Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Art of Investing -- Ignore unavailable to you. Want to Upgrade?

To: Sun Tzu who wrote (5327)	8/30/2022 12:43:09 PM
From: stuffbug	Read Replies (1) \| Respond to of 10599

<< basket of currencies >> The SDR (Special drawing right) already exists and includes gold as a component. As some countries prosper and others worsen, the constituents and weightings could be changed to better reflect relative global economic importance. Difficulty would be to develop some sort of bond market - who would issue them, the IMF?

To: Sun Tzu who wrote (5327)	8/30/2022 2:39:08 PM
From: russet	Read Replies (1) \| Respond to of 10599

I would call the U.S. dollar's role in the world presently as a "global quoting currency". I think it's role as a reserve currency has been eroding (and probably now deceased) since the 1980's when we got computers that could quickly calculate exchange rates for any currencies. International businesses I am familiar have been doing transactions for materials and parts in whatever currency the seller wanted since the 1980's. When I take a trip I am usually given the option to make transactions in several different currencies, most commonly being the currency of the country I am in, or the US dollar, or the Euro, and many countries accept whatever you want to use as a currency. Even nationalized businesses and governments will deal in multiple currencies, for not just buying things from other countries, but to supply things as well. Currency conversions can be done in milliseconds. Many commodities and products are quoted in US dollars as a starting point in negotiations, but the transactions are usually done in a different currency or a combination of other currencies and other things. This includes goods, services and even financial transactions. Computers, less restrictive global trade and multiple trading partners wiped out the need for a global reserve currency a long time ago. I think the concept of a global reserve currency is dead, except in the minds of political luddites that want to believe they have power over other people by insisting they possess a fantasy reserve currency. This last year has proven that Russia can transact anything they want in any currency they want.

To: Sun Tzu who wrote (5327)	8/30/2022 4:16:07 PM
From: Real Man	1 Recommendation Recommended By re3 Respond to of 10599

The problem with recession and higher interest rates is that it spikes up the budget deficit. If the expectation of “Worse than 2008” that I share with Michael Burry proves correct, US will be driven into unsustainable debt. at some level of debt more of it drives collapse instead of recovery. A widely circulated paper claimed the ratio of debt (govt) to gdp at which the threshold happens at 77%. It would mean if we fall into recession, Keynesian stimulus will not get you out of recession and could accelerate collapse. At least how it works in non-privileged countries. datalab.usaspending.gov You can see huge spikes in budget deficit during recessions, the debt that can’t possibly be paid in todays dollars. So, I am not sure what coolaid Powell is drinking thinking he can drive inflation down. I think it is accelerating. So we doubled M0 in 2020. How much stimulus now? Biden will keep doing bills. What I am trying to say, Fed’s effort is pointless at this point as it can’t prevent a sovereign default (printing is a form of that) because tightening will cause private and corporate defaults which in turn will transfer bad debt to the Federal govt. Another real estate crisis may be on its way already thanks to Powell hikes. You just can’t get out of this trap easily without major pain.

To: Sun Tzu who wrote (5327)	9/28/2022 12:47:11 PM
From: Sun Tzu	4 Recommendations Recommended By dara gg cox kidl stuffbug Read Replies (2) \| Respond to of 10599

I did not know that Stanley Druckenmiller had the same timeline for the collapse of the US as I do. Here he is today articulating it better than I have. My reasoning for the demise of USD as the reserve currency is the long debt cycle and the demographics. Typically one is enough, but both are coinciding. MUST WATCH: Incase you don’t realize how bad our debt/bubble situation is… listen now. Druckenmiller playing no games todaypic.twitter.com/JE5vgHwT9v — Stephen Geiger (@Stephen_Geiger) September 28, 2022 # tick tock

To: Sun Tzu who wrote (5327)	10/17/2022 12:36:38 PM
From: Sun Tzu	Respond to of 10599

