Tag Archives: Dollar

Defections from Pax Americana Coming Louder and Faster, by Tom Luongo

Posted on August 25, 2018 | Leave a comment

The American empire is slipping away. From Tom Luongo at strategic-culture.org:

It seems everyday I wake up and see another instance of defections coming from US allies over the behavior of some corner of the Trump Administration.

Over the weekend Philippines President Rodrigo Duterte hit back strongly at US Assistant Secretary of Defense for Asian and Pacific Affairs Randall Schriver who told Duterte to “think very carefully” about acquiring a Russian submarine.

Now if you know anything about Duterte he rarely thinks very carefully before opening his mouth. And this time was no different. He rightly told Schriver publicly to get stuffed and make his case why the Philippines shouldn’t pursue its best interests.

Moreover, as always, Duterte invited Schriver to a face-to-face meeting over this.

The US is applying the same pressure to India over buying S-400 missile defense systems from Russia. Turkey’s troubles with the US are all over the news with Pastor Brunson the public reason but it is Turkey’s working closely with Russia on important energy projects like the massive Turkish Stream pipeline, nuclear power plants as well as committing India’s sin of choosing the S-400 over the US Patriot system.

A Patriot system, by the way, that has been proven in recent months by the Syrian Army to be very ineffective. Meanwhile Iran unveiled its first homegrown fighter jet in a clear act of independence which will not be tolerated.

What started as small moments of defiance a few years ago are turning into full-throated shouts of opposition as the US pushes its leverage in financial markets to step on the necks of anyone who doesn’t toe the line.

And Trump feeds off this by casting everyone as a leach who has been sucking off the US’s breast for decades. It doesn’t matter the issue, to Trump US economic fragility is a hammer and every trade and military partner a nail to be bashed over the head to pay their way.

What we are seeing is the culmination of a long-term plan by global elites to tighten the financial noose around the world through overlapping trade and tariff structures and weaponizing the dollar’s position at the center of global financial interdependence.

To continue reading: Defections from Pax Americana Coming Louder and Faster

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Weaponizing the US Dollar Is Accelerating Global De-Dollarization, by Federico Pieraccini

Posted on August 25, 2018 | Leave a comment

You catch more flies with honey than vinegar, if catching flies is your quest. Turn the dollar into vinegar and other countries turn to alternatives. From Federico Pieraccini at strategic-culture.org:

Donald Trump has in just over two years abandoned the Trans-Pacific Partnership (TPP), ditched the Transatlantic Trade and Investment Partnership (TTIP), withdrawn the US from the Paris climate agreement, and unilaterally removed American participation in the Iranian nuclear agreement known as the Joint Comprehensive Plan of Action (JCPOA).

Some of these decisions have undoubtedly received popular support from far beyond America’s shores. Washington’s withdrawal from the TPP was welcomed by the People’s Republic of China. During the Obama presidency, Xi Jinping strongly protested the exclusion of Beijing from the TPP. In the case of the TTIP, European allies for the most part were strongly opposed to the treaty because European multinationals would be subjected to sanctions and fines from American authorities.

The climate agreement, placing important limits on CO2 emissions as well as imposing regulations governing pollution, has been strongly resisted by US energy oligarchs. The withdrawal from the Paris accord has satisfied a substantial proportion of Trump’s donors linked to the hydrocarbon industry and beyond. Finally, the abandonment of the JCPOA was praised by Riyadh and Tel Aviv, two essential partners in Trump’s domestic and foreign strategies.

Observing the consequences of these political choices in the months since, it is easy to see how the world has reacted in a more or less similar fashion, which has been by ignoring the United States and emphasizing cooperation amongst themselves. The TPP, with its agreements between 11 countries, has remained in place without Washington. The development of relations between ASEAN and China continues on without Washington’s participation. While the TTIP has been halted, the Comprehensive Economic and Trade Agreement (CETA), is in its final approval stage, an agreement between Canada and the EU that bypasses the American-inspired TTIP. The Iran deal remains in force despite Washington’s cowardly withdrawal, and the five countries remaining in the Iranian nuclear agreement have every intention of respecting the JCPOA, which had been negotiated over a number of years.

