Richard van Schaik

[Richard van Schaik @MaeliusNL]

@michaelxpettis This seems a strange disconnect - where does the money that subsidises manufacturing go other than wages and profits, fueling consumption? Further, the trade surplus brings in even more money than is spent, allowing yet more (internal) consumption, no?

[Richard van Schaik @MaeliusNL]

@BillyBaldwin @CalltoActivism Because those things do not unite you.
Oligarchs have convinced half the population that healthcare is a conspiracy, that education is a tool of the devil, that jobs would be everywhere were it not for immigrants, that affordable housing is communism, that equality is hatred etc.

[Richard van Schaik @MaeliusNL]

@michaelxpettis Isn't shifting the problem forward the only option? Stability does not exist in a system that requires constant growth, so a different element of growth will always have to be rotated in when one flags

[Richard van Schaik @MaeliusNL]

@MMTmacrotrader Possible, but it also accelerated the rate of wealth transfer between the extremely wealthy net creditors, and the already-impoverished debtors. An economy can only run so well with the majority of the population losing more and more spending power.

[Richard van Schaik @MaeliusNL]

@michaelxpettis That's how the economic system works. That it requires constantly expanding investment even if there is nothing to invest in is not the fault of the Chinese. We have passed the point of scarcity, and our society does not have a mechanism to handle that.

[Aaron Bastani @AaronBastani]

People will often say a politician should go to The Hague - sometimes with justification.

But this guy should genuinely be in prison. It shouldn’t even be a debate.

[Richard van Schaik @MaeliusNL]

@PatriciaNPino It will be incredibly dangerous if right wing parties are the ones to break the economic decline that has infected the west through neoclassical foolishness.

[Richard van Schaik @MaeliusNL]

@michaelxpettis @georgemagnus1 Didn't China argue for a Bancor style system with the IMFs SDR?

[sam @sam_d_1995]

@TheStalwart he’s gonna do the meme

[Richard van Schaik @MaeliusNL]

@wbmosler @SecchiLuigi Funnily enough Peter Schiff was saying the same... For rather different reasons

[Richard van Schaik @MaeliusNL]

@wbmosler @JustinWolfers Perhaps we can convince the world that bond markets are not all powerful *after* they have prevented worldwide trade war from escalating to depression-inducing levels

[Arnaud Bertrand @RnaudBertrand]

I unironically believe this 👇 is true, and I've been saying so for years.

The US, and much of the West, with people like Gordon Chang and frankly the large majority of "China experts" out there, have promoted a narrative on China that bears close to no relation with reality.

That doesn't hurt China, it hurts the West.

Trump's recent escalation of tariffs is but the latest example of this, and we actually know he listened to none other than Gordon Chang because he directly quoted him last week in a social media post.

Trump is acting out of the false belief, repeated non-stop on Fox News and various U.S. media, that China is extremely dependent on exports, especially to the U.S., but it's simply not true.

And even if their economy was indeed dependent on U.S. exports, the foundation of the legitimacy of the Communist Party of China isn't, as many wrongly believe, the economy, but the end of the century of humiliation.

Mao's first words at the founding political assembly of the PRC in 1949 weren't about economic growth, but rather: "Ours will no longer be a nation subject to insult and humiliation. We have stood up."

So the notion that Trump can bring China into submission by doing exactly this—insulting and humiliating them—based on the calculation that they'll prioritize money over national dignity, is extraordinarily misguided.

To the Chinese, the reference everyone has in mind here is the Opium War, a time that bears striking resemblance to today's context. Back then too, China had a large trade surplus with the West, the British Empire first and foremost.

The British, frustrated by the trade deficit, responded by forcing opium into Chinese markets—effectively using economic warfare to 'correct' the trade imbalance, much like Trump is trying to do now.

The Qing dynasty was weak and Britain won the Opium Wars, resulting in the 'unequal treaties' that became symbols of national humiliation. Ultimately it is this very context that enabled the Communist Party to grab power, and their entire founding narrative centers on never again allowing such treatment.

So if Trump wants to make a "deal" with China, the very last thing he should do is replay the historical script of Western powers attempting to dictate terms through economic warfare. China will obviously choose resistance over capitulation—even if the economic costs were to be absolutely enormous (and again in this case they wouldn't be).

A more effective approach would be to acknowledge China as an equal partner and focus on specific concerns in a respectful way, rather than attempting to force submission through unilateral bullying moves that not only are sure to achieve nothing, but are even wholly counter-productive.

There you go, very concretely, on the necessity of genuinely understanding who you're dealing with. The narratives promoted by the likes of Gordon Chang doesn't create leverage against China—it simply creates policy failures for America.

[Richard van Schaik @MaeliusNL]

@beautifullybunk @CapitalPatel @steve2bacon @NickWoolos There is no precedent besides 1929, and back then we didn't have global JIT supply chains and a service based economy or a massive federal gov providing ~25% of aggregate demand

[Richard van Schaik @MaeliusNL]

@Brad_Setser China can weather a few weeks of this. If the president doesn't reverse course by then the markets will drop another 20% and he'll get Luigi'd by the oligarch class. That or by some veteran that got fired from a federal job and who's portfolio got wrecked.

[Richard van Schaik @MaeliusNL]

@CapitalPatel @angelalynn723 1: USAID: 60-70% of ~$70b is spent in the US, like on farmers: https://t.co/Lg7zWBHFnz That will wipe out towns
2: IRS: 20K firings and audit restrictions will cost the US 100s of billions lost to fraud https://t.co/GsOLhG2JQA
3: 280k new unemployed https://t.co/eF2c0X6JZa

[Richard van Schaik @MaeliusNL]

@CapitalPatel @angelalynn723 And I'm getting distracted from the point by the idiotic lie. Because *it does not matter* how justified such cuts might be, there's a complex economic ecosystem built on that spending that suddenly collapses. Not taking those ripples into account will be disastrous

[Richard van Schaik @MaeliusNL]

@CapitalPatel @angelalynn723 'unproductive' is a measure of earnings per man hour.

You're right, guarding nuclear weapons does not generate much revenue.

But you already know your 'most of those cuts' line is a lie, because they show over and over they have no clue what they're cutting. Or failing to.

[Richard van Schaik @MaeliusNL]

@CapitalPatel @angelalynn723 This is somewhat rich from a DOGE fan. The ripple effects of tens of thousands of fired fed workers, and tens of billions of government spending they managed suddenly disappearing was already setting the country on course for a severe recession.
I just thought we had till ~june

[Richard van Schaik @MaeliusNL]

@CapitalPatel @steve2bacon @NickWoolos No, what you're going to see is an immediate depression. Starting this month.

Inflation spiking will paralyze the Fed so no rescue. Sudden massive unemployment, no investment or construction or anything. Everyone at all income levels tightening belts.

That's a dead economy

[Richard van Schaik @MaeliusNL]

@michaelxpettis The wages are the key. There is no mechanism for rising productivity to lead to higher wages - it's the opposite. With fewer workers needed the competition for those jobs rises and wages fall...
This has been the prime driver of western stagnation for 40 years