Nintendo sues the US government over "unlawful" Trump-era tariffs

[Gravitytr1]

Ahh the win win plan. Continue selling products in the US and also sue the US for more money.

If they really cared they would have stopped business in the US until the tariffs were mutually beneficial. But instead they just see it as an opportunity for more income.

And either way, users are the ones paying both sides to fight each other. While everything more important than gaming, like infrastructure, corruption justice, healthcare, electric bills, smog etc is still being rekt

 

[ScottSoapbox]

Basic macroeconomics. US bonds aren't sold in yuan, they're sold in dollars. The CCP doesn't print US dollars -- it can only get them by selling something to the US. If China sells $1T in goods to the US, then buys $1T in US goods in exchange (I.e. a zero net trade balance), then it has no dollars left over with which to purchase US debt. Or to purchase US land, US companies, nor anything else.

The books must always balance. Trade imbalances create currency surpluses on one side, deficits on the other. When China uses its US currency surplus to purchase US land, debt, and corporations, their ownership in the US increases. If and when there's no longer anything left they wish to purchase, that surplus starts rising, causing a rapid depreciation of the dollar vs. the yuan, which not only raises consumer prices as much as tariffs, but continues unabated until the trade imbalance vanishes.

Basic life skills: there are these things called money markets (think stock market) and money exchanges (think bank with stacks of various currency). Both let you trade currency for currency. The market one is how the news reports the "strength" of one currency against another.

It's amazing how often the propaganda teaching just skips over the inconvenient bits. I recommend Basic Economics by Thomas Sowell. My 12 year old is currently reading through it so it's quite accessible while being a very good primer.

 

[Endymio]

Basic life skills: there are these things called money markets (think stock market) and money exchanges (think bank with stacks of various currency). Both let you trade currency for currency. The market one is how the news reports the "strength" of one currency against another.

If you believe this invalidates my earlier statement, you fail to understand the basics of currency market operation. Effectively, every currency trader is placing a bet on the future relative demand of two currency vs each other. If they bet correctly, they make a profit ... if not, they lose their shirts.

This market is no different than the futures market for any commodity. Just as oil traders do not manufacture or consume petroleum, currency traders cannot produce dollars or yuan on demand: the ultimate source of their trades are the monies spent between each nation to buy and sell goods and services. And despite what youi believe, these markets don't exert long-term control over exchange rates. In a hypothetical situation where every single trader wrongly guesses that the dollar will strengthen sharply against the yuan, the dollar will indeed rise briefly -- but when the contracts come due and cannot be fulfilled, all those traders go bankrupt and the exchange market collapses.

There's a term for why this doesn't happen: convergence. Convergence exerted so much force during the Covid oil supply imbalance, that in April 2020, oil prices briefly went negative -- traders were essentially forced to pay people to take delivery of free barrels of oil. Weeks earlier, traders had wrongly bet on how much oil would be demanded, and many went bankrupt. Long-term, convergence requires the future price to meet the spot price, and the spot price equalizes instantaneous supply and demand.

At this point, you'll likely protest, 'but exchange rates affect demand'. True. But if a change in exchange rates isn't driven by underlying factors (the "wrong guess" I mentioned earlier) the demand effect is being subsidized by money from trader's pockets. As in April 2020 when negative oil prices briefly forced the market to buy more than was actually consumed, that was financed through hundreds of billions in market losses-- and the demand imbalance finally corrected by the bankruptcy of more than 100 suppliers.

I recommend Basic Economics by Thomas Sowell. My 12 year old is currently reading through it

As much as I love popular economics authors like Sowell, Hazlitt, Gilder, and others, you really need meatier material to gain a real understanding of markets. Might I suggest the indomitable Milton Friedman, of whom I own many works?

 

[ScottSoapbox]

If you believe this invalidates my earlier statement, you fail to understand the basics of currency market operation. Effectively, every currency trader is placing a bet on the future relative demand of two currency vs each other. If they bet correctly, they make a profit ... if not, they lose their shirts.

This market is no different than the futures market for any commodity. Just as oil traders do not manufacture or consume petroleum, currency traders cannot produce dollars or yuan on demand: the ultimate source of their trades are the monies spent between each nation to buy and sell goods and services. And despite what youi believe, these markets don't exert long-term control over exchange rates. In a hypothetical situation where every single trader wrongly guesses that the dollar will strengthen sharply against the yuan, the dollar will indeed rise briefly -- but when the contracts come due and cannot be fulfilled, all those traders go bankrupt and the exchange market collapses.

There's a term for why this doesn't happen: convergence. Convergence exerted so much force during the Covid oil supply imbalance, that in April 2020, oil prices briefly went negative -- traders were essentially forced to pay people to take delivery of free barrels of oil. Weeks earlier, traders had wrongly bet on how much oil would be demanded, and many went bankrupt. Long-term, convergence requires the future price to meet the spot price, and the spot price equalizes instantaneous supply and demand.

At this point, you'll likely protest, 'but exchange rates affect demand'. True. But if a change in exchange rates isn't driven by underlying factors (the "wrong guess" I mentioned earlier) the demand effect is being subsidized by money from trader's pockets. As in April 2020 when negative oil prices briefly forced the market to buy more than was actually consumed, that was financed through hundreds of billions in market losses-- and the demand imbalance finally corrected by the bankruptcy of more than 100 suppliers.


As much as I love popular economics authors like Sowell, Hazlitt, Gilder, and others, you really need meatier material to gain a real understanding of markets. Might I suggest the indomitable Milton Friedman, of whom I own many works?

While that's a nice red herring detour on why people trade currency for profit, I was addressing your statement:

US bonds aren't sold in yuan, they're sold in dollars. The CCP doesn't print US dollars -- it can only get them by selling something to the US.

Which is obviously false, and therefore is not a reason to worry about trade imbalances.

I like Milton Friedman and even use his pencil example one of my university lectures, but I'm more of a Ludwig von Mises, Friedrich Hayek, and Murray Rothbard fan myself. But Sowell's primer is excellent for learning the foundations of economics.

 

[Endymio]

I was addressing your statement:

US bonds aren't sold in yuan, they're sold in dollars. The CCP doesn't print US dollars -- it can only get them by selling something to the US.

Which is obviously false, and therefore is not a reason to worry about trade imbalances.

Both my statements are correct. The latter is often assumed otherwise -- as in your confusion in how currency markets work -- but only because so many 'middle-man' routes exist to obtaining the currency of a foreign nation. But ultimately, you cannot obtain dollars without having sold products or services to the US ... or indirectly, from someone who did.

I'm glad you admire the so-underappreciated Sowell. But if you quote the excerpt from his book which misled you to believe dollars have other sources, perhaps we can clear up the confusion.

 

[ScottSoapbox]

Both my statements are correct. The latter is often assumed otherwise -- as in your confusion in how currency markets work -- but only because so many 'middle-man' routes exist to obtaining the currency of a foreign nation. But ultimately, you cannot obtain dollars without having sold products or services to the US ... or indirectly, from someone who did.

I'm glad you admire the so-underappreciated Sowell. But if you quote the excerpt from his book which misled you to believe dollars have other sources, perhaps we can clear up the confusion.

But indirectly, from someone who did is the whole point. You act like we are living in a barter system. Anyone can trade anything to anyone easily. It's not even real currency moving most of the time but ones and zeros.