Author Topic: Begun the global currency war has?  (Read 6228 times)

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Offline Libertas

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Begun the global currency war has?
« on: May 14, 2014, 08:07:22 AM »
http://www.zerohedge.com/news/2014-05-13/russia-holds-de-dollarization-meeting-china-iran-willing-drop-usd-bilateral-trade

In a tit-for-tat escalation, where this ends...well, there could be smoke and fire, OK?

Eventually...

Can the Russian economy absorb the trade goods once destined for America? 

Can the American's find cheap goods elsewhere or are high-cost goods in their future?

Who is going to be dancing with who?

What will happen in the PM markets?

Will all currencies be exposed as worthless?

I don't think people fully understand the impacts of going down any road that severs the order of things...even if the order of things is screwed up, flawed and destined for failure...

We might find out though, and sooner than we may like...
« Last Edit: February 20, 2015, 06:24:35 AM by Libertas »
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Offline Weisshaupt

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Re: Begun the global currency war has?
« Reply #1 on: May 14, 2014, 01:54:07 PM »

Can the Russian economy aborb the trade goods once destined for America? 


No, but then neither can America.  Remember that China started  loaning us money so we could  buy their goods with it, probably thinking they could keep our recession from hitting them too hard if they help us and/or make their own numbers looks better internally - like our Dollar swaps are keeping Europe afloat - a QE via incestuous central bank lends to each other. But now everyone is caught in the same production death spiral.
China does have the population to become consumers, but for that they need a middle class - and they have been allowing that- to a point.  But the development of a middle class also will come with political problems for them..

Can the American's find cheap goods elsewhere or are high-cost goods in their future?

Americans devalued their own labor. Since the dollar largely represents the value each America produces,  prints a whole bunch of them results in their labor purchasing less from overseas.  High/Low costs are relative terms - relative mostly to what an average american earns. Our govt is obviously  as hell bent on destroying our middle class as china seems to  be on fostering one. Obamacare and other regulation are ensuring that wages stay stagnant while input costs such as fuel are increasing - along with the inflation stealing money from bank accounts and jacking prices.
We will tell out Grandchildren about the "before-time" when everyone had two cars and could afford to fuel them.

Who is going to be dancing with who?

As long as America isn't on your dance card, you will be doing better.  China is going to domainate on the pacific rim, BRICS Indonesia,  japan
Russia will dominate Western Europe, and possibly Middle East OPEC nations,  and they will share influence in India and Africa. They probably won't dance a lot with each other except as a tactical exercise in removing the US.

What will happen in the PM markets?
That is a real "it depends" question. And it mostly depends on if there is a world war.  Assuming there isn't..and an orderly transition is achieved,  China and Russia will eventually announce a return to Gold- or at least a commodities based basket which contains it.  Either independently or jointly ( like a SDR) It might even be a SDR if those powers feel they can sufficiently control the world bank.  If such currencies exist PM prices will become directly linked to those currencies ( as those currencies will either be fully or partially remediable directly  for that basket of commodities)  and the US  dollar price for PM  will fluctuate against that new basket  currency...

Will all currencies be exposed as worthless?

A Currency by definition can't be worthless without no longer being a currency. As long as someone still accepts in trade, it has value.
However it is very likely that all currencies will be considered worth less, and sometimes much much less, compared to the new currency used in world trading.Even with the Stupid number of zeros on a Zimbabwe  note, people there still accept them, but foreigners would laugh if you tired to pay them that way...

I don't think people fully understand the impacts of going down any road that severs the order of things...even if the order of things is screwed up, flawed and destined for failure...

I think the powers that be (Russia and China mostly)  understand completely the ramifications of severing the old world order - especially if the new isn't up and running and functional. That is why China still buys US Treasuries occasionally ( if they hold them afterwards is a different matter) and why Putin or China hasn't just gone ahead an dumped what they have on the open market in an act of (economic ) war.  They are obviously getting their ducks in a row so there is a second, easily accessible, system of trade, under their direct control, so that when the dollar goes they are impacted LESS.   The loss of the American, European and Japanese markets ( since they are all tied directly to the dollar at this point) will cause a world wide depression that will affect everyone.  But the prize here is being in charge of the new system that is adopted when trade begins to recover. Life gave us all lemons... so they are getting the juicer and other ingredients out and ready so they are the first with lemonade to sell.

