Donate Bitcoin

Donate Paypal


PeakOil is You

PeakOil is You

THE Dollar Crash Thread pt 2

For discussions of events and conditions not necessarily related to Peak Oil.

Re: The Dollar Crash Thread pt 2

Unread postby AgentR11 » Thu 04 Aug 2011, 14:38:43

americandream wrote:I day trade for a living. It's a job like any job.


If no one traded, read 10K's and Balance Sheets, or paid attention to who was sitting on what board and what they were up to; imagine the depths of corruption those guys could get away with! Definitely a job.

I don't much care for the short term trading profession, gives me ulcers; but hats off to those who can do it and relax enough to sleep later!

More a bargain hunter, medium term guy myself; I'm ok if I can tell myself not to look for six months...
Yes we are, as we are,
And so shall we remain,
Until the end.
AgentR11
Light Sweet Crude
Light Sweet Crude
 
Posts: 6341
Joined: Tue 22 Mar 2011, 09:15:51
Location: East Texas

Re: The Dollar Crash Thread pt 2

Unread postby AgentR11 » Thu 04 Aug 2011, 14:48:21

prajeshbhat wrote:I appreciate that. There are a lot of bloodsuckers out there who expect to get paid just for sitting on gold. And the god bugs(return to the gold standard) will reward them.


Gold is not something to get paid for by sitting on. Its hard core defensive. I have some, if I ever sell, it won't be for profit; it'll be because things have gone belly-up, and I need a reset on the other side of hell. Banks are seeing this too; a whole bunch of currencies are on teeter-totters right now, pushing hard to stay low enough to encourage exports, dancing to stay strong enough to buy fuel; problem with pushing low is that x/y goes to infinity as y->0, and infinity in this case is very, very bad. Gold gives you a constant "value" that can reset your 'y' exposure, and move purchasing power to a different z until things settle.

People trading gold daily aren't really doing that game, but they do keep things liquid for holders.
Yes we are, as we are,
And so shall we remain,
Until the end.
AgentR11
Light Sweet Crude
Light Sweet Crude
 
Posts: 6341
Joined: Tue 22 Mar 2011, 09:15:51
Location: East Texas

Re: The Dollar Crash Thread pt 2

Unread postby prajeshbhat » Fri 05 Aug 2011, 02:31:48

Gold is not something to get paid for by sitting on. Its hard core defensive. I have some, if I ever sell, it won't be for profit; it'll be because things have gone belly-up, and I need a reset on the other side of hell. Banks are seeing this too; a whole bunch of currencies are on teeter-totters right now, pushing hard to stay low enough to encourage exports, dancing to stay strong enough to buy fuel; problem with pushing low is that x/y goes to infinity as y->0, and infinity in this case is very, very bad. Gold gives you a constant "value" that can reset your 'y' exposure, and move purchasing power to a different z until things settle.

People trading gold daily aren't really doing that game, but they do keep things liquid for holders.


Agreed. I've got gold too. But why do people expect government to tie their currency to gold standard. Are you crazy? 8O When things go bad the government will confiscate all the nations gold and put it in a reserve, like FDR did in the 30's. Gold should be left entirely to private citizens. In India, the central bank has 397 tonnes of gold. That is the gold that was mostly confiscated from smugglers from time to time. But the private citizens own more than 13000 tonnes.

Take America for example. At last count the total gold reserves at fort knox was 147 million ounces. Also the price of oil in gold has historically been 8 to 10 barrels per ounce of gold. So 147 million ounces will buy you 1.47 billion barrels of oil. So considering your imports at 9 million barrels a day, all the gold in for knox will probably get you 163 days worth of oil imports. Most of these imports come from countries like Saudi Arabia, Venezuela, Mexico, Russia, Iraq, you get the picture. So if you want your gold back, you'll have to give these countries whatever they demand.
I have a feeling Gold standard is the dumbest thing to do for any country. Government should only rely on taxation and tariffs for their revenue. That's the only way a government can represent the interests of the public.
prajeshbhat
Lignite
Lignite
 
Posts: 346
Joined: Tue 17 May 2011, 02:44:33

Re: The Dollar Crash Thread pt 2

Unread postby AgentR11 » Fri 05 Aug 2011, 02:40:35

prajeshbhat wrote:I have a feeling Gold standard is the dumbest thing to do for any country. Government should only rely on taxation and tariffs for their revenue. That's the only way a government can represent the interests of the public.


