Home » Posts tagged 'us dollar'

Tag Archives: us dollar

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai III: Cataclysm
Click on image to purchase

Why the Dollar Rules the World — And Why Its Reign Could End

Why the Dollar Rules the World — And Why Its Reign Could End

President Donald Trump wants a lower US dollar. He complains about the over-valuation of the American currency. Yet, is he right to accuse other countries of a “currency manipulation”? Is the position of the US dollar in the international monetary arena not a manipulation in its own right? How much has the United States benefitted from the global role of the dollar, and is this “exorbitant privilege” coming to end? In order to find an answer to these questions, we must take a look at the monetary side of the rise of the American Empire.

Trump is right. The American dollar is overvalued. According to the latest version of the Economist’s “ Big Mac Index,” for example, only three currencies rank higher than the US dollar. Yet the main reason for this is not currency manipulation but the fact that the US dollar serves as the main international reserve currency.

This is both a boon and a curse. It is a boon because the country that emits the leading international reserve currency can have trade deficits without worrying about a growing foreign debt. Because the American foreign debt is in the country’s own currency, the government can always honor its foreign obligations as it can produce any amount of money that it wants in its own currency.

Yet the international reserve status comes also with the curse that the persistent trade deficits weaken the country’s industrial base. Instead of paying for the import of foreign goods with the export of domestic production, the United States can simply export money.

American Supremacy

 …click on the above link to read the rest of the article…

Russia Urges “Independence” From “Imposed World Order” Of US Financial System

Russia Urges “Independence” From “Imposed World Order” Of US Financial System

Following Russia signalling last week, its willingness to join the controversial payments channel Instex – designed to circumvent both SWIFT as well as US sanctions banning trade with Iran – new statements from Russian Deputy Foreign Minister Sergei Ryabkov called on the international community to free itself from a purely US-controlled international financial system and US dollar dominance. 

“We must protect ourselves from political abuses made with the help of the US dollar and the American banking system,” he said while addressing a ministerial meeting of the Non-Aligned Movement held in Venezuela, according to TASS. “We must turn our dependence in this sphere into independence,” he added.

“Let us be multipolar in the spheres of finance and currency,” he said.

Image via Newsmax

The senior diplomat was specifically addressing US-led sanctions and the tightening economic noose, including a near total oil export blockade, on the Maduro government in Caracas. 

The comments also come after early this year the Maduro regime was stymied in its bid to pull $1.2 billion worth of gold out of the Bank of England, according to a January Bloomberg report. The Bank of England’s (BoE) decision to deny Maduro officials’ withdrawal request was a the height of US coup efforts targeting Maduro.

Specifically top US officials, including Secretary of State Michael Pompeo and National Security Adviser John Bolton, had lobbied their UK counterparts to help cut off the regime from its overseas assets, as we reported at the time. Washington has further lobbied other international institutions, and especially its Latin American allies, to seize Venezuelan assets and essentially hold them for control of Juan Guaido’s opposition government in exile. 

 …click on the above link to read the rest of the article…

In Major Threat To Dollar’s Reserve Status, Russia Offers To Join European SWIFT-Bypass

In Major Threat To Dollar’s Reserve Status, Russia Offers To Join European SWIFT-Bypass

Three weeks after a meeting between the countries who singed the Iran nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA), which was ditched by US, French, British and German officials said the trade mechanism which was proposed last summer – designed to circumvent both SWIFT as well as US sanctions banning trade with Iran – called Instex, is now operational.

And while we await for the White House to threaten Europe with even greater tariffs unless it ends this special purpose vehicle – it already did once back in May when it warned that anyone associated with the SPV could be barred from the U.S. financial system if it goes into effect – a response from the US is now assured, because in the biggest attack on the dollar as a reserve currency to date, on Thursday, Russia signaled its willingness to join the controversial payments channel, and has called on Brussels to expand the new mechanism to cover oil exports, the FT reported.

Moscow’s involvement in the Instex channel would mark a significant step forward in attempts by the EU and Russia to rescue a 2015 Iran nuclear deal that has been unravelling since the Trump administration abandoned it last year.

