Sorry, I missed this. Very cleverI do.
It's called a "bondfire".
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The Ultimate Destruction of the US Dollar and World Markets Will Not Happen
- Thread starter konkon
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USD is simply too powerful (not in price but quantity and usage) for it to be "destroyed". Get a strong feeling china are trying to change this though.
Not really, there is a long list of nations that were once powerful, and now either don't exist, or no longer have significance on the world stage.
Portugal used to be the world's foremost imperial and naval power, for instance. The Mongols had an empire that stretched from Europe to china. Both are now irrelevant nations. The ancient romans, greeks, egyptians etc all no longer exist, replaced by new nations.
Either the US is engaged in self-sustaining, constructive behaviour, or it is engaging in self-destructive behaviour. People forget that the power the US has came from somewhere, and if that source has gone, the power will wilt.
Just have a look and see what a commodity take-down might look like. The US still controls the world's markets and is giving us a glimpse of what it can do in such a short amount of time. Imagine if it got serious and desperate? Another reason why the USD will continue to be the reserve currency.
OK if your up for it, lets discuss just this point.
What is a 'commodity take-down'? How can the US possibly depress commodity prices whilst simultaneously expanding the money supply, without magically increasing the supply of commodities, or magically reducing peoples demand for commodities?
And what does this have to do with 'reserve currencies'?
repeated margin increases on silver did some damage.... its a commodity and has been taken down (and up again by the faithful) but then down again.
For example...
and also ....
release a statement confirming end of the 2nd round of US monetary printing (denoted via the now far too well known symbol of QE) thereby 'reducing' the global increase in credit that has been keeping these commodity prices well above average.......
aaaaaand release a torrent of information regarding Greeces issues e.g. '(untrue) breakway potential' , haircuts etc, Finlands reluctance, future proposals for potugal to hock the country -
all of which have smashed the euro - USD up
aaaaaand at the same time reducing 'speculator' participation by increasing margins...
aaaaand therefore commodities down.
Granted there are other factors at work here but the above have definitely 'taken down' the commodity price.
release a statement confirming end of the 2nd round of US monetary printing (denoted via the now far too well known symbol of QE) thereby 'reducing' the global increase in credit that has been keeping these commodity prices well above average.......
aaaaaand release a torrent of information regarding Greeces issues e.g. '(untrue) breakway potential' , haircuts etc, Finlands reluctance, future proposals for potugal to hock the country -
all of which have smashed the euro - USD up
aaaaaand at the same time reducing 'speculator' participation by increasing margins...
aaaaand therefore commodities down.
Granted there are other factors at work here but the above have definitely 'taken down' the commodity price.
explod
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Well summarised stacks, as famously said a few years back by Robert Kyosaki of the US "cash is trash".
Notice their bond sale was was not well taken up overnight. Who in thier right mind would take up a 30 year bond on almost zero interest.
The US dollar is going the same way as the Weimer republic where in the end a barrow load of notes would not even buy a meat pie.
http://nowandfutures.com/us_weimar.html
This sums it up nicely, stacks.
There are perhaps other methods in the pipeline too. Ones we haven't really predicted yet. I bet the margin hikes (on futures trading) on different types of commodities caught a lot by surprise.
I can see Greece leaving the EU and setting-up its own currency in the future. I can also see them spending the loans big time and later saying "thanks, but no thanks". This marriage just didn't work-out for us. We're (Greece) are going back to the drachma and we will dust-off the printing precess and get back to controlling our own money (instead of going to the ECB for huge unpayable loans). Greece won't change its ways. A restructuring of its debt obligations will make no difference in the long run. They'll just ramp-up the debts later on too.
Imagine Australia was part of a centralised Asian currency (had no control of the printing presses) and ran into a bit of (debt) trouble and had to go to a centralised Asian agency/bank for loans with (most likely) high interest rates.
Greece with a cheaper drachma will sell more ships, olive oil and have robust tourism.
There are plenty of reports on the net (Youtube documentaries etc) on the 'inevitable' collapse of the USD. There are suggestions that as a result of this collapse commodities like silver and gold etc will go higher in value; protection buying from falling currencies etc. Their arguments seem plausible to some extent, but I think that a lot is overlooked. One being, what stops ,for example, margin requirements going higher and higher to buy commodities. You need to pay a 10% premium on silver futures contracts now. What would stop the US from implementing a 50% premium on buying some commodities if the USD was close to a premature collapse; a collapse being helped by synthetic measures and short selling pressures? This is the type of control the US has over world markets and another reason why the USD isn't going anywhere (collapsing) anytime soon.
