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Largely lost in the sauce of a hectic and scary week was president Trump’s announcement of an allegedly temporary suspension of interest payments on outstanding student loan debt. That means student loans are now both interest-free and guaranteed by the the Federal Reserve. The Fed funds rate is also going to zero. The chance that student loan interest rates go back up is about the same as the chance that the funds rate does.
If that turns out to be the case, the $1.6 trillion in student loans is bad debt–well, it mostly already is, but this will make it all but official–on top of the $1.5 trillion in quantitative easing. The nominal funds rate is zero.
Treasury yields are in the process of deciding where to go. If they fall towards zero, the dollar has some staggering left to do. If they spike upwards, it will be an ominous sign that there is serious concern this round of super QE–debt monetization, where the government sells bonds to itself–is going to deal the fatal blow to the US dollar as the global reserve currency.
It’s 2008 all over again, except this time the Fed is out of ammunition before the Crisis has even appeared. Things are going to get ugly. Maybe not tomorrow, maybe not next week, but soon.
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As a long-ago Zerohedge reader, Ron Paul fan, and connoisseur of books such as the on-line Day the Dollar Died and Lionel Shriver’s The Mandibles*, I agree that we are in for trouble sooner than I’d thought, if these policies are not truly temporary. Either way, the dollar will go down sometime. I’d rather be more ready than I am, but one can always say that.
Gold, Bitchez! (Sorry, had a flashback to my old Zerohedge-reading daze.)
.
* Reviewed on Peak Stupidity in a review so long, it took 6 parts! Intro., Part 2, Part 3, Part 4,Part 5, and Conclusion
1. The US military. Other nations WILL take our money, or else, as Saddam found out.
2. The IRS /US taxpayer. You WILL receive interest on US Treasuries
3. The smooth transition of power, even though traitorous Dems tried to ruin that, and should be punished.Replies: @Audacious Epigone
The dollar has been a zombie for a long time. I forecast that 2021 would be the year it went into the toilet, and the toilet would be flushed. This prediction was made in 1989 while drinking at a bar in Ann Arbor. The people who will be really mad are the ones who think that dollars represent real value. Being broke is going to be tough on them.
I’d like to see a currency that had depictions of inflation on the back of every bill.
A table of the cost of things in 1930 vs. 2020, or pictures of individual things, like a steak dinner or postal stamp with cost comparisons. Hyperinflation: people pushing wheelbarrows full of money or burning it for heat.
Man, too bad you didn’t bet the bartender 5 bucks or something … wait…
False and false. Come on, you are too young to be stuck in 1979 forever.
There will never be inflation again, despite QE (technological progress ensures that). Plus the Fed can never be ‘out of ammunition’ since QE can always be increased.
Well, only in unimportant things like house prices and education ...Replies: @Achmed E. Newman, @Thomm, @Audacious Epigone
Student loan interest, the fed funds rate, and Treasury yields have absolutely nothing to do with the U.S. dollar being the global reserve currency.
Any financial crisis in the U.S. will be instantly exported to the rest of the world with the net result that foreigners will want more dollar assets. This is what always happens.
People other than currency speculators are best advised not to pay undue attention to Central Bank shenanigans.
Currencies don’t float, they just sink at different rates. Crazy volatility in the markets, stress in the financial system always hits the pound, and it has plunged against USD and EUR.
this was the one place where Trump was definitely objectively wrong. and Jerome Powell was definitely correct. Powell was the only chairman who was probably acting in the best interests of the nation at large since Paul Volcker, and not coincidentally, was the first chairman in over 30 years who wasn’t one of (them). if Powell had not slowly raised rates when things were going well, there would be no room to maneuver at all here.
now that the federal funds rate is 0%, as Trump has demanded for 3 straight years, and the market went DOWN, the central bankers don’t have many options left. printing money out of thin air and buying financial instruments are all they can do now.
it’s not a central part of MAGA, as there are much bigger issues, but the dollar is in possible trouble now, for real this time, and Trump read this situation wrong the entire way.
this isn’t that important relative to other things like, if Biden is elected, the country ends. so there’s that.
It always hits the Australia dollar as well. The Australia dollar has gone right down the toilet.
… is going to deal the fatal blow to the US dollar as the global reserve currency.
Paging Mark Twain — what is the alternative to the USD? — is there a major currency that has significantly appreciated vs the USD since the 2008-9 financial crisis?
Putin Unleashes Strategic Hell On The US
It’s all dying, FTSE down eight percent!
This is good, because the dollar was tool that the zio world order used to enforce its rules, the sooner the dollar dies the better.
They haven’t been planning for this, and you have.
Once t dollar collapses, everybody will seek out rw cranks and declare us their lords. Hot teen harems and plentiful food for the guys who have no organizational capacity to provide order or anything of value in a collapse scenario, but they were “right all along”.