To continue reading: Weaponizing the US Dollar Is Accelerating Global De-Dollarization

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Here’s How “External Dollar Debt” Produces An “Emerging Market Crisis”, by John Rubino

Posted on August 19, 2018 | Leave a comment

Borrow in dollars and convert them to your home currency and you are essentially short dollars. Which is okay, unless the dollar goes up against your home currency. Then you’re in trouble. From John Rubino at dollarcollapse.com:

Emerging market currencies are collapsing pretty much everywhere these days. But it’s safe to assume that most people don’t understand exactly what’s causing this outbreak, why it’s happening now, or what “external dollar debt” has to do with it. So here’s a quick primer followed by the obligatory apocalyptic prediction:

Prelude: cheap dollar financing
Pretend for a second that you’re Brazil. Your economy is in pretty good shape and your currency – the real – is getting stronger. Because of this, people are willing to lend you money.

Your internal interest rates – that is, what you’d have to pay to borrow real – are around 6%.

But when you look overseas you notice that US dollars – which have been trending down for a while – can be borrowed for around 2%. So you run some numbers and conclude that if you borrow dollars and assume that the real continues to rise against the dollar, you’ll make out two ways, on the spread between what you pay for those dollars and what you earn by investing them, and when you pay back the loans with depreciated dollars. So you borrow dollars, not just a little but a lot because with a lot you make a fortune.

So far so good. For a while the dollar keeps falling versus the real and you earn a nice spread. You feel smart, like you’ve figured out international finance and henceforth will will have a seat at the big table.

US dollar index external dollar debt

The turn
But then the unexpected (for you at least) happens. The dollar stops falling and starts rising.

US dollar index external dollar debt

And suddenly the spread you’re making on your external dollar debt no longer offsets the cost of paying back those ever-more-expensive dollars. That’s bad but manageable as long as the trend (dollar rising versus the real) doesn’t get too extreme. But the financial markets don’t like what they’re seeing and traders start selling real, forcing its value down further. Now you’re looking at massively negative cash flow and a possible death spiral as the markets sell your currency, which makes your dollar loans even more unmanageable and so on, with no end in sight.

To continue reading: Here’s How “External Dollar Debt” Produces An “Emerging Market Crisis”

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The Dollar Dilemma: Where to From Here? by Ron Paul

Posted on June 26, 2018 | 1 comment

This is a long but worthwhile article from Ron Paul on money, gold, the financial system, and government. From Paul at mises.org:

Introduction: Where We Are

It’s a fallacy to believe the US has a free market economy. The economy is run by a conglomerate of individuals and special interests, in and out of government, including the Deep State, which controls central economic planning.

Rigging the economy is required to prevent market forces from demanding a halt to the mistakes that planners continuously make. This deceptive policy can last only for a limited time. Ultimately, the market proves more powerful than government manipulation of economic events. The longer the process lasts, the greater the bubble that always bursts. The planners in charge have many tools to perpetuate confidence in an unstable system, but common sense should tell us that grave dangers lie ahead.

Their policies strive to convince the unknowing that the dollar is strong and its status as the world’s reserve currency is secure, no matter how many new dollars they create of out of thin air. It is claimed that our foreign debt is always someone else’s fault and never related to our own monetary and economic mismanagement.

Official government reports inevitably claim inflation is low and we must work harder to increase it, claiming price increases somehow mystically indicate economic growth.

The Consumer Price Index is the statistic manipulated to try to prove this point just as they use misleading GDP numbers to do the same. Many people now recognizing these reports are nothing more than propaganda. Anybody who pays the bills to maintain a household knows the truth about inflation.