“Russia is interested in close co-ordination with the European Union on Instex,” the Russian foreign ministry told the Financial Times. “The more countries and continents involved, the more effective will the mechanism be as a whole.”

… and the more isolated the US will be as a currency union meant to evade SWIFT and bypass the dollar’s reserve currency status will soon include virtually all relevant and important countries. Only China would be left outstanding; after the rest of the world’s would promptly join.

On Thursday, the Kremlin confirmed the foreign ministry’s take:

 …click on the above link to read the rest of the article…

The Dollar, Not Crypto, Is a National Security Issue

The Dollar, Not Crypto, Is a National Security Issue

U.S. Treasury Secretary Steve Mnuchin piled on to comments made recently by President Donald Trump by calling cryptocurrencies a “national security issue.” Bitcoin and crypto proponents more broadly have long wondered if (and how) the government of the United States would recognize the slow but steady encroachment of decentralized assets, and it appears to have begun. Facebook’s announcement of the Libra project on June 18, 2019, will likely prove the point on countless future historical timelines at which the U.S. government began a slow, ultimately ineffectiveassault upon the cryptocurrency realm.

Everything that Mnuchin attributed to Bitcoin — for one thing, that it has been used in concert with such “illicit activity [as] cyber crime, tax evasion, extortion … illicit drugs, and human trafficking” — can be said, and to degrees an order of magnitude or more larger, about the U.S. dollar. It’s an argument suitable for children.

All of this is extremely bullish for Bitcoin and the entire cryptocurrency complex. A bipartisan political salvo against crypto assets will undoubtedly accelerate the pace of innovation as well as increasing the value proposition, and ultimately the market price, of assets that ensure privacy. Higher prices will draw more crypto developers into the market and direct more resources at capturing market share, which means — as in any market — that consumers are the ultimate beneficiaries.

Mnuchin isn’t wrong, though. There is a tremendous risk to American national security where currencies are considered: the dollar. Those who habitually cite its reserve-currency status as a reason not to worry are making an argument that stands on increasingly precarious foundations: since 2010, the U.N. and other groups have cited the dollar’s downward slide in value, urging the adoption of an alternate system of reserves.

 …click on the above link to read the rest of the article…

New Multi-year Gold Rally Has Emerged

New Multi-year Gold Rally Has Emerged

New Multi-year Gold Rally Has Emerged

The dollar price of gold has been on a roller-coaster ride for the past six years. But the past six weeks have been a turbocharged version of that. Investors should expect more of the same for reasons explained below.

The six-year story is the more important for investors and also the more frustrating. Gold staged an historic bull market rally from 1999 to 2011, going from about $250 per ounce to $1,900 per ounce, a 650% gain.

Then, gold nose-dived into a bear market from 2011 to 2015, falling to $1,050 per ounce in December 2015, a 45% crash from the peak and a 51% retracement of the 1999-2011 bull market. (Renowned investor Jim Rogers once told me that no commodity goes from a base price to the stratosphere without a 50% retracement along the way. Mission accomplished!)

During that precipitous decline after 2011, gold hit a level of $1,417 per ounce in August 2013. It was the last time gold would see a $1,400 per ounce handle until last month when gold briefly hit $1,440 per ounce on an intra-day basis. At last, the six-year trading range was broken. Better yet, gold hit $1,400 on the way up, not on the way down.

The range-bound trading from 2013 to 2019 was long and tiring for long-term gold investors. Gold had rallied to $1,380 per ounce in May 2014, $1,300 per ounce in January 2015, and $1,363 per ounce in July 2016 (a post-Brexit bounce).

But, for every rally there was a trough. Gold fell to $1,087 per ounce in August 2015 and $1,050 per ounce in December 2015. The bigger picture was that gold was trading in a range. The range was approximately $1,365 per ounce at the top and $1,050 per ounce at the bottom, with lots of ups and downs in between. Yet, nothing seemed capable of breaking gold out of that range.