#ticktock Bye Bye Petro Dollar ?? 🚨 pic.twitter.com/BZC8qBPSpW — Wall Street Silver (@WallStreetSilv) October 17, 2022

To: Sun Tzu who wrote (5327)	12/21/2022 3:46:08 PM
From: Sun Tzu	1 Recommendation Recommended By Anchan Read Replies (2) \| Respond to of 10599

Re: #ticktock USD, Cryptos, and Fiat Currencies Had a good discussion with Hank Scorpio over on Kirk's thread. I am providing my final comments here to keep the discussion regarding a global currency in one place. This is a reply to: Message 34126098 Which you can backtrack to its beginning. tick tock ============ You pov is a relatively common one, so I am going to try to address each point: >> All of my economics professors and the textbooks they used told me that the value of a fiat currency is directly derived from the ability of the said country to leverage the value and output of its citizens. That is a fairytale. The kind that adults or governments tell their children/citizens to put their minds at ease. Governments have always had the ability to tax their citizens. Yet traditionally their currency's value had nothing to do with their GDP or ability to tax. Why was that? Now the reason your professors can sell that myth to their students is that the mechanics of balance of payment mean that in general when a country's GDP grows more than others, then it creates a net increase demand for their currency, which in turn increases the price of their fiat money. But peel away the onion layers and it still boils down to some sucker perpetuated the myth that the monopoly money has some value. In fact likening a fiat currency to game credit clarifies the point. Many of the modern games have a currency within them. You can use this currency to buy weapons, tools, or decorate your home and character within the game There have been endless debates and court cases as whether or not the play money is real money. On one hand, the game producers (and many courts) have held that it is not a currency or anything of value. They say this because it is in both of their interests to perpetuate the myth and to safeguard the national currency myth. On the other hand, people spend hours earning these play monies. And they are willing to pay real hard currency to gain some of that play money so they can buy the digital assets within the game. And in some cases they have resorted to violence to gain and/or protect such digital assets and money. Nobody can objectively distinguish how the game money is different than a national currency. >> Your argument wrt. oil is a meaningful point. Thank you. But the really fun one was the Eurodollar. Most people don't realize that the Fed has only limited power regarding the USD because there is ~15x - 30x more Eurodollars than US dollars in circulation and the two are indistinguishable. This is one of the reasons why I find the transition to a global digital stablecoin inevitable. It is not in the US national interest to maintain the world's reserve currency. This point will be exceedingly clearer as the time goes by. >> All of this said, however, it still doesn't address where crypto gets its value. Even if I accept the argument that a countries' currency has value simply because people think it has value, that said country has infinite more ways to back and extract that value and cause those people to think that the value is there. Crypto has nothing more than a mass psychosis. ;))) The whole point crypto, or at least Bitcoin, is that the government should not be the only entity capable of inducing the said mass psychosis <vbg>. The collective power of masses around the world is greater than any single government. In China, when you shop from Alibaba's network, you pay with some Ali Coin or what not. By convention 1 ali coin = 1 RMB. But that is just to keep the match simple. This is one of the key reasons why Jack Ma got so much flak from the government that ended up disappearing from public life to focus on painting. Meta (then Facebook) had the right idea with their Libra currency. And the government was scared enough to scare all the backers aways. Zuckerberg however did not get the drift and had to be hauled in front of the congress. If Amazon decides to issue its own coin across its network that will be valid for all regions and AWS services, you will have a real private fiat coin, not backed by the ability of any government to tax you. But Bezos is too smart for that ;) The bottom line is that there are people who are willing to storm this castle and risk having their heads on spikes and eventually one of the will succeed. Is it going to be Bitcoin? I doubt it. Will it be Either? They are closer to government sanctioned digital coin, but they don't address the real issue of being free from the government. Will it be some the other cryptos? Certainly not. The end picture will be a digital stablecoin that is tied to a basket of currencies and commodities and bypasses SWIFT or any other unilateral governing body. It may fall under the auspices of IMF or something like it. But it will need to be more inclusive than SWIFT or the US government.