You are, without a doubt, the most learned and intelligent financial writer I have ever read. The articles I read from you are masterpieces. Major props to you.
A commonality in many previous civilisational collapses was the debasement of their currencies and collapse of the complexity of the societal systems.
There has never been such a complex system as these junkies have created. Cross Contagion from all these trillion-dollar speculations is almost certain. Just like in Hollywood, the movie always comes to a dramatic end, and we are circling the drain now.
That was a very concise read! These macro subjects usually elude me, but looking at the orders of magnitude of each player's debts/assets, things make a lot of intuitive and 7yo aritmethic sense. It's unbelievable that the Fed will "lose a battle" anytime soon - if ever.
Neither will national reserves back down, I imagine, not with the Fed behind them. Here in Argentina we always knew to make the money printer go brr even before QE made it cool and orthodox monetary policy everywhere. We already (and every other non-US country eventually) still get hyperinflation (because who wants those filthy pesos if there's that many juicy dollars, right?). But not for the US dollar, nope!
Would you be interested in translating this piece to Spanish? It deserves a truly wide audience.
Spectacular. Simply but exhaustively explaining the global monetary system and a persuasive argument for it to continue. Good luck to the de-dollarizers.
Excellent summary. While I hate the dysfunctional analogy of our Fed being the opiate supplier of dollar fiat, it is true. I wish they would just admit to soft default through higher inflation and stop with the foolishness of targeting 2% inflation with tools that are blunt and obsolete.
first, terrific article, extremely well articulated and described.
second, as Herbert Stein said, that which cannot continue, won't, or something to that effect (I don't remember the exact quote), but the point is, can this actually go on indefinitely? It occurs to me that at some point, the magnitude of what will need to be done to anesthetize the volatility will outgrow the Fed's capabilities. either that or the market will no longer care what they say/do and go on their merry way. consider how difficult it has been for Chairman Jay to convince people that they mean business and they are going to continue to tighten policy going forward and maintain those levels for a long time. certainly the bond market doesn't believe Powell, although it appears the stock market is getting a little religion lately.
Is there a number that will be too large for even them to accept when it comes to printing money?
they will issue as many reserves as needed to maintain liquidity. this goes on indefinitely until it causes too much of an inflationary pulse. but issuing reserves alone might not be enough to light a fire. you need government stimulus and spending etc. other exogenous factors on top.
Are you convinced the BRICS+ will go along with this plan? Couldn’t they just cut bait and trade amongst themselves? They are already discussing an alternative means of currency.
They're past discussing. China has publicly invited Saudi to trade its oil for Yuan on Shanghai exchanges. China purchased Saudi oil in Yuan a few months ago. Then you look to Russia, which has shot itself in the foot, and locked in a long future as China's gas station. If China secures reliable energy from multiple regional partners, on their markets using their currency, they pose a legitimate threat to dollar hegemony.
Your thinking is on the same lines as mine. Not sure Russia is wounded though - Europe still needs cheap(er) energy and if sense prevails may start putting the interests of their people first. The loss of the pipeline is a major hurdle admittedly. I heard months to years to get it fixed.
This is a great article.....in fact all your publications are a goldmine of great information and knowledge I wish I would have been here earlier but its still great reading through all your publications....be blessed
The current crisis will lead to a global financial reset. The rules must change and the banking system should go back to the actual investing. The era of central banking as we know it is coming to the end.
Was recently directed to your site via someone linking to this piece.
I have been in discussions with someone over the repo crisis of 2019. Their view of what triggered it is the quote below which I thought was an oversimplification of the situation.
I would be interested to hear your views on this.
" I believe the repo crisis was due to US banks refusing to transact with European banks that have never written their bad debts down after he 2008-09 financial crisis. The Fed became the central bank to the world as US banks, which are healthier than other big banks, refused to counteract with Deutsche Bank and other big banks, because they refused to assume the counter-party risk - that is why rates leapt to 10% for overnight money."
You are, without a doubt, the most learned and intelligent financial writer I have ever read. The articles I read from you are masterpieces. Major props to you.
🙏
A commonality in many previous civilisational collapses was the debasement of their currencies and collapse of the complexity of the societal systems.