Nah, economy is too big, and too internationalized to use a gold standard, won't happen. There won't be any confiscation either. Different times call for different measures. They confiscated to defend the strength of the currency back then; but right now, everyone is desperately trying to crash their currencies, but only just enough to restart their export economies without destroying their import requirements. Kinda like trying to jury-rig the price of ipads up, and keep oil import prices low. lol.

Its kinda surprising how well its working so far; you have pictures of Uncle Ben cranking the presses, sitting side by side with long bond traders buying at and below 3% interest.

I keep thinking something has to go splat, but its really hard to argue with those bond yields.
Yes we are, as we are,
And so shall we remain,
Until the end.
AgentR11
Light Sweet Crude
Light Sweet Crude
 
Posts: 6341
Joined: Tue 22 Mar 2011, 09:15:51
Location: East Texas

Re: The Dollar Crash Thread pt 2

Unread postby copious.abundance » Fri 05 Aug 2011, 09:41:34

I want the doomers here to take note of US dollar action the past couple days. Yesterday the dollar surged on bad news out of Europe, rising 1.5%. When the better-than-expected jobs report came out today, the dollar tumbled, and as I write this it's already erased almost half of yesterday's gains.

In other words, a falling dollar is a sign of good news, not bad news. Hell, the phenomenon is almost starting to make me think about becoming a gold bull. :lol:
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
User avatar
copious.abundance
Fission
Fission
 
Posts: 9589
Joined: Wed 26 Mar 2008, 03:00:00
Location: Cornucopia

Re: The Dollar Crash Thread pt 2

Unread postby Pops » Fri 05 Aug 2011, 10:24:05

I've probably said this before but the dollar isn't going to collapse until there is a flexible, fungible alternative that is as widely accepted. The dollar may get weaker or stronger but it ain't going away any time soon no matter how many Gurus scream out the chant. They won't be accepting krugerands at the Quik Sac anytime soon.

One of the first hard money/hyperinflationary doomers of modern times (lol) was Howard Ruff, the guy gave me a copy of his book back in the 70s sometime - I installed some astroturf on his 2nd floor balcony. It was my introduction to doomers and preppers but not long after, the big speculative bubble in metals popped and the price crashed, if I'd had any money to invest I'd have lost it - because "I knew THE guy!"

Since that time I don't buy anything the Gurus pitch on face value, not the bears and not the bulls and not the government, because everyone has an angle, it may be as innocent as egoism and a blindness to other views or as blatant as a stake in an outcome - but everyone is biased and FRN bears are no different.


But don't take my word for it, I'm not even a guru!
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
User avatar
Pops
Elite
Elite
 
Posts: 19746
Joined: Sat 03 Apr 2004, 04:00:00
Location: QuikSac for a 6-Pac

Re: The Dollar Crash Thread pt 2

Unread postby prajeshbhat » Fri 05 Aug 2011, 10:31:30

I want the doomers here to take note of US dollar action the past couple days. Yesterday the dollar surged on bad news out of Europe, rising 1.5%. When the better-than-expected jobs report came out today, the dollar tumbled, and as I write this it's already erased almost half of yesterday's gains.

In other words, a falling dollar is a sign of good news, not bad news. Hell, the phenomenon is almost starting to make me think about becoming a gold bull.


Strong currency only works for resource rich countries, especially petro-states. They also have low taxes. The governments in these countries couldn't care less about the economy or the people. They just live off the petro-fortune. If you want the participate in the hyper-competitive global economy, a weak currency will go a long way.
But USA is cheating. Their global reserve currency status is allowing her to live way beyond her means. This means US can perpetually run trade deficits with any country and then just print money to pay for it. The government of USA now resembles any other petro state government. Instead of relying on taxes for revenues, the US government just prints money.
prajeshbhat
Lignite
Lignite
 
Posts: 346
Joined: Tue 17 May 2011, 02:44:33

Re: The Dollar Crash Thread pt 2

Unread postby mattduke » Fri 05 Aug 2011, 23:29:46

Dollar’s Reserve Status Waning, U.S. Treasury Borrowing Committee Says
The committee of bond dealers and investors that advises the U.S. Treasury said the dollar’s status as the world’s reserve currency “appears to be slipping” in quarterly feedback presented to the government.