My comment at isteve:
The ambient air = COVID-19 nexus is really really strong:
Sajadi et al. (2020) Temperature and Latitude Analysis to Predict Potential Spread and Seasonality for COVID-19
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3550308
Wang et al. (2020) High Temperature and High Humidity Reduce the Transmission of COVID-19
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3551767
Indoors, most everyone is at around 70 F / 21 C. The only available variable is humidity.
We are shuttering the global economy and causing certain global depression in the belief that otherwise everyone will die when warm, humid weather stops this thing. Tragic stupidity.
Actually the mechanism is explained very clearly in these two documents:
Kudo et al. (2019) Low ambient humidity impairs barrier function and innate resistance against influenza infection. Proceedings of the National Academy of Sciences, 2019
Gough, March 1, 2020. Fighting the Flu with Humidity: Researchers discover immune system benefits of humidity https://medium.com/@ngough_bioserendipity/fight Fighting the Flu with Humidity Researchers discover immune system benefits of humiditying-the-flu-with-humidity-28d4ccb42bd7
Everyone has ‘innate immunity’ — you have cilia enclosed in snot that clears out viruses from the body. That is the part of the immune system that doesn’t need to “know” the pathogen.
When it is cold the snot gets more viscous. When it is dry, the snot dries and hardens. Either way, the innate immune system doesn’t work when it gets cold, or dry.
Trump apparently had a big coronavirus party at Mar-a-lago and was fine. Very warm, very humid. Not problem.
The big risk seems to be when people gather outdoors in the cold (which is what skiing is). Milan has tons and tons of people walking around outdoors in winter. The virus survives a long time in winter air, at the same moment that their innate immunity is solved.
The world will not see environmental solutions. Instead everyone will panic.
In warm and humid spring this will go away for certain. The tropical countries have virtually no problem.
Meanwhile GDP will post a -40% year over year print, if you annualize the numbers. Steeper than the 1930s, while Coronavirus will give us fewer deaths than a normal US flu season.
The panic and the inability to reason is very very sad.
Everyone can humidify and shield themselves very strongly against viral respiratory infections.
After we pick up the pieces from our totally unnecessary economic collapse, I hope people will figure out at least that much. Probably not.
Deaths from this are still under 100 in America, and spring is days away. I knew this was an intellectually stunted age, but this is really remarkable.
Have fun figuring this out how to fix our economic collapse, titans of industry. You couldn’t rub two brain cells together to figure this humidity thing out. It seemed really easy from this vantage point.
More research, not that anyone cares:
1. Makinen et al. (2009) Cold temperature and low humidity are associated with increased occurrence of respiratory tract infections. Respiratory Medicine, Volume 103, Issue 3, March 2009, Pages 456-462
2. Salah et al. (1988) Nasal mucociliary transport in healthy subjects is slower when breathing dry air. Eur Respir J. 1988 Oct;1(9):852-5.
My solution is to cut global science budgets to zero. Nobody reads the scientific papers anyway, even when their life depends on it. We can instead invest in more hand sanitizer. Can never have enough of that, after all.
2020 is going to be the year vast numbers of normies are going to be red-pilled.
https://slate.com/news-and-politics/2020/03/coronavirus-tsa-liquid-purell-paid-leave-rules.html
This guy’s Twitter feed is mostly devoted to movies, he’s certainly not a Bernie Bro; doesn’t like Trump much, but mostly jokes about getting a “viral Trump tweet,” so he’s no Seth Abramson.
Yeah dude it will definitely be good, there’s no way “zio world order” will use a dollar collapse to make itself more powerful.
They haven’t been planning for this, and you have.
Once t dollar collapses, everybody will seek out rw cranks and declare us their lords. Hot teen harems and plentiful food for the guys who have no organizational capacity to provide order or anything of value in a collapse scenario, but they were “right all along”.
now that the federal funds rate is 0%, as Trump has demanded for 3 straight years, and the market went DOWN, the central bankers don't have many options left. printing money out of thin air and buying financial instruments are all they can do now.
it's not a central part of MAGA, as there are much bigger issues, but the dollar is in possible trouble now, for real this time, and Trump read this situation wrong the entire way.
this isn't that important relative to other things like, if Biden is elected, the country ends. so there's that.Replies: @LondonBob, @Digital Samizdat
That market sell off after Powell had started raising rates should have been allowed to happen. I keep on expecting the markets to rally and resume a more gentle sell off, but this looks like the entire system is teetering.
now that the federal funds rate is 0%, as Trump has demanded for 3 straight years, and the market went DOWN, the central bankers don't have many options left. printing money out of thin air and buying financial instruments are all they can do now.
it's not a central part of MAGA, as there are much bigger issues, but the dollar is in possible trouble now, for real this time, and Trump read this situation wrong the entire way.
this isn't that important relative to other things like, if Biden is elected, the country ends. so there's that.Replies: @LondonBob, @Digital Samizdat
Just like Greenspan, Bernanke and Yellen, Trump represents (((you know who))).
