling their USD for their own native currency.
- World currencies do not inflate when USD inflates. Inflation of a currency is *directly* caused by the over-supply of that *particular* currency. If the USD inflates by the printing press, Thailand's Baht will rise in relation to USD, because the supply of Baht will be lower than USD on a relative scale.
- The world is not like Zimbabwe, because supply of world currencies are not being inflated by the printing press, as is being planned in the U.S. at the moment.
For a comprehensive peek at what China is actually thinking and saying *right now*:
Pay special attention to the second half of the article.
Also, google "fiscal policy", "monetary policy", and "bond pricing"... and learn how a bond's fair market value changes with interest rate increases and decreases.
For an even better source, one that clearly outlines and explains the links between currencies, government debt, international trade, government bonds, the Fed, interest rates, and commodity prices... buy a used copy of the Economics portion of the CFA Level 1 series of texts (no older than 2007) off ebay or craigslist. I think a guy like you will absorb the material in no time flat and gain a new level of understanding of how international trade and finance operates.
I would say "you are fucked" because you (or rather, the U.S. government) depends on not only a) entities buying your treasury securities now, but also b) entities buying your treasury in the future. The first wave of baby boomers will be eligible for social security and medicare benefits in the next 16 to 24 months, there is no way in hell the U.S. will be able to fund these obligations in the state the U.S. economy is currently in. This means they'll have to borrow more money in the future.
If the U.S. behaves like they're still top dog and enact policies that devalues all the money they owe to everybody else in the world, guess what, nobody's going to be in line to buy those treasuries when the U.S. needs to sell them the most.
They'd be fucked even more because the U.S. simply has no manufacturing industry. Nobody in the U.S. would even be able to buy a single computer, television set, fax machine, cellphone, or even dog food because companies need to borrow money to buy from suppliers overseas. With savings rates in negative territory, there is no way in hell anybody would lend the U.S. any money whatsoever if they adopt this "it's my currency and I'll inflate it if I want to... you'll get screwed but not me" attitude.
Right now, the U.S. has to convince the world to buy $800B of U.S. government debt. They can't even do *that*, which is why they're selling 30-year bonds to the Fed, because the Fed is the only entity willing to buy them. This action by the Fed *will* inflate the USD, because they simply create the money out of thin air. If China doesn't want to be made an ass by the people who owe them billions, they simply have to sell. The U.S. government will then have to convince the world to buy... not $800B of government debt... but $1.5 trillion. This action alone will *flood* the market with USD and push it down to unbelievable levels. Sure, the value of government debt will decrease because of the massive inflation, but *everything* in America will increase in price.
Why? Because America doesn't make anything anymore. Everything needs to be imported, and importing means paying foreign suppliers in their own currency. So good luck convincing foreign suppliers to accept worthless USD as payment. Commodity prices will go through the roof because they're all price in USD and consumed everywhere else in the world.
In summary, decreasing the purchasing power of the USD is *not* the solution to any of the U.S.'s current problems. Pissing off the largest debtor by inflating the currency may save you a couple hundred billion at first, but you'll pay it all back later (and then some) when you're forced import everything you need... at now-higher prices.
And it's not just China. Do you think if a massive sell-off starts, central banks and investment institutions around the world will sit idly by and wait to be the last one holding depreciating bonds that nobody wants? No way. If you thought the price of oil dropped quickly, it'll be nothing compared to how quick and how far the USD will fall once the selling starts and traders begin short-selling treasuries and USD.
I don't believe for a second that you're stupid, because you fully understand all the immediate implications.
You just need to think ahead a couple steps more.
I would think this problem would be solved if the required ratio were set to equal the growth rate of new users.
Really, the economics of seeding ratios parallels those of interest rates and money supply.
Worse for China - it's not like China can throw the USA into prison, or seize and liquidate the USA's assets.
Anyway if the USA wants to, it can ask the Federal Reserve to wave its magic wand and create USD out of nowhere to pay China. After all the loans are in US Dollars
You're missing something here.
BOTH China and the Treasury have the capability of selling $700B in U.S. Treasury securities.
Right now, BOTH entities have gigantic red buttons labeled "SELL", and don't for a second think that China won't push their button when the Treasury pushes theirs.
With interest rates as low as they are now, the fair market value of the bonds China's holding onto now are at their maximum. Their market values can only go down from here, especially if you realize that once the Treasury starts selling those bonds to the Fed, currently-held bonds will depreciate with the USD.
So to complete your analogy,
If I borrow $100K, the bank controls you.
If you borrow $1 trillion, you control the bank.
If the bank sells your debt to a hundred thousand people, you are fucked.
"...divide the Joes into two groups: those who can afford the pricier version, and those who cannot. If you only have the pricier version, you lose the latter group. If you only have the cheaper version, you lose part of your profits from the former group. By having both, you improve your profits."
and what I said
"differentiate their output so as to take away as much consumer surplus possible under the demand curve"
You described the mechanism, I summarized the effect.
"That's not how demand curves work. Not at all."
That's exactly how demand curves work.
The textbook says, if a company is in a monopoly position, the best way to maximize revenues is for them to differentiate their output so as to take away as much consumer surplus possible under the demand curve.
So, of course, they differentiate their product.
What they've failed to understand is this factoid completely relies on the consumer's ability to differentiate between the products! If 100,000 Joe Schmoes don't know the difference between Home Basic and Home Premium, then guess what, revenue from the two will just be the average prices between the two as Joe Schmoes around the world toss coins to decide which to buy. Some will buy the "better" (more expensive) one because they can't tell but want to "be safe", while others will get the cheaper one because they can't tell and want to save some money. MS will have been better off just selling an all-encompassing "Home" version at a price set at the averages of the Starter and two Home versions and not incur the overhead costs of differentiating the two versions in the first place.
The people who can differentiate between Start, Home Basic and Home Premium won't bother with either, and the people who can't won't care which one they get.
I mean, three different versions for non-geeks?? Of all products to differentiate, they choose the one aimed at the customer demographic who are least equipped to make an informed decision between all options.
Geez, God help you Microsoft.
Nobody will know why something so large and simple was created, what it's good for, how it's supposed to be used. It will face complete abandonment and isolation, only to be admired and appreciated by a handful of people once a year.
I keed I keed!
I wonder if this is the evolutionary benefit to having so much 'junk' dna; to absorb copy errors.