I think fed will possibly pivot towards the end of the year.Depends why it's dropping
The Saudis get a lot more relevance debate than they deserve.There's a coalition of commodity heavy countries that want to move away from the usd$. To something that doesn't depreciate as hard.
Saudis chattering about something gold backed. Might be all pie in the sky stuff, but I'm definitely seeing moves.
What's the safest (ie. lazy man's option) of shorting the usd out to 2024 if I were interested. Which I'm not really because I'm in a pretty lazy mood.
Sorry, I replied to the wrong post re Saudis.The Saudis get a lot more relevance debate than they deserve.
Apart from oil, sand and terrorism, they don't make , export , or grow much else.
nearly 70 % of its economy and 65% of its exports are fossil fuel based.
The most critical source of revenue, apart from its hit squads, will come to an end, either by the rest of the world removing its great dependance on oil, or, more likely, the reserves of oil along with the technology to extract it will run dry.
So what do they have to offer the rest of the world apart from a steady market for red checked tea towels and fan belts?
The population of 35 million people is mostly poorer immigrants who work to make life easier for the House of Saud elites.
It lacks water, is unable to feed itself, and relies on buying large tracts of arable land in other countries.
A corrupt , mysoginist , narcissistic regime that lacks any sort of morals or ethics most likely will not survive the next 30 years.
mick
Yea, but THIS time its different.View attachment 148712DXY chart set to 25 years. Last time the US dollar was this high was in 2002, $1.20. The US dollar soon collapsed.
View attachment 148716
Gold chart also set for 25 years. Gold rallied from 2002 through to 2011. $250 in 2002 to $1800 in October 2011
Petrodollars.The Saudis get a lot more relevance debate than they deserve.
Apart from oil, sand and terrorism, they don't make , export , or grow much else.
nearly 70 % of its economy and 65% of its exports are fossil fuel based.
The most critical source of revenue, apart from its hit squads, will come to an end, either by the rest of the world removing its great dependance on oil, or, more likely, the reserves of oil along with the technology to extract it will run dry.
So what do they have to offer the rest of the world apart from a steady market for red checked tea towels and fan belts?
The population of 35 million people is mostly poorer immigrants who work to make life easier for the House of Saud elites.
It lacks water, is unable to feed itself, and relies on buying large tracts of arable land in other countries.
A corrupt , mysoginist , narcissistic regime that lacks any sort of morals or ethics most likely will not survive the next 30 years.
mick
Sorry, that one went through to the keeper.Petrodollars.
Once the US went off the gold standard they cut a deal with the Saudis to basically oil back the $usd to keep it as reserve currency in exchange the US defends the regime.Sorry, that one went through to the keeper.
Would you care to expand a little Mox??
Mick
I bet the Saudis are not getting petrodollars for Chinese oil sales.Once the US went off the gold standard they cut a deal with the Saudis to basically oil back the $usd to keep it as reserve currency in exchange the US defends the regime.
Or something like that.
Anyway if Saudis pivot to something else $Usd is probably toast
That's part of the problem. They started selling it in yuan earlier this year. While it's largely "symbolic" there's that concern.I bet the Saudis are not getting petrodollars for Chinese oil sales.
Mick
It actually is. Most of the world has reached the point of demographic no return.Yea, but THIS time its different.
Mick (with his largest sarcastic hat on).
Its always different, but the outcome is always the same.It actually is. Most of the world has reached the point of demographic no return.
Its always different, but the outcome is always the same.
Mick
Chuck butler in his overnight email noted a couple of important things.Guys if the world goes to **** the USD will be the flight to safety. The only exception is if the U.S itself goes to hell and the usa is actually going to be the best country for the rest of this half of the century.
I think fed will possibly pivot towards the end of the year.
I don't think 2-3% inflation will be the baseline they will be able to get to.
Hard to see how they get out of this one. Especially with Republican possibly blocking everything.
Chuck butler in his overnight email noted a couple of important things.
1. The Chinese Renmimbi has become the fifth most traded currency.
I was one of those saying that the Renmimbi/Yuan did not have enough liquidity to become a major force.
That might be true in the western world, but it is patently obvious that other countries see no such problems. This is a major level of scale that many experts said could not be achieved.
2. Last Friday, stats announcing that Consumer Spending had risen3.8%, and the economy was seen as being resilient . The problem is, the high levels of inflation would have taken account of a goodly chunk of that rise, so its really a small rise in real value at best.
3.the current Debt to GDP at a worldwide level is sitting at 350%! The use looks comparatively benign at a mere 140% of GDP.
In 1985, the then relevant nations gathered at the Plaza hotel in New York city. They collectively decided that US current account deficit/ GDP ratio at 2.5% was far too high and the rest of the world would sell US dollars. Conveniently, the Fed government no longer report it. But others do.According to BEA, the us current account deficit 3.6% up from 2.9 % in 2020. If 2.5% was too much for the finance ministers in 1985, what would they think of todays 3.6%??
4. There is a bit of a liquidty crunch happening in US treasuries.
Japan has pulled back from buying US treasuries as it seeks to prop up the Yen.
The US fed has been shrinking its balance sheet of US treasuries, so not only is it not buying , its a net seller.
Other potential Buyers, China, Russia, the OPEC middle eastern countries have vowed to move out of the USD.
Personally, I see major problems for the USD and the US economy.
Mick
There's much more to it than this. You need to look at demographics and then how the U.S (by almost any metric) compares to the rest of the world.Chuck butler in his overnight email noted a couple of important things.
1. The Chinese Renmimbi has become the fifth most traded currency.
I was one of those saying that the Renmimbi/Yuan did not have enough liquidity to become a major force.
That might be true in the western world, but it is patently obvious that other countries see no such problems. This is a major level of scale that many experts said could not be achieved.
2. Last Friday, stats announcing that Consumer Spending had risen3.8%, and the economy was seen as being resilient . The problem is, the high levels of inflation would have taken account of a goodly chunk of that rise, so its really a small rise in real value at best.
3.the current Debt to GDP at a worldwide level is sitting at 350%! The use looks comparatively benign at a mere 140% of GDP.
In 1985, the then relevant nations gathered at the Plaza hotel in New York city. They collectively decided that US current account deficit/ GDP ratio at 2.5% was far too high and the rest of the world would sell US dollars. Conveniently, the Fed government no longer report it. But others do.According to BEA, the us current account deficit 3.6% up from 2.9 % in 2020. If 2.5% was too much for the finance ministers in 1985, what would they think of todays 3.6%??
4. There is a bit of a liquidty crunch happening in US treasuries.
Japan has pulled back from buying US treasuries as it seeks to prop up the Yen.
The US fed has been shrinking its balance sheet of US treasuries, so not only is it not buying , its a net seller.
Other potential Buyers, China, Russia, the OPEC middle eastern countries have vowed to move out of the USD.
Personally, I see major problems for the USD and the US economy.
Mick
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