Technically, no. The Fed could still make the discount rate negative if it wanted to. In that case, it would be paying the Big Banks interest for the privilege of giving them money. Fancy that! If you thought people were pissed at Wall Street 12 years ago, wait until that sh*t goes down.
this is what (Yellin) wanted to do.
they can do this, if they want to crash the country. interest rates are already negative in a few other nations. but those are countries that don't matter
negative rates are an insidious plan that will flush out all saved money from it's safe hiding place, and will cause boomer savers to be crushed. which, why would (they) care. all (they) care about is flushing all the money out and inflating asset prices so (they) can make more money. who cares about the europeans who worked, built the nation, and saved. (they) will just go back to Israel if things get too hot.
30 years of (Greenspan), (Bernanke), and (Yellin) was really ONLY about this. manipulating the US central banking system from the top down, for jewish financial interest. the side effect was a steady growing stock market for Presidents to benefit from. but that wasn't the main reason to do it.
the jewish bankers used up 200 years of saved up european treasure in only 35 years. centuries of historical interest rates are gone forever. they might never go above 1% now ever again. maybe they will stay near 0% for years.
Out of reaction-comments, so forced to write. This is true. Control of the Federal Reserve becomes useless when the dollar loses its status as the world’s reserve currency. That likely also de-fangs the World Bank. Those actors suddenly finding themselves powerless would be a huge benefit to literally EVERYONE else in the world.
Debt Jubilee!
Everyone gets $100,000 of debt forgiven.
Anyway, what good are dollars if the shelves are empty?
The system will re-balance out.
Everyone gets $100,000 of debt forgiven.
Anyway, what good are dollars if the shelves are empty?Replies: @dfordoom
That’s an interesting point. People are suddenly realising that money can’t buy everything. Money can buy you love and it can buy you happiness, but it can’t buy you toilet paper.
Doesn’t work anyway, negative or low rates mean banks can’t make any money and the financial system gums up, look at Europe. I don’t know what they can really do.
The Fed is buying treasuries.
Does anyone know the actual limit of how much money we can lend ourselves?
Didn’t this work for pre-War Germany for a while?
My cash dollars just earned 25% in local currency. USD is going up against pretty much every currency in the world, with a few safe haven exceptions like CHF and Yen. What death of the dollar, what are you talking about?
Yes, and even more interestingly, the more the FED mashes ctrl-P, the more toilet paper we will have available, as we realize the stuff in our pockets and wallets is good only for that anymore. The 5s and 50s are the best bet, as Lincoln and US Grant, respectively, have been the most absorbing of fecal matter.
After we pick up the pieces from our totally unnecessary economic collapse, I hope people will figure out at least that much. Probably not.
Deaths from this are still under 100 in America, and spring is days away. I knew this was an intellectually stunted age, but this is really remarkable.
Have fun figuring this out how to fix our economic collapse, titans of industry. You couldn’t rub two brain cells together to figure this humidity thing out. It seemed really easy from this vantage point.
More research, not that anyone cares:
1. Makinen et al. (2009) Cold temperature and low humidity are associated with increased occurrence of respiratory tract infections. Respiratory Medicine, Volume 103, Issue 3, March 2009, Pages 456-462
2. Salah et al. (1988) Nasal mucociliary transport in healthy subjects is slower when breathing dry air. Eur Respir J. 1988 Oct;1(9):852-5.
My solution is to cut global science budgets to zero. Nobody reads the scientific papers anyway, even when their life depends on it. We can instead invest in more hand sanitizer. Can never have enough of that, after all.Replies: @Achmed E. Newman
We’ve been through this already. Wintertime climates all over are dry as far as absolute humidity goes. I and commenter Res brought out the psychrometric chart. You may have figured out how to use it, and you may not have. You can’t force much water into air that’s down near freezing and lower, is the gist of it.
It’s good advice for people to use a humidifier INDOORS, if that’s what you’re selling. OUTDOORS, what really matters is temperatures going up and in many climates the absolute humidity going up with it.
Please don’t keep spamming us with this. If you believe in this so strongly, why not go over to Johns Hopkins, to the offices of a Professor in the field and ask him politely if he’s got 10 minutes to discuss it with you? If you can convince him that this is an are that needs more emphasis, he will have more pull to tell someone who can inform the pubic.
Doomerist nonsense. Audacious Epigone fortunately does not blog frequently about financial issues, but like too many on the hard right he’s saddled with the incorrect conceptual framework of the Austrian School of Economics. This is a legacy of the fact that a lot of us were once libertarians. Fortunately the Zoomers have completely bypassed this and are now producing memes to mock the doomerists:
Quantitative Easing is not quite the same thing as the government selling bonds to itself.
For starters, as is much remarked upon, the Federal Reserve System, while established by statute, is not owned by the government. The regional Federal Reserve Banks are owned by their member banks, which are privately-owned commercial banks. Incidentally, by law all profits earned by the FED are also remitted to the US Treasury Dept.
Second, the Treasury Dept never sells bonds directly to the FED. Bonds are mainly sold at Treasury auctions to primary dealers. An insignificant amount of bonds are also sold directly to the public (www.treasurydirect.gov for instance).