As strange as these sort of premium measures might seem, it might become an option (among many other we haven't thought of yet) if the US feels it needs to further protect its currency and economy.
And if you think there is very little speculation going on in the commodity markets have a look at the Baltic Exchange Dry Index of commodities being shipped from country to country, below. This a non-speculative index of premiums on actual receipts on cross-county border movement of soft and hard commodities around the world.
May of 2008 saw the hight of actual movements and a drastic drop prior to the GFC. Remember when oil and other commodities were at record highs in 2008? Haven't we recently revisited these highs in the past few months in most commodities? But why isn't this reflected in demand? There has to be an oversupply somewhere (stockpiled perhaps) and a hell of a lot of speculation. The index is at 1467 as of yesterday and its average on the premium paid based on actual receipts back in 2008 and before must have been past the 5000 level; the index went past 10,000 twice back then which would have justified the high energy and commodity prices back then. What justification do we have today? Goldman Sachs recommending we buy commodities again, because it suggests oil will hit $120 again? Didn't Goldman suggest we sell commodities last month? I guess it needs to make more somehow. I wonder how closely Goldman is being looked at these days by regulatory bodies that aren't looking the other way and really do give a stuff about the US economy?
As strange as these sort of premium measures might seem, it might become an option (among many other we haven't thought of yet) if the US feels it needs to further protect its currency and economy.
And if you think there is very little speculation going on in the commodity markets have a look at the Baltic Exchange Dry Index of commodities being shipped from country to country, below. This a non-speculative index of premiums on actual receipts on cross-county border movement of soft and hard commodities around the world.
May of 2008 saw the hight of actual movements and a drastic drop prior to the GFC. Remember when oil and other commodities were at record highs in 2008? Haven't we recently revisited these highs in the past few months in most commodities? But why isn't this reflected in demand? There has to be an oversupply somewhere (stockpiled perhaps) and a hell of a lot of speculation. The index is at 1467 as of yesterday and its average on the premium paid based on actual receipts back in 2008 and before must have been past the 5000 level; the index went past 10,000 twice back then which would have justified the high energy and commodity prices back then. What justification do we have today? Goldman Sachs recommending we buy commodities again, because it suggests oil will hit $120 again? Didn't Goldman suggest we sell commodities last month? I guess it needs to make more somehow. I wonder how closely Goldman is being looked at these days by regulatory bodies that aren't looking the other way and really do give a stuff about the US economy?
But it is not a 'premium'. It is a 'deposit'. If you want to buy a futures contract, the margin requirement is the percentage value of the contract you need to deposit with the exchange to open the position. However, this works both ways - all buyers of future contacts have traded with a seller of the futures contract. Sellers are also limited in the amount they can trade given the size of their deposit.
Raising margin requirements does not in itself force the price in a particular way, but it can of course trigger a move in the price as certain agents close their positions to meet margin calls. Margin requirement increases a generally a 'calming' mechanism implemented by exchanges, since they reduce the size of the positions people can trade.
It does seem that the US and perhaps other nations are looking at ways to curb enthusiasm in many speculative markets, that are to some extent inversely related to the long term movements of the USD. One way of looking at this is to suggest that curbing speculator enthusiasm might artificially stabilise markets overall. If we look into the future, one possible outcome of this practice would be to control movements (or the lack of those movements) in nearly all markets.
If, for example, the USD is nearing a premature collapse in the distant future, a strategy by those in charge of exchanges (and by those putting pressure from above!) might be to raise margins even further on trading all kinds of markets/platforms, to unprecedented and bizarre levels, so as to preserve the USD. 'Restrictions' like or kind of like this might include restrictions placed on trading other currencies too. Instruments to curb enthusiasm on inversely related products may not be in force today, but may be implemented in the distant future; in other words, we probably haven't even factored in other unique methods of counteracting the mass buying of other products, that are inversely related to the USD.
Artificially propping-up and stabilizing markets is in force today, with for example, the quantitative easing rounds. Who would have thought of this three or so years ago. Imagine what other type of initiatives might be implemented in the next five to ten years.