Ever since the Great Depression, controlling the dollar price of gold and deciding who gets to hold gold was official policy. This advanced the Federal Reserve’s original goal of demonetizing precious metals, which was fully achieved in August 1971. Today, even though the official position of all central banks is that gold is not money, central bankers constantly rig the dollar price of gold, pretending the dollar is stronger than it really is. Just as the market overrode the artificial price of $35 per ounce in the 1970’s, today’s price will soar when the dollar is dethroned as the king of the world’s currencies.

To continue reading: The Dollar Dilemma: Where to From Here?

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Behind Korea, Iran and Russia Tensions: The Lurking Financial War, by Alastair Crooke

Posted on January 1, 2018 | Leave a comment

Several countries who do not consider themselves friends of the US are moving away from US economic and financial dominance. That’s fueling tensions. From Alastair Crooke at strategic-culture.org:

What have the tensions between the US and North Korea, Iran and Russia in common? Answer: It is that they are components to a wider financial war. Russia and Iran (together with China) happen to be the three key players shaping a huge (almost half the global population) alternative currency zone. The North Korean issue is important as it potentially may precipitate the US – depending on events – towards a more aggressive policy toward China (whether out of anger at Chinese hesitations over Korea, or as part and parcel of the US Administration’s desire to clip China’s trading wings).

The US has embarked on a project to restore America’s economic primacy through suppressing its main trade competitors (through quasi-protectionism), and in the military context to ensure America’s continued political dominance. The US ‘America First’National Security Strategy made it plain: China and Russia are America’s ‘revisionist’ adversaries, and the US must and intends to win in this competition. The sub-text is that potential main rivals must be reminded of their ‘place’ in the global order. This part is clear and quite explicit, but what is left unsaid is that America is staking all on the dollar’s global, reserve currency status being maintained, for without it, President Trump’s aims are unlikely to be delivered. The dollar status is crucial – precisely because of what has occurred in the wake of the Great Financial crisis – the explosion of further debt.

But here is a paradox: how is it that a Presidential Candidate who promised less military belligerence, less foreign intervention, and no western cultural-identity imposition, has, in the space of one year, become, as President, a hawk in respect to Korea and Iran.  What changed in his thinking?  The course being pursued by both states was well-known, and has offered no sudden surprise (though North Korea’s progress may have proved quantitatively more rapid than, perhaps, US Intelligence was expecting: i.e. instead of 2020 – 2021, North Korea may have achieved its weapons objective in 2018 – some two years or so earlier that estimated)?  But essentially Korea’s desire to be accepted as a nuclear weapon state is nothing new.

To continue reading: Behind Korea, Iran and Russia Tensions: The Lurking Financial War

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Into the Cold and Dark, by James Howard Kunstler

Posted on October 20, 2017 | Leave a comment

The fake reality so much of Washington and the media is caught up in can’t obscure actual reality: we’re on track for a prodigious fiscal train wreck. From James Howard Kunstler at kunstler.com:

It amuses me that the nation is so caught up in the sexual mischief of a single Hollywood producer when the nation as a whole is getting fucked sideways and upside down by its own political caretakers.

Behind all the smoke, mirrors, Trump bluster, Schumer fog, and media mystification about the vaudeville act known as The Budget and The Tax Cut, both political parties are fighting for their lives and the Deep State knows that it is being thrown overboard to drown in red ink. There’s really no way out of the financial conundrum that dogs the republic and something’s got to give.

Many of us have been waiting for these tensions to express themselves by blowing up the artificially levitated stock markets. For about a year, absolutely nothing has thwarted their supernatural ascent, including the threat of World War Three, leading some observers to believe that they have been rigged to perfection. Well, the algo-bots might be pretty fine-tuned, and the central bank inputs of fresh “liquidity” pretty much assured, but for all that, these markets are still human artifacts and Murphy’s Law still lurks out there in the gloaming with its cohorts, the diminishing returns of technology (a.k.a. “Blowback”), and the demon of unintended consequences.

Many, including yours truly, have expected the distortions and perversions on the money side of life to express themselves in money itself: the dollar. So far, it has only wobbled down about ten percent. This is due perhaps to the calibrated disinformation known as “forward guidance” issued by this country’s central bank, the Federal Reserve, which has been threatening — pretty idly so far — to raise interest rates and shrink down its vault of hoarded securities — a lot of it janky paper left over from the misadventures of 2007-2009.