Offline Libertas

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Re: Begun the global currency war has?
« Reply #2 on: May 14, 2014, 02:45:04 PM »
I can't argue with most of that and that last part is key, there is a lot of hedging going on, even among these jokers bad-mouthing the US, I think there is going to be some bolder pronouncements than actual moves for now and as the water-testing makes the frog feel safe the heat will slowly be turned up.

And nothing seems to make investing in physical PMs a bad move any way you slice it, but the trends being what they are being as fully provisioned as possible with all manner of barter items seems prudent.

To say there are interesting times ahead seems an inadequate statement...
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Offline Weisshaupt

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Re: Begun the global currency war has?
« Reply #3 on: May 14, 2014, 03:09:51 PM »
And nothing seems to make investing in physical PMs a bad move any way you slice it, but the trends being what they are being as fully provisioned as possible with all manner of barter items seems prudent..

I don't think of PMs as an investment,  any more than I would think of  $1 million in cash stuck in a mattress as an "investment"
Investing implies that you are somehow contributing to wealth generation.  Wealth  buried in the ground, in a safe, or in a mattress is not INvesting. It may appreciate. It may fall in value. But its only attempting to store  value previously generated, and its doing nothing to make new value.

As such, its  insurance.  A hedge against the worst case.  An oz of gold is sure to appreciate if measured in dollars in the next 10 years,  but if the world currency becomes SDR,  that won't necessary make you "rich" - just richer than if you had held only dollars.
Silver is even more iffy, because 90% of production  is used for industry.  If industry goes away , you could even end with a silver glut.  And even if the price of silver is low  in purchasing power compared to now,  it will probably still be worth more than if you had held the same in dollars.

Bottom line, I would expect gold, silver, oil and the new currency ( whatever it s)  to maintain fairly constant and historical ratios in buying power over the next 50 years and  they have had in the last 50 years .  There will of course be distortions that will knock those wildly out of whack ( and those are potential opportunities)   as things jar   over this bumpy road - eventually settling out as the road gets smoother.

Now if you want to "invest"  put the money where it will free you of the bumpy road. Where it will create value - make your OWN POWER, make your OWN FOOD, make your OWN entertainment, and so forth,  thus removing the need to trade with others using a currency ( be it paper or PM) that will be subject to the winds of fate. You may then choose to sell or to keep your own production as needed.

Offline Libertas

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Re: Begun the global currency war has?
« Reply #4 on: May 15, 2014, 07:13:17 AM »
And nothing seems to make investing in physical PMs a bad move any way you slice it, but the trends being what they are being as fully provisioned as possible with all manner of barter items seems prudent..

I don't think of PMs as an investment,  any more than I would think of  $1 million in cash stuck in a mattress as an "investment"
Investing implies that you are somehow contributing to wealth generation.  Wealth  buried in the ground, in a safe, or in a mattress is not INvesting. It may appreciate. It may fall in value. But its only attempting to store  value previously generated, and its doing nothing to make new value.

As such, its  insurance.  A hedge against the worst case.  An oz of gold is sure to appreciate if measured in dollars in the next 10 years,  but if the world currency becomes SDR,  that won't necessary make you "rich" - just richer than if you had held only dollars.
Silver is even more iffy, because 90% of production  is used for industry.  If industry goes away , you could even end with a silver glut.  And even if the price of silver is low  in purchasing power compared to now,  it will probably still be worth more than if you had held the same in dollars.

Bottom line, I would expect gold, silver, oil and the new currency ( whatever it s)  to maintain fairly constant and historical ratios in buying power over the next 50 years and  they have had in the last 50 years .  There will of course be distortions that will knock those wildly out of whack ( and those are potential opportunities)   as things jar   over this bumpy road - eventually settling out as the road gets smoother.