That said, it has been proposed (but not carried) out that expansionary fiscal policy be more closely coordinated with the FED in order to increase stimulative effects. This is proposed because the experience of the Global Financial Crisis (GFC) was that Quantitative Easing is not very effective, nor are the more radical measures employed by the ECB and Bank of Japan.
The reason Quantitative Easing doesn’t do much is that it can’t out of thin air conjure up creditworthy borrowers. Also it can do is suppress interest rates, which are already low because demand for credit is modest (hence low or no inflation). QE is also deflationary because it reduces income to the private sector–interest payments previously made to private sector bond holders instead end go to the FED.
The Dollar’s reserve currency status doesn’t stem from the coupon on Treasuries–otherwise the Ruble would be challenging its status. It stems from the fact that the USA offers by far the world’s largest pool of high quality, liquid securities. More broadly the USA has more assets and nominal economic activity than any other currency zone, and it has a fully open capital account. This does not change because the discount rate has a nominate rate of zero or because the federal government temporarily suspends interest on student debt. The Dollar-denominated bond and stock markets simply dwarf all other contenders.
In the near term the greatest threat to the Dollar’s reserve currency role is the escalating sanctions war waged by the US government against its perceived enemies. So far this has done little to diminish the Dollar’s role because foreign banks and corporations value their economic links to the USA more than they do to Iran. Russia and China are making efforts to de-Dollarize their bilateral trade, but continue to rely on Dollars for other transactions.
In the medium term threats are that the Europeans get their act together or that the Chinese choose to become a market economy with an open capital account. Neither are very likely. There’s a very good reason to avoid becoming a reserve currency issuer. Namely, the main “product” you export becomes your currency. This is known in economics as the Triffin Dilemma.
During the Japanese Bubble era when the Tokyo Stock Exchange was worth more than the rest of the world’s stock markets combined and the Imperial Palace was more valuable than California, the Japanese considered turning the Yen into a reserve currency to rival the Dollar. The idea was ultimately rejected because it was understood that the resulting capital inflows that would make Japanese exports less competitive and thus undermine the Japanese manufacturing sector. During the GFC there was an Asian flight to safety into Japanese assets, and the upward pressure on the Yen ended up destroying much of the Japanese electronics industry.
Nothing lasts forever of course, and in the long term the Dollar will eventually lose its role. But today is not that day.
Why does there seem to be near-unlimited demand for these US "assets?" And when does that end--when does the world just choke on what US is supplying?
” The Dollar’s reserve currency status doesn’t stem from the coupon on Treasuries–otherwise the Ruble would be challenging its status. It stems from the fact that the USA offers by far the world’s largest pool of high quality, liquid securities. More broadly the USA has more assets and nominal economic activity than any other currency zone, and it has a fully open capital account. This does not change because the discount rate has a nominate rate of zero or because the federal government temporarily suspends interest on student debt. The Dollar-denominated bond and stock markets simply dwarf all other contenders.”
Why does there seem to be near-unlimited demand for these US “assets?” And when does that end–when does the world just choke on what US is supplying?
So when do you think this will happen, in 5, 10, 30, 50, 100+ years?
https://slate.com/news-and-politics/2020/03/coronavirus-tsa-liquid-purell-paid-leave-rules.html
This guy's Twitter feed is mostly devoted to movies, he's certainly not a Bernie Bro; doesn't like Trump much, but mostly jokes about getting a "viral Trump tweet," so he's no Seth Abramson.Replies: @UK
No-one intelligent or not crazy can look at that list of stuff the writer wants for free and not realise that there is a cost to them. But then no-one intelligent or not crazy thinks that Kung-Flu is an American bio-warfare attack on China. I can see why this utterly ignorant article keeps popping up on Unz.
They both follow the same logic of the ‘if we all just do two nice things for people when one nice thing is done for us, then we’re all be living great” school of complete idiocy. They require only the most superficial and distracted (senile or simple?) thought.
With Kois, you have someone entirely ensconced in popular culture suddenly writing an article titled 'America is a Sham'. A seemingly very average suburbanite just discovered that his whole society is a fraud. Ron Unz is a very different character, but the dynamic is the same.Replies: @UK
Thorfinnsson,
Speaking of libertarianism, if I die of Corona Virus, promise to come to my funeral and give a speech against free trade.
Thanks.
The Euro [€] Died in 2014
If zero or less = dead, then the Euro has long been extinct. And, people keep using it. € is the only valid currency for remitting most Euro Zone [EZ] taxes and receiving payments from EZ governments.
_____
If people want to leave USD where do they go?
— EUR has years of negative rates.
— RMB (China) is not transparent about risks such as bad loans.
— Other national currencies are volume limited — JPY, GBP, etc.
— Physical commodities, such as Gold and Silver, have storage costs that are equivalent to negative rates. Plus, fraud risks such as gold foil wrapped tungsten bars.
As much as certain parties want the USD to go away, they have no credible replacement.