I guess the lesson is that when you have a pervasively false and corrupt financial system, it is always subject to a little additional accounting fraud — until it’s not. And the next thing you know, you’re sitting in the rubble of what used to be your civilization.

To continue reading: Into the Cold and Dark

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The World Is Creeping Toward De-Dollarization, by Ronald-Peter Stöferle

Posted on September 20, 2017 | Leave a comment

The US is slowly losing a huge economic advantage: having the world’s reserve currency. From Ronald-Peter Stöferle at mises.org:

The issue of when a global reserve currency begins or ends is not an exact science. There are no press releases announcing it, and neither are there big international conferences that end with the signing of treaties and a photo shoot. Nevertheless we can say with confidence that the reign of every world reserve currency has to come to and end at some point in time. During a changeover from one global currency to another, gold (and to a lesser extent silver) has always played a decisive role. Central banks and governments have long been aware that the dollar has a sell-by date as a reserve currency. But it has taken until now for the subject to be discussed openly. The fact that the issue has been on the radar of a powerful bank like JP Morgan for at least five years, should give one pause. Questions regarding the global reserve currency are not exactly discussed on CNBC every day. Most mainstream economists avoid the topic like the plague. The issue is too politically charged. However, that doesn’t make it any less important for investors to look for answers. On the contrary. The following questions need to be asked: What indications are there that the world is turning its back on the US dollar? And what are the clues that gold’s role could be strengthened in a new system?

The mechanism underlying today’s “dollar standard” is widely known and the term “petrodollar” describes it well. This system is based on an informal agreement the US and Saudi Arabia arrived at in the mid-1970s. The result of this deal: Oil, and consequently all other important commodities, is traded in US dollars — and only in US dollars. Oil producers then “recycle” these “petrodollars” into US treasuries. This circular flow of dollars has enabled the US to pile up a towering mountain of debt of nearly $20 trillion — without having to worry about its own financial stability. At least, until now.

For a long time the basis on which this global currency system rests was poorly documented. Finally, Bloombergpublished a comprehensive article in May 2016, which provided detailed confirmation of the agreement that was hitherto only known as a rumor. The fact that this article is published now also represents a subtle clue that there are simmering shifts in the global currency system.

To continue reading: The World Is Creeping Toward De-Dollarization

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Dear President Trump: America is in for a Rude Awakening in January, by James Rickards

Posted on September 11, 2017 | 2 comments

James Rickards says that come the new year, the globalists will dump the dollar in favor of Special Drawing Rights issued by the International Monetary Fund. From Rickards at dailyreckoning.com:

Dear President Trump,

Over the last couple of years I’ve been all over TV… from Fox News to CNBC, CNN and Bloomberg. I’ve been telling our fellow Americans that the financial global elite was planning to issue their own globalist currency called special drawing rights, or SDRs.

And that those elites would use this new currency to replace the U.S. dollar as the global reserve currency.

I’ve even written about this extensively in my best-selling booksThe Road to Ruin and The New Case for Gold.

I’m sure some people in the mainstream media thought I was out of line — but the United Nations and the International Monetary Fund (IMF) have both confirmed this plan to replace the U.S. dollar is real. I’ve made this warning many times, but it seems to be falling on deaf ears. That’s why I’m writing directly to you.

Here’s the proof that the U.S. dollar is under attack, right in front of our eyes:

The UN said we need “a new global reserve system… that no longer relies on the United States dollar as the single major reserve currency.”

And the IMF admitted they want to make “the special drawing right (SDR) the principal reserve asset in the [International Monetary System].”

More recently, the IMF advanced their plan by helping private institutions, such as the UK’s Standard Chartered Bank, issue bonds in SDRs.

Although our mainstream media ignored this major event, the UK media reported:

SDR Special Drawing Rights

This is all happening. And on January 1st, 2018, this trend to replace the U.S. dollar will accelerate. That’s when the global elite will implement a major change to the plumbing of our financial system.