Now if you want to "invest"  put the money where it will free you of the bumpy road. Where it will create value - make your OWN POWER, make your OWN FOOD, make your OWN entertainment, and so forth,  thus removing the need to trade with others using a currency ( be it paper or PM) that will be subject to the winds of fate. You may then choose to sell or to keep your own production as needed.

Sorry, my bad...I am using the term "invest" in the present tense, as in "I have to do something with this fiat before people realize it is in fact worth less than a pile of shyt!", in the long-term PMs are a store of value, merely a vessel to use for acquiring needed goods and services in the future.

 ::thumbsup::
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Offline Libertas

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Re: Begun the global currency war has?
« Reply #5 on: February 13, 2015, 07:47:12 AM »
Sweden joins the ZIRP and QE parade.

And this quote -

Manoj Pradhan, Morgan Stanley’s global economist, said the world is revisiting the “ghosts of the 1930s” as one country after another tries to steal a march on others by getting in devaluation first. “The lesson from the 1930s is that those who do so early benefit at the expense of those who wait too long,” he said.
 
Mr Pradhan said it is becoming harder to extract advantage from this ploy now that “everyone is doing it”. China faces strong pressure to defend itself while it still can. “The longer they wait, the harder it will be for China’s policy-makers,” he said.
 
The United States has so far acquiesced in the surging dollar but there are growing calls for a shift in policy on Capitol Hill. Both Republicans and Democrats in Congress back new legislation that introduces binding currency rules for trade deals and imposes punitive import taxes on countries deemed to be “currency manipulators”. The move is explicitly aimed at China and Japan, but might also include Germany given the size of its current account surplus.

Yeah well, these "ghosts" will persist precisely because most central bankers and governments are run by Neo-Keynesian jackwagons!

The other thing these clowns forget...one way or another, economic wars turn into real wars!

And how this factors in I guess we will find out.

Strap in, the ride could be bumpy...we might be lucky to make it to Spring before stuff pops!
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Offline Libertas

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Re: Begun the global currency war has?
« Reply #6 on: February 19, 2015, 07:30:31 AM »
See, this is what irks me about ZeroHedge now days...they post so many of these "the sky is falling, Russia/China dumping Treasury holdings warnings that it just lacks meaning anymore.

Look the the charts in the link, both nations still own buttloads of paper.  Russia held far far less in the Bush years...yet somehow the US managed to stave of imminent ruin?  I think the divestment of Russia has more to do with the wider Ukraine and East-West economic war than any concerted effort with their Chi-Com pals (who still own several boatloads of paper) to piss on the dollar, converting paper to gold makes perfect sense, but that's it.  Am I missing something else here?

I also think the attempt to move away from SWIFT and the NSA's FTM program is more about common sense than any particular scheme against the dollar.  I mean, who wants all their transactions scrutinized by the NSA?  Rooskies and Chi-Com's do a buttload of shady deals, especially with their Islamic pals and fellow BRICS mates.  Again, weakness in America (Obama) is driving this as much as anything.  Perhaps there is a downstream building block payoff that helps achieve de-dollorization, but for many of the reasons previously posted I do not think they are close to being there yet.
« Last Edit: February 19, 2015, 07:38:22 AM by Libertas »
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Offline Weisshaupt

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Re: Begun the global currency war has?
« Reply #7 on: February 19, 2015, 08:03:15 AM »
See, this is what irks me about ZeroHedge now days...they post so many of these "the sky is falling, Russia/China dumping Treasury holdings warnings that it just lacks meaning anymore.
If you look at China's line is pretty steady.. and that means the Chinese "Marshall PLan" to buy treasuries so that Americans can buy Chinese made goods is coming or at an end. That is pretty significant in itself.   The Sky isn't going to fall suddenly and unless there is a war, none of the parties hlding dollars will want it to.  If you read that series I posted on SDR it portrays a quasi realistic  scenario for a controlled demolition of the Dollar - if Washington is willing to go along.