PEACE 😇
Gold, Bitchez! (Sorry, had a flashback to my old Zerohedge-reading daze.)
.
* Reviewed on Peak Stupidity in a review so long, it took 6 parts! Intro., Part 2, Part 3, Part 4,Part 5, and ConclusionReplies: @George Strong
The dollar is backed by things better than shiny metals:
1. The US military. Other nations WILL take our money, or else, as Saddam found out.
2. The IRS /US taxpayer. You WILL receive interest on US Treasuries
3. The smooth transition of power, even though traitorous Dems tried to ruin that, and should be punished.
I was just talking about the Fed’s own discount rate, which is only available to member banks (i.e., Wall Street). There is no way any of those banks would pass along the negative interest rate to a customer. It would just be a way of encouraging those banks to go a lending spree by, perhaps, lowering their standards for borrowers–you know, ‘sub-prime’ borrowers.
“Technically, no. The Fed could still make the discount rate negative if it wanted to.”
this is what (Yellin) wanted to do.
they can do this, if they want to crash the country. interest rates are already negative in a few other nations. but those are countries that don’t matter
negative rates are an insidious plan that will flush out all saved money from it’s safe hiding place, and will cause boomer savers to be crushed. which, why would (they) care. all (they) care about is flushing all the money out and inflating asset prices so (they) can make more money. who cares about the europeans who worked, built the nation, and saved. (they) will just go back to Israel if things get too hot.
30 years of (Greenspan), (Bernanke), and (Yellin) was really ONLY about this. manipulating the US central banking system from the top down, for jewish financial interest. the side effect was a steady growing stock market for Presidents to benefit from. but that wasn’t the main reason to do it.
the jewish bankers used up 200 years of saved up european treasure in only 35 years. centuries of historical interest rates are gone forever. they might never go above 1% now ever again. maybe they will stay near 0% for years.
“Doomerist nonsense.”
that was a good post, and the dollar is not right on the precipice of disappearing tomorrow, but hitting 0% is very clearly, one of the steps along the way.
ultimately, the reserve currency is based on the people, in the same exact way everything else good about a first rate, first world nation depends entirely on the people, as the argument is made in HBD land all the time now. want free speech? want relatively trustworthy politicians? want a relatively fair justice system? want clean water? food that doesn’t kill you? buildings that don’t collapse? small arms ownership? the ability to criticize the government without disappearing?
having a certain percentage of germanics, or something similar, is a prerequisite for that. you can get some of those things with romance europeans, slavs, or a japanese population, but not all of them. you can’t get almost any of them with a chinese population.
you also need the intelligence to run one of the best countries and economies. the reserve currency never comes from a third world country. and once the US becomes a third world country democraphically, and it is on it’s way, that slide out of reserve currency is certain. it’s just a matter of time. Japan will NOT become a third world country, they won’t allow the humans in their borders to change that much, so having negative interest rates, while bad, does not kill them.
likewise for China and Russia. so with the US and western Europe for certain becoming third world countries before 2100, the Dollar and Euro will necessarily crumble slowly and steadily. 0% or negative interest rates probably hurt your TFR as well. again, not an issue for Japan, China, or Russia, which won’t allow genetic replacement.
as the SEC and other regulatory agencies are slowly compromised by becoming less germanic and replaced by a jumble of less trustworthy internationals, the previously solid nature of the US markets starts to become less solid. already happening with FBI as well. (you know who) makes every previously solid WASP institution less solid and trusthworthy. adding lots of Indian and Chinese grifters further weakens it. then, finally, replacing the european population of workers with latin americans, africans, and muslims, makes it so the economy itself is not solvent. they generate less GDP than they consume in services.
this is aside from the fact that the US is on course to not be able to afford their debt payments, within my lifetime. the US government cannot afford a huge SS and medicaid system, a trillion dollar a year military, and all the debt payments.
This is it. I have long wondered if I would live to see it. This pandemic will mark the fall of the Anglo/Zionist Empire like the fall of the Berlin Wall marked the end of the Soviet Empire.
If you understand the problem of debt money you will not be surprised by the death of King Dollar and the hard times that ensue. If you are young and strong enough to live through the whole thing you will then discover great opportunities right where you live. Everything will have to be rebuilt.
Who is producing the vaccine? Could it be the:
— Anglos (1)
— Zionists (2)
It seems rather more likely that the IslamoGlobalist Empire, lead by Mutti Mullah Merkel, is about to fall. The IslamoSoros and his Open Borders theology spreads the plague.
Judeo-Christian Populism and national borders are winning.
PEACE 😇
_______
(1) https://time.com/5790545/first-covid-19-vaccine/
(2) https://www.sfgate.com/science/article/COVID-19-coronavirus-vaccine-Israel-15093659.php
We are going to get a test run of MMT to see whether or not you’re right.
“Always” is a long time.
Paging Mark Twain -- what is the alternative to the USD? -- is there a major currency that has significantly appreciated vs the USD since the 2008-9 financial crisis?