There has never been such a complex system as these junkies have created. Cross Contagion from all these trillion-dollar speculations is almost certain. Just like in Hollywood, the movie always comes to a dramatic end, and we are circling the drain now.
Absolutely fantastic article.
Thanks Frank
That was a very concise read! These macro subjects usually elude me, but looking at the orders of magnitude of each player's debts/assets, things make a lot of intuitive and 7yo aritmethic sense. It's unbelievable that the Fed will "lose a battle" anytime soon - if ever.
Neither will national reserves back down, I imagine, not with the Fed behind them. Here in Argentina we always knew to make the money printer go brr even before QE made it cool and orthodox monetary policy everywhere. We already (and every other non-US country eventually) still get hyperinflation (because who wants those filthy pesos if there's that many juicy dollars, right?). But not for the US dollar, nope!
Would you be interested in translating this piece to Spanish? It deserves a truly wide audience.
Nothing News - it is a "normal" cirkulation behind the USA way of life style.
Spectacular. Simply but exhaustively explaining the global monetary system and a persuasive argument for it to continue. Good luck to the de-dollarizers.
Thank you. Round two coming up!
All that you say may be true but I think you underestimate the geopolitical risks. History shows that navigating debt crises is not simple.
Excellent summary. While I hate the dysfunctional analogy of our Fed being the opiate supplier of dollar fiat, it is true. I wish they would just admit to soft default through higher inflation and stop with the foolishness of targeting 2% inflation with tools that are blunt and obsolete.
Perhaps a war or something like that
first, terrific article, extremely well articulated and described.
second, as Herbert Stein said, that which cannot continue, won't, or something to that effect (I don't remember the exact quote), but the point is, can this actually go on indefinitely? It occurs to me that at some point, the magnitude of what will need to be done to anesthetize the volatility will outgrow the Fed's capabilities. either that or the market will no longer care what they say/do and go on their merry way. consider how difficult it has been for Chairman Jay to convince people that they mean business and they are going to continue to tighten policy going forward and maintain those levels for a long time. certainly the bond market doesn't believe Powell, although it appears the stock market is getting a little religion lately.
Is there a number that will be too large for even them to accept when it comes to printing money?
they will issue as many reserves as needed to maintain liquidity. this goes on indefinitely until it causes too much of an inflationary pulse. but issuing reserves alone might not be enough to light a fire. you need government stimulus and spending etc. other exogenous factors on top.
Are you convinced the BRICS+ will go along with this plan? Couldn’t they just cut bait and trade amongst themselves? They are already discussing an alternative means of currency.
They're past discussing. China has publicly invited Saudi to trade its oil for Yuan on Shanghai exchanges. China purchased Saudi oil in Yuan a few months ago. Then you look to Russia, which has shot itself in the foot, and locked in a long future as China's gas station. If China secures reliable energy from multiple regional partners, on their markets using their currency, they pose a legitimate threat to dollar hegemony.
Your thinking is on the same lines as mine. Not sure Russia is wounded though - Europe still needs cheap(er) energy and if sense prevails may start putting the interests of their people first. The loss of the pipeline is a major hurdle admittedly. I heard months to years to get it fixed.
This is a great article.....in fact all your publications are a goldmine of great information and knowledge I wish I would have been here earlier but its still great reading through all your publications....be blessed
The current crisis will lead to a global financial reset. The rules must change and the banking system should go back to the actual investing. The era of central banking as we know it is coming to the end.
Thank you for your detailed view on currency .As a Canadian resident, do you have a view on holding CAD vs USD for the next six months? Thank you
Was recently directed to your site via someone linking to this piece.
I have been in discussions with someone over the repo crisis of 2019. Their view of what triggered it is the quote below which I thought was an oversimplification of the situation.
I would be interested to hear your views on this.
" I believe the repo crisis was due to US banks refusing to transact with European banks that have never written their bad debts down after he 2008-09 financial crisis. The Fed became the central bank to the world as US banks, which are healthier than other big banks, refused to counteract with Deutsche Bank and other big banks, because they refused to assume the counter-party risk - that is why rates leapt to 10% for overnight money."
The move was made to add liquidity, so no :)