Ordinary Gweilo

4 responses to “Don’t understand”

1. 

   Conrad

   May 31, 2004

   The money lent to Thailand came from HK government collections.
   Those collections include my salaries tax payments.
   The money I pay in taxes permanently leaves my account and is depositited in the government’s.
   The HK government took that money and sent it to Thailand.
   Thailand repaid that money back to the HK government.
   Now, here’s the part you seem to have missed, the HK government did not then repay that money to me.
   Every dollar the government spends comes from someone’s pocket. I, for one, generally prefer that the money I earn stay in my pocket. If Thailand wants to borrow my money, they can bloody well ask me or my bank. I’d prefer that they not have my government expropriate my cash for their benefit.
   Let’s say I were to forceably take $1,000 from you, which I then lend to Simon. Are you going to feel okay about being permanently releaved of your money by the fact Simon later pays it back to me with interest?
   I suspect that you’d rather keep your money. But, if I’m wrong and you are happy with the transaction proposed above, please let me know and I’ll be by this afternoon to pick up the cash.
   And, speaking of economics, I really should start charging tuition for these tutorials:

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2. 

   Chris

   May 31, 2004

   I thought perhaps you were objecting to the government’s decision to lend this money to the Thai government rather than the US government (by buying US government bonds).
   However, clearly you have a more fundamental issue with the government’s policy of building up reserves of gold and foreign currency – rather than leaving the money with taxpayers to spend as they choose.
   OK, that’s fine: I understand that. To a certain extent I might even agree with you – most Asian countries do have excessively high reserves, and it is certainly odd that Asia governments take money out of their own economies and pump it into the US economy to fund their budget deficit (though at least US consumers spend some of that money on imports from Asia).
   However, the amount of money lent to the Thai government was fairly trivial in the overall scheme of things, and the decision to lend the money was made in 1997, for goodness sake.

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3. 

   Conrad

   May 31, 2004

   Each asinine expenditure is generally “trivial in the overall scheme of things” but, as US Senator Everett Dirksen once observed “a billion here and a billion there, and pretty soon you’re talking real money.”

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4. 

   Chris

   May 31, 2004

   Expenditure? No-one bought anything.
   My point, in case it’s not obvious, is that it does far more damage to the economy to have billions tied up in foreign currency and US Treasury Bills than it does to lend a few hundred million to Thailand. The problem, however, is the size of the reserves, not the way that this money is used.

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