It’s a brand-new worldwide banking system called Distributed Ledger Technology. And it will have a huge impact on seniors who are now preparing for retirement.

When this system goes live, many nations will be able to dump the U.S. dollar for SDRs.

To continue reading: Dear President Trump: America is in for a Rude Awakening in January

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China’s Plan to Subvert the Global Dollar Standard, by Alasdair Macleod

Posted on May 4, 2017 | Leave a comment

The US realizes almost incalculable benefits by having the world’s reserve currency. It’s gain is other countries’ loss. China may be trying to upend the existing order. From Alasdair Macleod at mises.org:

If nothing else, the Chinese have a sense of history and destiny. They have had a glorious past, stretching back millennia, and once controlled most of the Asian heartland in the days of Genghis and Kublai Khan. But even then, China was essentially inward-looking, protecting her own cultural values. Trade with Europeans in the centuries following Marco Polo’s visit was mostly at the behest of European travelers, not the Chinese. She exported her art and culture to visitors, and did not import European values.

This was a mistake, implicitly recognized by China’s current leadership. This time, China has embraced Western thinking and technology to further her own progress. The development of the Shanghai Cooperation Organization in recent years is the platform for China in partnership with Russia to embrace the Asian continent through peaceful trade, improving the lives of all the citizens of the many nations who are and will become members. The SCO promises a revolution in the wealth and living standards of over 40% of the world’s population, and associated benefits for its supplier-nations on the other continents.

China’s approach is fundamentally different from that of America, which under President Trump appears to be envious of the success of non-Americans producing goods and services for the American consumer. Autarkic America has a GDP of $19 trillion. Eventually, China will have free trade agreements with the rest of the world, excluding for now the EU. On a purchasing power parity basis, this is a market with a GDP of about $70 trillion, out of a world total of about $125 trillion.

Already, China dominates world trade. Her own economy is already significantly larger than that of the US on the purchasing power parity (PPP) estimates. While being the largest consumer of raw materials, China also exports more finished goods by value than any other country. As the Asian powerhouse, she has lifted the economies of all the countries on the western side of the Pacific Ocean, which including her own between them have a GDP of $50 trillion. Her exports into Asia now exceed her exports to the US. Yet despite this dominance, most of China’s trade is conducted in US dollars, something China is bound to change, if she is to contain external economic risk and replace America as the dominant global empire. Both objectives can only be achieved by China replacing the dollar as a medium of exchange.

To continue reading: China’s Plan to Subvert the Global Dollar Standard

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Donald and the Dollar, by Antonius Aquinas

Posted on January 18, 2017 | Leave a comment

Great nations don’t generally have weak currencies. From Antonius Aquinas on a guest post at theburningplatform.com:

John Connally, President Nixon’s Secretary of the Treasury, once remarked to the consternation of Europe’s financial elites over America’s inflationary monetary policy, that the dollar “is our currency, but your problem.” Times have certainly changed and it now appears that the dollar has become an American problem.

In a recent interview with the Wall Street Journal, the soon to be 45th President of the United States believes that the greenback’s strength – up some 25% against a broad basket of currencies since 2014 – is now “too strong,” “killing us,” and has hurt companies trying to compete overseas.* A top Trump economics advisor, Anthony Scaramucci, reinforced his boss’ sentiment adding that “we must be careful of a rising dollar.”

Apparently, making America great again does not include the nation’s monetary standard. Trump’s belief that the dollar is too strong also shows a distinct lack of historical understanding. Every great nation and empire (which Trump promises to restore America to) had a sound monetary system. It is no coincidence that the pound sterling was the world’s “reserve currency” at the time when the British Empire was at its height. Debasement of it to finance Britain’s insane decision to enter World War I led, in large part, to the eventual loss of its empire. If Trump truly seeks to restore American greatness at home and its prestige throughout the world, devaluating the currency is not the way to go.

To continue reading: Donald and the Dollar

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