 …click on the above link to read the rest of the article…

How Iran Will Determine If The US Dollar Remains The World’s Reserve Currency

How Iran Will Determine If The US Dollar Remains The World’s Reserve Currency

For almost two centuries, Sterling reigned supreme as the world’s reserve currency, propping up the vast British Empire which was the world’s superpower during the 19th century and the early 20th. Then, in the span of just a few months, everything changed and the US Dollar took over after a series of dramatic events.

For those unfamiliar with this historic transformation, Clarmond’s Mustafa Zaidi and Chris Andrew describe the series of events in which Iran and its oil reserves proved to be the final nail in the coffin of sterling and the British Empire. However, what is far more interesting, is their suggestion that the current tensions between Washington and Tehran, and what happens to Iranian gas, could also be the event that results in the end of the dollar’s own reserve status.

Why? Read on in Clarmond’s observation on “Self Deception and Pride.”

Wilting in the muggy summer of 1945 in Washington DC, an ailing Lord Keynes messaged London – his mission to procure a $5b grant to avoid a ‘financial Dunkirk’ had failed.

Instead the Americans had offered a $3.5b loan loaded high with conditions. “We are in Shylock’s hands” muttered Ernie Bevin, the Labour Foreign Minister. The American demands were put forward by a former cotton king (Will Clayton) a future Chief Justice (Fred Vinson) and crafted by the President of Chase Bank (Winthrop Aldrich). There were three immovable requirements for the loan. First an end to Imperial Preference in trade, secondly the floatation of Sterling within a year, and thirdly Britain signing up to the Bretton Woods system.

The American objective was to put American industry and finance at the centre of the world. This meant dismantling the sterling free-trade market and destroying sterling’s status as a settlement and reserve currency.

 …click on the above link to read the rest of the article…

From Dollar Hegemony to Global Warming: Globalization, Glyphosate and Doctrines of Consent

From Dollar Hegemony to Global Warming: Globalization, Glyphosate and Doctrines of Consent

There has been an on-going tectonic shift in the West since the abandonment of the Bretton Woods agreement in 1971. This accelerated when the USSR ended and has resulted in the ‘neoliberal globalization’ we see today.

At the same time, there has been an unprecedented campaign to re-engineer social consensus in the West. Part of this strategy, involves getting populations in Western countries to fixate on ‘global warming’, ‘gender equity’ and ‘anti-racism’: by focusing on identity politics and climate change, the devastating effects and injustices brought about by globalized capitalism and associated militarism largely remain unchallenged by the masses and stay firmly in the background.

This is the argument presented by Denis Rancourt, researcher at Ontario Civil Liberties Association, in a new report. Rancourt is a former full professor of physics at the University of Ottawa in Canada and author of ‘Geo-economics andgeo-politics drive successive eras of predatory globalization and socialengineering: Historical emergence of climate change, gender equity, andanti-racism as state doctrines’ (April 2019).

In the report, Rancourt references Michael Hudson’s 1972 book ‘Super Imperialism: The Economic Strategy of American Empire’ to help explain the key role of maintaining dollar hegemony and the importance of the petrodollar to US global dominance. Aside from the significance of oil, Rancourt argues that the US has an existential interest to ensure that opioid drugs are traded in US dollars, another major global commodity. This explains the US occupation of Afghanistan. He also pinpoints the importance of US agribusiness and the arms industry in helping to secure US geostrategic goals.

 …click on the above link to read the rest of the article…

Gold Makes Its Grievances Heard

Gold Makes Its Grievances Heard

gold-dollar-trap

Gold is getting its revenge. Try as he might Mr. Tariff Man can’t dominate all the headlines all the time. Everyone once in a while something more important than the Trump Man-Baby Show should take center stage.

Gold has moved more than $50 in just under three trading sessions, blowing past near term resistance and, more importantly, reminding everyone just how quickly the reserve asset of the world economy can call bullshit on the proclamations and machinations of the morons who think they run the world.

You always know when you’re reaching the end of a bear market. 

