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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Dr. Voodoo who wrote (155380)	3/27/2020 5:37:49 AM
From: sense	5 Recommendations Recommended By Dr. Voodoo dvdw© Lee Lichterman III maceng2 Maurice Winn Read Replies (2) \| Respond to of 218167

Most people have no clue about the reality... The reality is... yeah, the Fed / the big banks and "the dollar" suck... they just suck so much less than any alternative on offer that there really isn't any alternative to the dollar... and all that it represents... since no one else is remotely close to being able to meet the requirements that the dollar "system" does meet. A huge portion of what "the dollar" is has next to nothing to do with the U.S.... it's the global currency. Because it is the reserve currency... OTHERS create dollar denominated obligations all the time... and that isn't under the control of anyone in the U.S. ? And, that's a royal pain in the ass... to have to manage an economy when you have people all over the place creating new dollar defined currency obligations... and not bothering to tell you about it ? If you're a lender in Argentina... you're willing to lend on a mortgage for a good risk... but if you lend in the local currency "And it's gone" applies to the lenders... more than the customers. So, mortgages in Argentina are contracts written to require payments due in dollars... which they can trust will maintain the value of the loan as it is defined in dollars, so lending occurs... and the economy benefits... even as the local currency inflates into nothing. And it's not just Argentina, and mortgages... Business risks all over the world are reduced by defining contracts in dollar terms... so that good value used in exchange is part of the deal. So, the demand for dollars is pretty much open ended... and it grows along with the growth in the global economy... but it also grows along with the decline in the relatiive utility of others currencies... as they offer less of the advantages the dollar offers. Who controls that ? Correct answer is "no one"... But, the worse others are in managing local affairs... the less their own currencies manage to hold value over time... the greater the demand grows... Note, the one mortgage in Argentina... is relatively fixed in relation to the dollar demand it creates ? So if dollar demand is growing... its not because the mortgage takes more dollars... but because the deal flow is making more mortgages that demand dollars ? People all over the world throw rocks at the U.S. and the dollar for lots of reasons... but when it comes to deciding whether to do a deal that is defined in dollars... or a deal defined in the local currency... their self interest resolves the issue of where the value and their self interest lies. Notice, I'm not talking about "demand destruction" in relation to the dollar ? Dollar demand just grows more and more as things go more and more sideways elsewhere... ? And the problem that results... is that there AREN'T ENOUGH dollars... not that there are too many ? Too little money printing... in dollars... is causing a global depression... ONLY because of how it pairs with too much money printing elsewhere. Economic reality... is that the dollar... is WAY better than the alternatives... and no one else is ready, or able, to take on the burden of sustaining value in a currency... Doing that... harms American interests... It makes our exports vastly more expensive... so it imposes competitive disadvantages ? You don't like the dollar ? Fine. Quit printing the shit out of your local trash money... at many times the rate dollars are printed ? Team China dumping Treasuries ? I've never understood why people think that's such a threat... or a risk. The Fed buys them in an afternoon and adds them to the balance sheet... without batting an eye. That's what they're there for... to smooth out the odd burbles ? So what ? It's just another... much less than a trillion now as China has been using up its savings at a good rate. It's the equivalent of one round of TARP or QE... or (not) QE ? And, on China's side... that's why you HAVE (or, had ?) savings... so they're there when you need them ? The idea of threatening us with your savings ? LOL!! We just last week... spent six times that in one week... pfftt ? Scale of the issue ? More than half of contracts in Italy... are defined in dollars... a few others are up more like 60%... most of Europe... solidly in the 40's ? China ? Probably the best among the rest... has only 20% of its internal commerce defined in dollar terms... So, you want China to play at "an economic war" by dumping Treasuries ? How would that pointless gesture work out for them ? What happens after declaring an "economic war" and dissing your trade partner... when the U.S. finally quits trying... stops clearing dollars... and stops doing business with China ? Hong Kong ? There's a reason they adopted a peg ? And they haven't had the same problems China has had with an incredible shrinking currency ? They're trusted trade partners... in part because they're not always trying to cheat you by changing the value of the money used after they make a deal ? There are economic problems in the world... But "too many dollars" doesn't appear to be the cause of any of them ? Too many bankers ? Might be onto something there...