Putin Unleashes Strategic Hell On The UShttps://www.goldpriceoz.com/goldpricegraph/us-dollar-index-10-years-history.pngReplies: @Audacious Epigone
No idea what the alternative will be. Maybe we’re entering a multipolar world with regard to currency. Maybe crypto. Maybe gold. Maybe a bundled currency basket like Facebook has been toying with.
If the discount rate goes negative in a sustained way and beyond transaction and storage costs, it will cause an old fashioned bank run.
If this comment ages well, I’ll buy it from you!
Zoomers producing memes is fun now. When dollar inflation moves from assets to consumer goods, it’s not going to be funny to zoomers, either.
The Fed and the Treasury don’t coordinate? Really?
If US assets are so reliably liquid, why do the repurchase markets keep gumming up so spectacularly?
If zero or less = dead, then the Euro has long been extinct. And, people keep using it. € is the only valid currency for remitting most Euro Zone [EZ] taxes and receiving payments from EZ governments.
https://www.silverdoctors.com/wp-content/uploads/2017/12/COMM-world-central-banks-still-holding-interest-rates-in-negative-territory-12212017.jpg
_____
If people want to leave USD where do they go?
-- EUR has years of negative rates.
-- RMB (China) is not transparent about risks such as bad loans.
-- Other national currencies are volume limited -- JPY, GBP, etc.
-- Physical commodities, such as Gold and Silver, have storage costs that are equivalent to negative rates. Plus, fraud risks such as gold foil wrapped tungsten bars.
As much as certain parties want the USD to go away, they have no credible replacement.
PEACE 😇Replies: @Audacious Epigone
The “death of the dollar” is obviously (I hope) hyperbolic. The enfeebling of the dollar is not, I don’t think.
____
However, it is hard to make a case that the USD riskier than the alternatives.
-a- Do you believe any currency will outperform the USD?
-b- If so, specify which one(s)?
-c- Does this outperforming currency have sufficient market depth to accommodate those wishing to exit USD?
Point C is critical. The Swiss Franc [CHF] is a small market versus €, and CHF has experienced massive artificial gyrations driven by € instability. (1)Theoretically sound, but small, currencies are likely to be disastrously impacted if the USD is damaged.
PEACE 😇
_______
(1) https://www.investopedia.com/articles/forex/033115/why-swiss-franc-so-strong.aspReplies: @Audacious Epigone
1. The US military. Other nations WILL take our money, or else, as Saddam found out.
2. The IRS /US taxpayer. You WILL receive interest on US Treasuries
3. The smooth transition of power, even though traitorous Dems tried to ruin that, and should be punished.Replies: @Audacious Epigone
The US is taking an L in Afghanistan after two decades. If coronavirus is a weapon, US military dominance doesn’t mean what we think it means.
Elite, Yes indeed. A new balance will be found,as it has in time of collapse in the past, nd will again in the future. This time might go a lot faster than some previous epoch changes. The rub is whose assets are seized and whose debits are forgiven during the re-balancing event(s). Typically there is some sort of armed confrontation and treaty that sets the re balancing process aright, and I don’t see one here. It will be fun to watch.
When the spot price of gold is beaten down by $200+ in just a few days after a long, slow climb out of the basement, it’s likely just a ploy to stop the perception that the dollar has been losing against gold lately.
The game isn’t going to play out the way it did in ’13, though.
“there will never be inflation again”
Well, only in unimportant things like house prices and education …
The cost of learning anything (i.e. actual learning) has fallen tremendously. The amount of free material online, MOOCs for $10-$20, etc. is immense. Plus, more and more employers, including Google, have said they no longer require college degrees, as Coursera and Udacity will suffice.
Colleges jack up tuition without actually adding educational value. For your statement to be true, one would have to believe that college degrees have risen in value as tuition has risen. That is obviously and emphatically not the case.
The problem is, statements like yours are mindlessly memorized, with no actual thought behind them.
Yeah i got a friend whose family owns several small businesses here, they’re expecting massive layoffs soon
Well, only in unimportant things like house prices and education ...Replies: @Achmed E. Newman, @Thomm, @Audacious Epigone
Inflation has been much higher than the advertised 1-2% in food, autos, auto parts, building materials, insurance, health care, utilities, and yes, house prices and education too. But, I can get my iCrap a lot cheaper, so there’s that …
Plus, the Commodities Index has fallen 40% since 2000, vs. over a 100% rise in the stock market over the same period.Replies: @Achmed E. Newman
Well, only in unimportant things like house prices and education ...Replies: @Achmed E. Newman, @Thomm, @Audacious Epigone
Completely false. Education is not the same thing as college tuition.
The cost of learning anything (i.e. actual learning) has fallen tremendously. The amount of free material online, MOOCs for $10-$20, etc. is immense. Plus, more and more employers, including Google, have said they no longer require college degrees, as Coursera and Udacity will suffice.