Last week I tweeted out:

I think we’re reaching Peak Gold Bearishness. If the dollar is an attractive safe-haven asset, which it isn’t, just a necessary evil after a decade of ZIRP, then of course this will weigh on gold. That doesn’t mean demand isn’t there.https://seekingalpha.com/news/3467311-gold-longer-attractive-complacent-market-says-wells-fargo-analyst#email_link …25:22 PM – May 28, 2019Twitter Ads info and privacyGold no longer attractive in complacent market, says Wells Fargo analystGold prices no longer look attractive based on the way the metal has reacted to recent economic events, says Wells Fargo’s John LaForge, noting that gold’s complacent reaction to market volatility isseekingalpha.com

When an analyst at Wells is looking at the day-to-day ticker of gold looking for silly and binary safe haven arguments to warn people off of gold, I know we’re nearly there. 

This isn’t a complacent market. In fact, as I’ve pointed out in the past, it’s an incredibly volatile one. 

You don’t have to be a whiz with numbers, or worse a quant working for a central bank, to see the differences here. 

And the reason for this massive increase in volatility across all asset classes is Trump’s insistence on tariffs being the cure all for what ails America’s trade ‘imbalances.’

 …click on the above link to read the rest of the article…

The Zeitgeist Knows

The Zeitgeist Knows


Who said the global economy was a permanent installation in the human condition? The head cheerleader was The New York Times’s Tom Friedman, with his 1999 book, The Lexus and the Olive Tree, the trumpet blast for the new order of things. Since then, we partied like it was 1999, with a few grand mal seizures of the banking system along the way, some experiments in creating failed states abroad, and the descent of America’s middle-class into a Disney version of Hieronymus Bosch’s Last Judgment — which is kind of what you see on the streets of Los Angeles these days.

Guess what: the global economy is winding down, and pretty rapidly. Trade wars are the most obvious symptom. The tensions underlying that spring from human population overshoot with its punishing externalities, resource depletion, and the perversities of money in accelerated motion, generating friction and heat. They also come from the fact that techno-industrialism was a story with a beginning, a middle, and an end — and we’re closer to the end than we are to the middle. There will be no going back to the prior party, whatever way we pretend to negotiate our way around or through these quandaries.

The USA-China romance was bound to end in divorce, which Mr. Trump is surreptitiously suing for now under the guise of a negotiated trade rebalancing. The US has got a chronic financial disease known as Triffin’s Dilemma, a set of disorders endemic to any world reserve currency. The disease initially expressed itself in President Nixon’s ditching the US dollar’s gold backing in 1971. By then, the world had noticed the dollar’s declining value trend-line, and threatened to drain Fort Knox to counter the effects of holding those dollars. Since then, all world currencies have been based on nothing but the idea that national economies would forever and always pump out more wealth.

 …click on the above link to read the rest of the article…

That Time the Dollar Tide Went Out…

That Time the Dollar Tide Went Out…

dollar-tide-apes-trump

Welcome to the Dollar Rally to end all rallies. This week’s action in the U.S. dollar puts paid all of the moves by the Fed and the ECB over the past three months to forestall this from coming.

First it was January’s FOMC meeting where the Fed completely reversed course after a very unpopular December rate hike threw equity markets into a tailspin by Christmas.

Of course our Narcissist-in-Chief thought it was all about him and implored the Fed to stop raising rates. It was interfering with his ability to shake down the world at his sanctions and tariffs party.

But it wasn’t about him at all. It was about the Fed’s need to normalize rates into a coming global slowdown after a central-bank-induced, decade-long recovery of dubious merit. 

They’d done their job of recapitalizing the banks, somewhat, and now it was time to start trying to address the massive pension system and municipal bond crisis that was on the horizon. 

Or at least that’s what they thought.

Moreover, at some point the Fed had to show the markets something positive. That unwinding its balance sheet alongside significant shift in capital flows thanks to Trump’s tax cuts going into effect in 2019 was a signal to U.S. corporations to invest in something other than balance sheet manipulations themselves — buybacks, special dividends, etc. 

Trump can talk a good game about the ‘greatest economy evahr!’ but reality is even today’s 3.2% GDP print is marred by one-off items like an anomalous contraction of the trade deficit and huge inventory builds as Zerohedge pointed out. 