Quote
I also think the attempt to move away from SWIFT and the NSA's FTM program is more about common sense than any particular scheme against the dollar.  I mean, who wants all their transactions scrutinized by the NSA?  Rooskies and Chi-Com's do a buttload of shady deals, especially with their Islamic pals and fellow BRICS mates.

I suspect the NSA is the least of thier worries, and overshadowed by their goals.  Obtaining control of the reserve currency  is like getting the One Ring. It can be used to generate undue prosperity for many, many years.  I suspect that is the real goal with creating an alternative system. But as you say - they aren't there yet.  The wheels are in motion,  but a sudden drop in the dollar is in no one's best interest -- yet.

If we get into a Hot war with China however, you can expect their holdings to be dropped like an economic H bomb.
And there are still a number of black swan events that could cause the collapse (and a sudden one)    - like OPEC ( or ISIS) announcing Middle east Oil will no longer be sold in dollars,  or a large enough  terror attack within the US.  Remember that the 2008 crisis occured because certain still  unamed parties started withdrawling money from money market accounts...


Offline Libertas

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Re: Begun the global currency war has?
« Reply #8 on: February 19, 2015, 08:09:37 AM »
I agree.  I am much more worried about the wildcards (the unknown unknowns) than anything else at this point, but once mayhem starts in one corner the cascade effect alone will propel the globe into simultaneous chaos...how anybody survives or profits from that...if it is off-the-scale chaos...seems extremely doubtful to me.  I guess we'll find out, if we're around...
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Offline Weisshaupt

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Re: Begun the global currency war has?
« Reply #9 on: February 19, 2015, 08:39:38 AM »
I agree.  I am much more worried about the wildcards (the unknown unknowns) than anything else at this point, but once mayhem starts in one corner the cascade effect alone will propel the globe into simultaneous chaos...how anybody survives or profits from that...if it is off-the-scale chaos...seems extremely doubtful to me.  I guess we'll find out, if we're around...

Individuals can and will profit from Chaos - sale of ammo and arms is always a profitible business in such times, as are black market goods (Think WWII rationing of gasoline, stockings, etc)

Nations that participate rarely  prosper - even if they "win"
 

Offline Libertas

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Re: Begun the global currency war has?
« Reply #10 on: February 20, 2015, 06:29:16 AM »
I agree.  I am much more worried about the wildcards (the unknown unknowns) than anything else at this point, but once mayhem starts in one corner the cascade effect alone will propel the globe into simultaneous chaos...how anybody survives or profits from that...if it is off-the-scale chaos...seems extremely doubtful to me.  I guess we'll find out, if we're around...

Some individuals can and will profit from Chaos - sale of ammo and arms is always a profitible business in such times, as are black market goods (Think WWII rationing of gasoline, stockings, etc)

Nations that participate rarely  prosper - even if they "win"
 

FIFY

Have to account for attrition.   ;)

Common sense dictates individuals should fare better in any situation...except all-out scorched-earth war.  Surviving that may be a curse, left with nothing death will still run you down.
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Offline Libertas

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Re: Begun the global currency war has?
« Reply #11 on: June 22, 2015, 08:36:41 AM »
Interesting.

http://www.zerohedge.com/news/2015-06-21/its-time-hold-physical-cash-fidelity-manager-warns-ahead-systemic-event

So, just how long is fiat going to be relevant?

And please take note, of the PMs, silver is going to be more exchangeable than gold for routine transactions, so have more if it...and more of other needed barter goods...and proactively protect to keep what is yours.

 ;)
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Offline Libertas

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Re: Begun the global currency war has?
« Reply #12 on: August 11, 2015, 09:00:33 AM »
ChiCom's devalue Yuan, casinos worldwide react.

http://www.zerohedge.com/news/2015-08-11/markets-turmoil-after-china-devaluation-surveying-damage

http://www.zerohedge.com/news/2015-08-10/china-devalues-yuan-fix-most-record-plunges-28-month-lows-against-dollar

Why do I sense this is a teasing of Janet Yellen?  It's like the ChiCom's are trying to sucker Janet into a rate hike and then like Lucy with the football...

Well, crap...whatever...