On a separate note, I feel like we are living in a world where we are becoming more like pot plants than people who are free to swear at others if we feel the need to. Instead of telling us how to live our lives to an optimum degree, how about those in their ivory towers just turn to their window cills and water their pot plants. Hard to justify your job this way I guess.
If, for example, the USD is nearing a premature collapse in the distant future, a strategy by those in charge of exchanges (and by those putting pressure from above!) might be to raise margins even further on trading all kinds of markets/platforms, to unprecedented and bizarre levels, so as to preserve the USD. 'Restrictions' like or kind of like this might include restrictions placed on trading other currencies too. Instruments to curb enthusiasm on inversely related products may not be in force today, but may be implemented in the distant future; in other words, we probably haven't even factored in other unique methods of counteracting the mass buying of other products, that are inversely related to the USD.
Artificially propping-up and stabilizing markets is in force today, with for example, the quantitative easing rounds. Who would have thought of this three or so years ago. Imagine what other type of initiatives might be implemented in the next five to ten years.
On a separate note, I feel like we are living in a world where we are becoming more like pot plants than people who are free to swear at others if we feel the need to. Instead of telling us how to live our lives to an optimum degree, how about those in their ivory towers just turn to their window cills and water their pot plants. Hard to justify your job this way I guess.
professor_frink
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This is true professor. Perhaps the US will have its 2 lost decades also given that its doing the same thing and then some.Quantitative easing isn't a recent thing, Japan first started doing it 10 years ago
And as usual, I can't understand what konkon is talking about.
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QE1 & QE2 - the data is in, and the market has given it a big fat FAIL!
Is this what they get for several $TRILLION in debt funded economic stimulation? For several weeks now the various manufacturing data have plunged in unison, to the extent not to be statistical noise, rather a dramatic new trend - a global double dip recession is imminent only this time there won't be any more bazookas left in the armoury.
The flow on now showing up in the markets - The DOW - the surprising thing today was that there wasn't the 'set your clock by' last hour bid up by the Feds trading desks ie this was genuine selling brought about by just a small miss on the call for ADP Non-Farm Employment Change - only 38k on a 177k guestimate!
Along with the other abysmal data -
Wonder what QE3 will look like?
Is this what they get for several $TRILLION in debt funded economic stimulation? For several weeks now the various manufacturing data have plunged in unison, to the extent not to be statistical noise, rather a dramatic new trend - a global double dip recession is imminent only this time there won't be any more bazookas left in the armoury.
The flow on now showing up in the markets - The DOW - the surprising thing today was that there wasn't the 'set your clock by' last hour bid up by the Feds trading desks ie this was genuine selling brought about by just a small miss on the call for ADP Non-Farm Employment Change - only 38k on a 177k guestimate!
Along with the other abysmal data -
Wonder what QE3 will look like?
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You are a bit behind the curve there KK....it's being done right now.
They already raised margins on all the counter trades to the $USD and the DOW ie look at the silver & commodities take down. But, not only that, they have just announced that they will reduce margins on equities! Now what do you think they are trying to do?
There are no real markets anymore - it's all a sham trying to prop up the dying corpse of failed capitalism..................
wayneL
VIVA LA LIBERTAD, CARAJO!
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I keep hearing references to the failure of capitalism.
Capitalism hasn't failed at all, it just hasn't been allowed to do its job. Recession is part of the business cycle, and when they started messing with the business cycle, they suspended true capitalism.
What we have now is a semi command and manipulated economy run by people who think they are smarter than the markets.
If capitalism is a dying corpse, it is not because it is trying to go into recession, it's dying because it has been intrinsically altered, leaving an almost unrecognizable franken-economy in its place.
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Sorta like a half-dead heroin junkie who's life is inexorably ebbing away being prescribed massive doses of crack & amphetimines in a panick-stricken attempt to provide a bit of "stimulation"?
http://www.bloomberg.com/news/2011-...m-china-to-europe-as-global-economy-ebbs.html
So its the y2k / 2011 financial bug .
And we will all get up the next day with a big hangover and some egg on our face from partying way too hard.
Isn't our economy geared to the yella fellas yen , and don't we have a boom (minning)
I think theres been some talk of record ore prices for what the last 20yrs and WTF.
And we will all get up the next day with a big hangover and some egg on our face from partying way too hard.
Isn't our economy geared to the yella fellas yen , and don't we have a boom (minning)
I think theres been some talk of record ore prices for what the last 20yrs and WTF.
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