http://www.bloomberg.com/news/2011-08-0 ... -says.html
User avatar
mattduke
Intermediate Crude
Intermediate Crude
 
Posts: 3591
Joined: Fri 28 Oct 2005, 03:00:00

Re: The Dollar Crash Thread pt 2

Unread postby eXpat » Sun 07 Aug 2011, 00:39:53

China has been trumpeting for days in a row now that they are moving away from the dollar.
China economists sees big risk to markets after U.S. downgrade
(Reuters) - Chinese economists said the U.S. credit rating downgrade by Standard & Poor's poses great risk to financial markets and expect it to prompt China, the world's biggest holder of U.S. Treasuries, to accelerate the diversification of its holdings.

The United States lost its AAA long-term credit rating from S&P on Friday.

S&P cut the rating to AA-plus on concerns over the government's budget deficits and rising debt burden. The move is likely to raise borrowing costs eventually for the U.S. government, companies and consumers.

"There would be chaos in international financial markets at least in the short term. The most direct impact for China would be the hit on its reserves. The value of China's dollar investments will fall and the shrinking effect may be great," said Li Jie, a director at the Reserves Research Institute at the Central University of Finance and Economics.

Earlier this week, China had urged Washington to act responsibly to deal with its debt issues, saying uncertainty in the U.S. Treasuries market will undermine the global monetary system and hamper global growth.

Beijing has repeatedly urged Washington to protect its dollar investments, estimated by analysts to account for about two-thirds of its $3.2 trillion in foreign exchange reserves, the world's largest.

"China will be forced to consider other investments for its reserves. U.S. Treasuries aren't as safe anymore. There is a class of assets out there that are more risky than AAA, but less risky than AA+. China didn't consider these investments before, but now it would be forced to do so," Li said.

http://in.reuters.com/article/2011/08/06/idINIndia-58648020110806
"I learned long ago, never to wrestle with a pig. You get dirty, and besides, the pig likes it."
George Bernard Shaw

You can ignore reality, but you can't ignore the consequences of ignoring reality.” Ayn Rand
User avatar
eXpat
Intermediate Crude
Intermediate Crude
 
Posts: 3801
Joined: Thu 08 Jun 2006, 03:00:00

Re: The Dollar Crash Thread pt 2

Unread postby eXpat » Sun 07 Aug 2011, 23:08:28

China again.
China Isn't Exactly Floating The Yuan But...
Earlier we speculated that the one thing that could throw this whole fiasco into a complete tailspin is for China to float the renminbi, which would catch an already frazzled America unawares, as China submits a formal bid for its currency to become the de facto global reserve. Well, that didn't quite happen. However, at a massive 0.23% change in the fixed overnight rate, a move that very much hurts China, it is about as symbolic of an intraday change as can be. The PBoC set the Monday USDCNY fixing at a record high of 6.4305, up from 6.4451. While it is unknown whether this near record rate of FX change will be sustained, China just sent a very clear message to the US, following the previously noted opeds in both Xinhua and FT, in which various Chinese individuals blasted the current situation America finds itself in. The only question now is whether China will proceed with a very demonstrative dump of US bonds tomorrow to reinforce the purely political statement it just made in FX.

http://www.zerohedge.com/news/china-isnt-exactly-floating-yuan
"I learned long ago, never to wrestle with a pig. You get dirty, and besides, the pig likes it."
George Bernard Shaw

You can ignore reality, but you can't ignore the consequences of ignoring reality.” Ayn Rand
User avatar
eXpat
Intermediate Crude
Intermediate Crude
 
Posts: 3801
Joined: Thu 08 Jun 2006, 03:00:00

Re: The Dollar Crash Thread pt 2

Unread postby mattduke » Mon 08 Aug 2011, 22:33:38

Image
ECB Bond Buying May Reach $1.2 Trillion in Creeping European Fiscal Union

We need a Euro crash thread.
http://www.bloomberg.com/news/2011-08-0 ... poses.html
User avatar
mattduke
Intermediate Crude
Intermediate Crude
 
Posts: 3591
Joined: Fri 28 Oct 2005, 03:00:00

Re: The Dollar Crash Thread pt 2

Unread postby mattduke » Tue 09 Aug 2011, 20:36:27

The Federal Reserve on Tuesday expressed much more concern about the economic outlook and said it would hold interest rates at ultralow levels “at least” through mid-2013, the first time the central bank put a time frame on their duration.