Let’s not forget how easy it is to get a big GDP print when you’re running the biggest deficits in history.

 …click on the above link to read the rest of the article…

The US Government Debt Crisis

The US Government Debt Crisis 

This article explains why the US Government is ensnared in a debt trap from which there is no escape. Its finances are spiralling out of control. In the context of a rapidly slowing global economy, the budget deficit can only be financed by QE and bank credit expansion. Do not draw comfort from trade protectionism: it will not prevent the trade deficit increasing at the expense of domestic production, unless you believe there will be an unlikely resurgence in personal saving rates. We can now begin to see how the debt crisis will evolve, leading to the destruction of the dollar.

Introduction

At the time of writing (Thursday April 24) bond yields are crashing, the euro has broken down against the dollar and equities are hitting new highs. Obviously, equities are taking their queue from bonds. But bond yields are crashing because the global economy is sending some very worrying signals. Equity investors will be hoping monetary easing (which they now fully expect) will kick the can down the road once again and economies will continue to bubble along. They are ignoring some very basic economic facts…

Regular readers of my Insight articles will be aware of strong indications that the expansionary phase of the credit cycle is now over, and that we at grave risk of falling headlong into a global credit and systemic crisis. The underlying condition is that economic actors and their bankers accustomed to credit expansion are beginning to realise the assumptions behind their borrowing commitments earlier in the credit cycle were incorrect. 

That’s why it is a credit cycle. It is driven by prior credit expansion which corrals all producers into acting in an expansionary manner at the same time. Random activity, the condition of a true laissez-faire economy, ceases. Instead, credit conditions act on profit-seeking businesses in a state-managed context.

 …click on the above link to read the rest of the article…

Dollar Dominance Under Multiple, Converging Threats

Dollar Dominance Under Multiple, Converging Threats

Dollar Dominance Under Multiple, Converging Threats

For years, currency analysts have looked for signs of an international monetary “reset” that would diminish the dollar’s role as the leading reserve currency and replace it with a substitute agreed upon at some Bretton Woods-style monetary conference.

That push has been accelerated by Washington’s use of the dollar as a weapon of financial warfare, including the application of sanctions. The U.S. uses the dollar strategically to reward friends and punish enemies.

The use of the dollar as a weapon is not limited to trade wars and currency wars, although the dollar is used tactically in those disputes. The dollar is much more powerful than that.

The dollar can be used for regime change by creating hyperinflation, bank runs and domestic dissent in countries targeted by the U.S. The U.S. can depose the governments of its adversaries, or at least blunt their policies without firing a shot.

But for every action, there is an equal and opposite reaction.

As the U.S. wields the dollar weapon more frequently, the rest of the world works harder to shun the dollar completely.

I’ve been warning for years about efforts of nations like Russia and China to escape what they call “dollar hegemony” and create a new financial system that does not depend on the dollar and helps them get out from under dollar-based economic sanctions.

These efforts are only increasing.

Russia has sold off almost all of its dollar-denominated U.S. Treasury securities and has reduced its dollar asset position to almost zero. It has been amassing massive quantities of gold, and has increased the gold portion of its official reserves to over 20%. Russia has almost 2,000 tonnes of gold, having more than tripled its gold reserves in the past 10 years. It has actually acquired enough gold to surpass China on the list of major holders of gold as official reserves.

 …click on the above link to read the rest of the article…

China & Buying Gold – Why?

China & Buying Gold – Why? 

QUESTION: Mr. Armstrong; I believe you said at the WEC in 2017 that central banks will diversify and increase their gold reserves going into the currency crisis coming in 2021. China has continued to increase its gold reserves. You would please update on that development.

Thank you

PK

ANSWER: Central banks are in a very difficult position. The ECB has really put the entire world at risk. Draghi is now realizing that negative interest rates have seriously harmed the European economy and led to a major growing liquidity crisis in European banking. The euro is regarded as a time bomb for it is neither a national currency nor a stable unit of account. The failure to have consolidated the debts from the outset has simply left the euro vulnerable to separatist movements and sheer chaos.