Colleges jack up tuition without actually adding educational value. For your statement to be true, one would have to believe that college degrees have risen in value as tuition has risen. That is obviously and emphatically not the case.
The problem is, statements like yours are mindlessly memorized, with no actual thought behind them.
Actually, it has not. MIT did a Billion Prices Project (BPP) which proved otherwise.
Plus, the Commodities Index has fallen 40% since 2000, vs. over a 100% rise in the stock market over the same period.
Actually, then, Thomm, yes, inflation has been a lot higher than you are told.Replies: @Nodwink, @Thomm
Plus, the Commodities Index has fallen 40% since 2000, vs. over a 100% rise in the stock market over the same period.Replies: @Achmed E. Newman
I buy stuff. I doubt I’ll believe the MIT project over my own lying eyes. I don’t buy that many commodities directly. I do have to pay for house/auto insurance (just went up), healthcare (always going up – yearly lab test went from $38 to $150 over the last 7 years), car batteries (up 50%, but last 1/2 as long), water bill (used to be $8 for minimum 200-300 cubic-ft, now $35, over 25 years), and, well, I go to the grocery store.
Actually, then, Thomm, yes, inflation has been a lot higher than you are told.
You are not correct. Inflation is minimal, despite $23 Trillion in worldwide QE. Oil has fallen from $110 to $30.Replies: @Achmed E. Newman, @Mark G., @Audacious Epigone
I don’t think the specifics matter. This is like Ron Unz’s American Pravda series.
With Kois, you have someone entirely ensconced in popular culture suddenly writing an article titled ‘America is a Sham’. A seemingly very average suburbanite just discovered that his whole society is a fraud. Ron Unz is a very different character, but the dynamic is the same.
With Kois, you have someone entirely ensconced in popular culture suddenly writing an article titled 'America is a Sham'. A seemingly very average suburbanite just discovered that his whole society is a fraud. Ron Unz is a very different character, but the dynamic is the same.Replies: @UK
Yes, both are stupid.
All nations hit by the pandemic can expect to have at least temporarily “enfeebled” currency buying power. This is a natural consequence from reduced production of services & real goods.
____
However, it is hard to make a case that the USD riskier than the alternatives.
-a- Do you believe any currency will outperform the USD?
-b- If so, specify which one(s)?
-c- Does this outperforming currency have sufficient market depth to accommodate those wishing to exit USD?
Point C is critical. The Swiss Franc [CHF] is a small market versus €, and CHF has experienced massive artificial gyrations driven by € instability. (1)
Theoretically sound, but small, currencies are likely to be disastrously impacted if the USD is damaged.
PEACE 😇
_______
(1) https://www.investopedia.com/articles/forex/033115/why-swiss-franc-so-strong.asp
Hard to predict how it is going to play out, but I expect fiat currencies across the world to depreciate against other forms of money--gold if you're conventional, crypto if you're a futurist.
Actually, then, Thomm, yes, inflation has been a lot higher than you are told.Replies: @Nodwink, @Thomm
I haven’t paid any attention to inflation figures here in Australia since the 90s, because I found out that they were excluding lots of items.
MaudeHedonics.See "Measuring Inflation: Hooked on Hedonics",
"Hedonics - Pleasure from Products and Services", and
"Hedonics in the Current Era of Cheap China-made Crap".
Right, and then there’s
MaudeHedonics.See “Measuring Inflation: Hooked on Hedonics”,
“Hedonics – Pleasure from Products and Services”, and
“Hedonics in the Current Era of Cheap China-made Crap”.
Actually, then, Thomm, yes, inflation has been a lot higher than you are told.Replies: @Nodwink, @Thomm
That is not scientific in the least, plus people have a tendency to think ‘inflation’ is governed by the price of just three things : milk, gasoline, and college tuition (which is not ‘education’).
You are not correct. Inflation is minimal, despite $23 Trillion in worldwide QE. Oil has fallen from $110 to $30.
Your college vs. education point is a good one, Thomm, but it's not good for this argument. Put it this way - COLLEGE has gone way up. Is that better?
You are not correct. Inflation is minimal, despite $23 Trillion in worldwide QE. Oil has fallen from $110 to $30.Replies: @Achmed E. Newman, @Mark G., @Audacious Epigone
Nope, I’m correct. I am not stupid enough to believe numbers out of the BLS. They need to keep the numbers low to keep down the built-in raises in SS, disability payments and whatever else. Milk is not a big portion of anyone’s budget. Gasoline is not a big portion of mine, even when it is at $4/G.
Healthcare IS a significant portion of my budget. Food is too, Utilities are somewhat smaller but still significant (even internet has gone up fro $30 monthly to $70 over 10 years. I hate to tell you, but that’s a WHOLE LOT more than 2% annually, Thomm.) Autos and the care therof are a significant portion (only due to one purchase, but it was a biggy – the parts still matter – have you gotten a battery lately?) Insurance is a significant part of my budget (cars and the house). It’s steadily gone up, maybe by 4-5% a year.