 ::popcorn::
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Offline Libertas

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Re: Begun the global currency war has?
« Reply #13 on: August 26, 2015, 07:52:43 AM »
Holy Guano, Bat Man!  I think the currency war has just gotten hotter!

BRIC-Mate India says it might (cough!) "retaliate" (cough!) Chinese devaluation, and they like China has been loading up on gold and central to the post-dollar scheme.

China is looking the devalue some more and they dumped $106B in Treasuries since 8/11 and I guess if a new reserve currency is needed, maybe those with the biggest stacks of shiny will be the ones to create it.

And who bought these dumped Treasuries?  Easy, the Fed. 

And the Chi-Com's can then convert dollars to gold (thanks to PTBs monkey-hammering it down) and further consolidate their future world reserve collateral.

Brilliant!  And it could not be done without the willing stupidity of the Fed!

In the end, no matter how much short term pain China and her BRIC-Mates might suffer, the irrecoverable pain we eventually get means China wins.
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Offline Weisshaupt

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Re: Begun the global currency war has?
« Reply #14 on: August 26, 2015, 11:17:11 AM »
Holy Guano, Bat Man!  I think the currency war has just gotten hotter!

BRIC-Mate India says it might (cough!) "retaliate" (cough!) Chinese devaluation, and they like China has been loading up on gold and central to the post-dollar scheme.

China is looking the devalue some more and they dumped $106B in Treasuries since 8/11 and I guess if a new reserve currency is needed, maybe those with the biggest stacks of shiny will be the ones to create it.

And who bought these dumped Treasuries?  Easy, the Fed. 

And the Chi-Com's can then convert dollars to gold (thanks to PTBs monkey-hammering it down) and further consolidate their future world reserve collateral.

Brilliant!  And it could not be done without the willing stupidity of the Fed!

In the end, no matter how much short term pain China and her BRIC-Mates might suffer, the irrecoverable pain we eventually get means China wins.

The Fed may not be stupid.  They may have been given a go along or we destroy it all right now ultimatum.

Offline Libertas

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Re: Begun the global currency war has?
« Reply #15 on: August 26, 2015, 11:54:53 AM »
Holy Guano, Bat Man!  I think the currency war has just gotten hotter!

BRIC-Mate India says it might (cough!) "retaliate" (cough!) Chinese devaluation, and they like China has been loading up on gold and central to the post-dollar scheme.

China is looking the devalue some more and they dumped $106B in Treasuries since 8/11 and I guess if a new reserve currency is needed, maybe those with the biggest stacks of shiny will be the ones to create it.

And who bought these dumped Treasuries?  Easy, the Fed. 

And the Chi-Com's can then convert dollars to gold (thanks to PTBs monkey-hammering it down) and further consolidate their future world reserve collateral.

Brilliant!  And it could not be done without the willing stupidity of the Fed!

In the end, no matter how much short term pain China and her BRIC-Mates might suffer, the irrecoverable pain we eventually get means China wins.

The Fed may not be stupid.  They may have been given a go along or we destroy it all right now ultimatum.

Yes, maybe...it's not like the Deep State is going to do anything that generates a truthful report in the media, we all know the latter just does as it is told/led...but I think there is an obvious pattern here...

The BRICS are maneuvering for a post-dollar reserve world, the Fed has been mouthing raising rates for months while keeping the easy dollar express chugging, the Chinese devalue their currency and dump UST's and load up on more Au...then Tianjin explodes...then Sagami explodes...and people are expected to not link any of it.

And most of the walking brain-dead will not link anything.

There are wars going on...just because nobody is openly shooting anybody or declaring it or God forbid even talking about it...doesn't mean it isn't raging.
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Offline Libertas

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Re: Begun the global currency war has?
« Reply #16 on: December 09, 2015, 10:09:09 AM »
Not a surprise move at all, really...

http://www.zerohedge.com/news/2015-12-09/imf-just-entered-cold-war-forgives-ukraines-debt-russia

...should add some impetus to the currency wars...

...might be time to add to the lake bottom some more...
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