This is what has been behind the strength in the dollar. Central banks outside Europe have been caught in this dollar vortex. They have been selling dollars and buying gold in an effort to stem the advance of the dollar. China also has a debt problem with many provinces and companies who borrowed in dollars. Here in 2019, there is $1.2 trillion in Chinese dollar borrowings that must be rolled over. There is a rising concern that this year there could be a major threat of a dollar funding crunch. The total debt issued in US dollars outside the USA approached $12 trillion at the end of 2018. That is about 50% of the US national debt. The forex risk is huge, no less the interest rate risk on top of that. The more crises we see in Europe, the greater the pressure on the dollar to rise regardless of the Fed trying to stop capital inflows by delaying raising rates.

 …click on the above link to read the rest of the article…

The Ultimate Pivot: Saudi Betrayal of the Petrodollar

The Ultimate Pivot: Saudi Betrayal of the Petrodollar

Saudi Arabia has gone nuclear, threatening the petrodollar. Or has it?

The report from Zerohedge via Reuters that Saudi Arabia is angry with the U.S. for considering a bill exposing OPEC to U.S. antitrust law is a trial balloon.

The chances of the U.S. bill known as NOPEC coming into force are slim and Saudi Arabia would be unlikely to follow through, but the fact Riyadh is considering such a drastic step is a sign of the kingdom’s annoyance about potential U.S. legal challenges to OPEC.

If these things are so unlikely then why make the threat public? There are a number of reasons.

First, one must remember that the Saudis are hemorrhaging money. Their primary budget deficit in 2018 was around 7% of GDP. Since the 2014 crash in oil prices it has gone from almost zero sovereign debt to $180 billion in debt to finance its spending, or around 22% of GDP.

2019’s budget will be even bigger as it tries to deficit spend its way to growth. It’s needs for a higher oil price are built into their primary budget not their production costs, which are some of the lowest in the world.

Second, the Saudis finally opened up the books on Saudi-Aramco this week. And it revealed the giant is far more profitable than thought. It has is eye on acquiring stakes in some of the biggest oil and gas projects out there these past couple of years. It’s floating its first public bond to buy a stake in SABIC to get into the mid and downstream petroleum markets.

 …click on the above link to read the rest of the article…

Where Is The World Headed?

Where Is The World Headed?

Since 2016 the United States has been in the Russiagate box, a hoax created by the US military/security complex to prevent President Trump from normalizing relations with Russia.  Normalized relations would devalue THE RUSSIAN THREAT, an orchestration that protects the $1,000 billion annual budget of the military/security complex.  

The Democratic Party, which most certainly is not democratic, supported the hoax hoping to do Trump in for their own reasons and pulled the presstitute media into the conspiracy against Trump.

Now that all the assurances from the Establishment that Trump was a traitor to America who conspired with Russian President Putin to steal the election from the killer-bitch in order that America could serve Russian interests have been exposed as lies by the Mueller report, American attention is free to take up some other nonsensical campaign. The succession of these stupidities is destroying America’s reputation.

True, some of the most crazed of the Democrats and media whores cannot let go of Russiagate.  The presstitutes are saying that Trump would be impeached for his non-crime except the unworthy Democrats had rather go back to the business of spending other people’s money.  A crazed professor or two have declared that Mueller was part of the “Trump coverup” and that Mueller needs to be investigated.  But these claims simply underline that the United States wasted three years of its existence.

Meanwhile, other countries moved on.  The Russians, for example, discovered that Washington’s sanctions had a silver lining.  Russia became more self-sufficient economically and moved out of the box of being an exporter of raw materials to the West, a box into which the Americans and the American-brainwashed Russian economics profession had put the Russian government.

 …click on the above link to read the rest of the article…

Olduvai IV: Courage
In progress...

Olduvai II: Exodus
Click on image to purchase

Olduvai
Click on image to purchase

Olduvai II: Exodus
Click on image to purchase

Olduvai III: Cataclysm
Click on image to purchase