Screw the dollar-savers. ZIRP forever.
http://www.marketwatch.com/story/fed-lo ... 2011-08-09
User avatar
mattduke
Intermediate Crude
Intermediate Crude
 
Posts: 3591
Joined: Fri 28 Oct 2005, 03:00:00

Re: The Dollar Crash Thread pt 2

Unread postby mattduke » Tue 09 Aug 2011, 20:46:17

The man who leads one of China’s top rating agencies says the greenback’s status as the world’s reserve currency is set to wane as the world’s most powerful policy makers convene to examine the implication of S&P’s decision to strip the United States of its triple “A” rating.

In comments emailed to CNBC, Guan Jianzhong, chairman of Dagong Global Credit Rating, said the currency is “gradually discarded by the world,” and the “process will be irreversible.”

The United States "should get a clear understanding that the continuous decline of the debt service capability will inevitably result in the outbreak of a sovereign debt crisis.”

http://www.cnbc.com/id/44050325
User avatar
mattduke
Intermediate Crude
Intermediate Crude
 
Posts: 3591
Joined: Fri 28 Oct 2005, 03:00:00

Re: The Dollar Crash Thread pt 2

Unread postby americandream » Tue 09 Aug 2011, 20:54:43

mattduke wrote:
The man who leads one of China’s top rating agencies says the greenback’s status as the world’s reserve currency is set to wane as the world’s most powerful policy makers convene to examine the implication of S&P’s decision to strip the United States of its triple “A” rating.

In comments emailed to CNBC, Guan Jianzhong, chairman of Dagong Global Credit Rating, said the currency is “gradually discarded by the world,” and the “process will be irreversible.”

The United States "should get a clear understanding that the continuous decline of the debt service capability will inevitably result in the outbreak of a sovereign debt crisis.”

http://www.cnbc.com/id/44050325


Won't work. Like the Euro, any global reserve would be toothless in every sense of the word and the elites, including one's in China and Saudi Arabia (America's biggest backers) wouldn't dare trust their worth on some nebulous entity (especially now that Switzerland no longer plays that role and Europe was never going to work.) These ex-Maoist hacks are either playing at some form of disinformation or they are just plain old stupid....I don't think its the latter.
americandream
Permanently Banned
 
Posts: 8650
Joined: Mon 18 Oct 2004, 03:00:00

Re: The Dollar Crash Thread pt 2

Unread postby mattduke » Tue 09 Aug 2011, 22:26:36

I can think of a lot of words to describe the performance of the US dollar. Farce. Joke. Lunacy. Embarrassment. Disgusting. But it’s more clearly summed up like this: the price of a Big Mac is in Zurich is now so high (at $17.19) that a minimum wage employee in Minneapolis, Minnesota, would have to work for nearly 4-hours in order to afford it.

http://www.sovereignman.com/expat/big-mac-zurich
User avatar
mattduke
Intermediate Crude
Intermediate Crude
 
Posts: 3591
Joined: Fri 28 Oct 2005, 03:00:00

Re: The Dollar Crash Thread pt 2

Unread postby copious.abundance » Tue 09 Aug 2011, 23:31:42

^
That has at least as much to do with a soaring franc as it does with a falling dollar. The franc is going up against just about everything these days - even gold I think.

LINK
Image

Surging Swiss Franc Threatens Growth

ZURICH—As Switzerland's central bank slashes interest rates to almost zero in a bid to bring a "massively overvalued" Swiss franc back to earth, key pillars of the Swiss economy—banks, pharmaceutical makers and tourist companies—are increasingly feeling the strain.

Economists say that if the central bank's move doesn't work, the Swiss economy, which until now has been one of Europe's strongest, could slam on the brakes by next year. "The severity and the speed of the franc's overvaluation is coming like a hammer," says Janwilliem Acket, chief economist at Julius Baer.

While the Swiss economy defied gravity in recent years, the relentless strength of the franc—up 10% against the euro in the last month alone—has emerged as the single biggest threat.

The Swiss National Bank cited the currency's risk to the economy as a major reason for its surprise decision Wednesday to cut interest rates to almost zero and inject more liquidity into markets. That decision sparked a sell-off of the franc, which over the last year has risen 20% against the euro and 33% against the dollar, hitting repeated records.