Did this MIT study take into account that shirts don’t last 10 years but more like 2 years now? Sneakers last 6 months instead of a year. Do they account for worse quality of almost ALL retail goods compared to in the past? You have to get things more often. Is that part of the study? No, it’s not.
Do they account for smaller portions sizes? (I know, beans are by the lb., and so forth, and YES, have gone up, some items such as ice cream come in reduced containers that I would not be sure the MIT study accounted for.)
Your college vs. education point is a good one, Thomm, but it’s not good for this argument. Put it this way – COLLEGE has gone way up. Is that better?
You are not correct. Inflation is minimal, despite $23 Trillion in worldwide QE. Oil has fallen from $110 to $30.Replies: @Achmed E. Newman, @Mark G., @Audacious Epigone
Most of the inflation here in the U.S. has gone into non-transportable goods. This would be things like medical care and higher education. The higher prices in these areas have caused more people to demand free college or free health care. For transportable goods, consumers can substitute lower priced foreign goods made in places like China for higher priced domestic goods made here in the U.S. So the inflationary policies followed by the Fed have helped to cause the trade deficit and the hollowing out of the manufacturing sector here in the United States as consumers have switched to buying these lower priced foreign goods. Prices have been held down in this area but at the expense of American jobs. Inflation has also caused people to shift their investments more into the stock market since things like bonds or saving accounts have such low interest rates. This has helped to form the stock market bubble which is now popping.
yeah, the idea that day to day item inflation is minimal, that’s just so wrong man. most stuff costs so much more now than it did 40 years ago.
“Popular perception is correct. In 1985, the typical male worker could cover a family of four’s major expenditures (housing, health care, transportation, education) on 30 weeks of salary. By 2018 it took 53 weeks. Which is a problem, there being 52 weeks in a year.”
i live in the real world and am only in my 40s, but the inflation in prices of stuff since the 70s is crazy. i have eyes. dollar corrected inflation is so, so real for tons of stuff. hell, the price of some stuff just in the last 10 years has increased so much.
i’m not sure how much is related to Nixon going off gold in 1971, but in the 70s and 80s, some of it definitely was. the price of certain stuff went up steadily every couple years back then.
when it comes to the price of a house, car, college tuition, or health insurance, it’s just totally dead wrong. everything is way more expensive now. more people competing for more stuff and jobs means lower pay and higher prices for stuff. it’s just that simple. a new car used to be like 5000 and a new house was 20,000. college tuition was under 1000 a year.
i would say food price inflation is real too, certainly restaurant price inflation.
it’s worse than this now, 5 years later, but for relative comparison.
https://i.imgur.com/2N3C8uC.jpg
it's worse than this now, 5 years later, but for relative comparison.Replies: @Mr. Rational, @Audacious Epigone
Try linking the image directly:
____
However, it is hard to make a case that the USD riskier than the alternatives.
-a- Do you believe any currency will outperform the USD?
-b- If so, specify which one(s)?
-c- Does this outperforming currency have sufficient market depth to accommodate those wishing to exit USD?
Point C is critical. The Swiss Franc [CHF] is a small market versus €, and CHF has experienced massive artificial gyrations driven by € instability. (1)Theoretically sound, but small, currencies are likely to be disastrously impacted if the USD is damaged.
PEACE 😇
_______
(1) https://www.investopedia.com/articles/forex/033115/why-swiss-franc-so-strong.aspReplies: @Audacious Epigone
Reduced production of goods and services should not lead to a one-third drop in the equity markets. There is no reason to flood the market with cash when production is putatively the issue. There is something else going on.
Hard to predict how it is going to play out, but I expect fiat currencies across the world to depreciate against other forms of money–gold if you’re conventional, crypto if you’re a futurist.
You are not correct. Inflation is minimal, despite $23 Trillion in worldwide QE. Oil has fallen from $110 to $30.Replies: @Achmed E. Newman, @Mark G., @Audacious Epigone
Real estate prices are one of the most significant kinds of inflation people experience. It is up way more than 2% per annum over the last several decades.
Gold was $300 an ounce in 2000. Now it’s $1500 an ounce, twenty years later. My guess is it’s going up from here. Inflation of 500% in less than a single generation.
it's worse than this now, 5 years later, but for relative comparison.Replies: @Mr. Rational, @Audacious Epigone
Anticipated my comment re: real estate prices. This is a huge aspect of inflation. Aside from stagnate wages, it is the underlying reason millennials don’t have the same standard of living that their boomer parents did.
Thorfinnsson, what probability do you put on Trump escalating into a hot war crisis with China now that his election chances are royally fucked due to how insanely badly he handled this virus outbreak? I know he’s race baiting like crazy to shore up right wing support but I’m much more worried that he may actually precipitate a near war crisis. For example, if he declares that China should pay for the crisis then it is pretty much war. Your take?
Ok boomer.
Well, only in unimportant things like house prices and education ...Replies: @Achmed E. Newman, @Thomm, @Audacious Epigone
That will finally come to an end, I think.