The franc has acted as a safe haven for investors spooked by the debt crisis in the European Union and the budget talks in the U.S., and despite the Swiss central bank's move, upward pressure on the franc remains strong. The euro surged Wednesday from about 1.08 francs to 1.11 francs on the Swiss central bank's move, but by the end of European trading Thursday it had fallen back to 1.09 francs.

[...]
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
User avatar
copious.abundance
Fission
Fission
 
Posts: 9589
Joined: Wed 26 Mar 2008, 03:00:00
Location: Cornucopia

Re: The Dollar Crash Thread pt 2

Unread postby prajeshbhat » Wed 10 Aug 2011, 04:39:56

Just because the governments are doing it doesn't mean it is the right thing to do. Every government in every country seems to have turned on the printing press. They all look like headless chickens doing the only thing they know to do. Even countries with surplus like Germany and China don't want strong currency. But I bet the currencies of OPEC nations are doing great.

I think the reason is that every country in the world needs oil for comfort, military might, private jets and what not. In order to import that oil they have to export something first. In a world where demand is falling everywhere (people are broke) the only thing that comes to mind of all politicians is to devalue the currency. I bet Oil is the number 1 import for all of these countries.

Eventually there will be a debt deflation. All OECD nations are hopelessly indebted. And I am not even talking about public debt. Private debt in most countries are in excess of 200% of GDP. Most of this debt are held by people who are holding on to their assets dearly hoping they will appreciate in the future. If governments decide to cut spending which will most certainly take money out of the markets, these assets are headed into a race to the bottom deflationary spiral. Watch Steve Keen for explanation.
prajeshbhat
Lignite
Lignite
 
Posts: 346
Joined: Tue 17 May 2011, 02:44:33

Re: The Dollar Crash Thread pt 2

Unread postby AgentR11 » Wed 10 Aug 2011, 12:46:01

Disagree with "Hopelessly indebted".

Disproof by contradiction:
Current overall us debt/liabilities $100 trillion right? more or less.

Take 100 small sheets of paper.
Write "1 Trillion US Dollars" on them.
Have treasury secretary sign.
Hand to banks.
Tada. Not hopeless.

Would completely alter the economy of course; burgers would likely cost $50 or so; but lots of countries do just fine with their unitary value set at that level; no one in Japan thinks a thing about paying 500 Yen for a bowl of noodles and a cup of tea...

So no, the US and European countries can reset their debts at will if things get bad; but truthfully, things aren't bad. Our employment levels are at or above what they usually have been over the past hundred years or so. Its true we have a few extra percent of folks that think they are worth employing, but really aren't. They need to relearn where they belong in society, and it can be a very gentle process if we allow it to be. In addition, we have a bunch of regular hired professionals who think they somehow need or rate 1000 sf / person in living space; they need to come to grips with reality as well.

So relax. Nothing to see here... move along. :)
Yes we are, as we are,
And so shall we remain,
Until the end.
AgentR11
Light Sweet Crude
Light Sweet Crude
 
Posts: 6341
Joined: Tue 22 Mar 2011, 09:15:51
Location: East Texas

Re: The Dollar Crash Thread pt 2

Unread postby mattduke » Sun 14 Aug 2011, 12:17:03

Abandoning the gold standard was a seminal moment, and one we're now all paying for.

http://www.telegraph.co.uk/finance/comm ... g-for.html
User avatar
mattduke
Intermediate Crude
Intermediate Crude
 
Posts: 3591
Joined: Fri 28 Oct 2005, 03:00:00

Re: The Dollar Crash Thread pt 2

Unread postby prajeshbhat » Sun 14 Aug 2011, 13:11:19

The gold standard was abandoned by every country in the world except USA a long time ago. USA was the last one out when it became obvious that being the only country with the gold standard would be economic suicide. With such gigantic trade imbalances in the world, all the gold in the world will end up in china, Germany and OPEC nations anyway. What after that? These countries are already the largest creditors. So things turned out exactly as they would have under the gold standard. With the current fiat system, at least no real gold was lost. It is still in fort knox. In the worst case scenario, a new currency can be started with a gold backing.
prajeshbhat
Lignite
Lignite
 
Posts: 346
Joined: Tue 17 May 2011, 02:44:33

PreviousNext

Return to Geopolitics & Global Economics

Who is online

Users browsing this forum: No registered users and 17 guests