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Strategies & Market Trends : The Financial Collapse of 2001 Unwinding -- Ignore unavailable to you. Want to Upgrade?

To: Broken_Clock who wrote (13449)	4/12/2025 2:37:09 AM
From: elmatador	Read Replies (1) \| Respond to of 13775

China calls on Europe to join it in defying US trade aggression China has matched Trump’s tariff escalation one last time and is now exploring other fronts for fighting its trade war with the US. Elmat: China tries to seize the opportunity to bring Europe to its side. Scott Bicheno April 11, 2025 Yesterday, US President Trump rewarded all the countries that didn’t immediately retaliate to the unilateral tariffs announced last week by declaring a 90-day pause on them, while still retaining a baseline 10% tariff on everyone. The exception was China, which had retaliated, and the day ended with a further reraise of US tariffs to reach the absurd level of 145%, effectively rendering imports from China impossible. China’s tariff like-for-like tariff retaliations have operated at a discount of 20 percentage points as some US tariffs had been imposed previously without such a response. Today, China once more matched the US hike, taking its tariff on US imports to 125%. According to state-controlled publication Global Times, this will be the last time it does so. Concluding that imports from the US are now also impossible, the Customs Tariff Commission of the State Council doesn’t see any point in raising tariffs further and signalled that it will ignore any US tariff hikes from now on. So that’s it – trade between the world’s two biggest economies is over, for the time being at least. The EU bloc, viewed as a whole, does have a larger economy than China, and thus is a critical ally of both belligerents in this trade war. In another of its headline-only bulletins, China’s state news agency Xinhua reported “Xi calls on China, EU to jointly resist unilateral bullying”. That call coincides with the visit of Spanish Prime Minister Pedro Sanchez (pictured above). Xinhua’s report on that visit is headlined “Xi says there is no winner in a tariff war”. There was the usual spin about how bravely defiant China is in the face of unprovoked aggression and no mention, of course, of the extensive protectionism and trading bad faith that is endemic to China. The country even had the nerve to complain to the World Trade Organisation about America’s behaviour. “[Xi] called on China and the EU to fulfill their international responsibilities, work together to safeguard economic globalization and the international trading environment, and jointly resist unilateral bullying,” says the Xinhua report. “This not only safeguards the legitimate rights and interests of China and the EU, but also serves to maintain fairness and justice within the international community while upholding international rules and order.” Trump, of course, insists that it’s he who is pursuing fairness by trying to force China to stop “ ripping off” the rest of the world and, while both view themselves as the injured party in this dispute, it’s hard to see any path to compromise and resolution. So long as this situation remains, trade with EU will take on an extra level of importance. The EU’s top trade representative is reportedly flying over to the US this weekend to see what he has to do to get Trump to chill out, but there will be a limit to his appetite for capitulation. In an interview with the FT, European Commission president von der Leyen reiterated the threat made a week ago by France that the EU would consider new taxes on US Big Tech if the matter remains unresolved. “We are developing retaliatory measures,” said von der Leyen.” “There’s a wide range of countermeasures…?in case the negotiations are not satisfactory… An example is you could put a levy on the advertising revenues of digital services… It’s a turning point with the United States without any question. We will never go back any more to the status quo.” China now has tonnes of goods intended to be shipped to the US that are desperately looking for other buyers. That seems like a great opportunity for the EU to negotiate more favourable trade terms with China. The same applies to the UK and just as much so with the US as the UK is also one of its biggest trading partners, in both directions. While stock and bond markets are still all over the place, Trump’s 90-day pause gives everyone a chance to gather themselves and get their heads around the whole situation. Further escalations by the US on China will apparently be ignored by the latter but it will presumably double-down on its global charm offensive. Anyone who works in diplomacy or trade policy should probably plan to start their summer holiday later than usual this year. telecoms.com

To: Broken_Clock who wrote (13449)	4/27/2025 1:25:32 AM
From: elmatador	1 Recommendation Recommended By Lance Bredvold Read Replies (1) \| Respond to of 13775

Trump wants a great monetary reset. Where can the world hide? As the US tries to reset the dollar-dominated monetary order, those seeking safety should consider a historical alternative to the dollar Elmat: As people how hold gold wants it to be the alternative, capital will flow to other geographies and other assets Published: 10:30pm, 25 Apr 2025 Chaotic as it seems, Donald Trump’s tariff war is a deadly serious attempt to address what he and his team perceive as the core issues of the dollar-dominated global monetary system. Look no further than how United States Treasury Secretary Scott Bessent, trade official Peter Navarro and senior economic adviser Stephen Miran share a visceral anger in their public statements. The US feels victimised because it runs large current account and trade deficits from the strengthening dollar – due in part to military spending – as trading rivals devalue their currencies, inadvertently or not weakening America’s once mighty manufacturing prowess. Essentially, the Trump administration wants to reset the dollar-dominated monetary and trading order. Miran’s November essay, “A User’s Guide to Restructuring the Global Trading System” – dubbed the “Mar-a-Lago accord” – envisions converting Pax Americana into Tax Americana. Users and holders of US dollars, especially allies, would be persuaded to pay user fees essentially, by switching their holdings into long-term securities, if they wish to continue enjoying military protection. Miran’s key weapons for bargaining include tariffs and sanctions. There is a brutal lesson here from the history of imperial finance. The Roman empire funded itself through military conquests and confiscation of enemy assets, among other ways. The British empire adopted a more civilised model of borrowing funds from colonies and foreign investors, by offering perpetual bonds known as consols. This allowed British capitalists to borrow, reinvest or lend at higher rates. This is exactly the model adopted by Wall Street. In 1717, Isaac Newton, as master of the mint, set a mint ratio that reduced the amount of silver in circulation, and it eventually led to the British adoption of the world’s first formal gold specie standard. US currency initially favoured silver but this changed after the US Congress adjusted the silver-to-gold ratio in 1834, leading to gold’s emergence. With the second world war nearly bankrupting Britain, the US took control of the gold market and the dollar eclipsed the pound sterling. After the second world war, the US dollar was linked to gold at a fixed rate of US$35 per ounce. Gold has long been accepted as a good means of payment and store of value, but its main defect as a reserve currency standard is limited supply, which constrains the ability of governments to print or borrow money. Gold creates a hard budget constraint independent of politics. As the US’ gold reserves declined, especially amid excessive spending on the Vietnam war, president Richard Nixon took the dollar off the gold standard in 1971, and the world entered the era of floating exchange rates. The new system gave the US the luxury of not maintaining fiscal discipline since the rest of the world wanted to hold dollars as a reserve currency. This created an “exorbitant privilege”, and a situation that economist Robert Triffin characterised as a dilemma: the more the world demanded US dollars, the more America’s deficits grew, as well as unsustainable debt. What is the Hong Kong Dollar Peg? With flexible exchange rates and the free flow of capital came the post-1980s era of fiscal extravagance that encouraged excessive consumption funded by debt, financial speculation rather than productive investment, periodic financial crises and bailouts by central banks that created asset bubbles and subsequent crashes. Proposals to reform the international monetary system have included replacing a nationally-issued reserve currency with a multilaterally-issued currency or using the International Monetary Fund’s Special Drawing Rights, which is a basket of the key reserve currencies. Such proposals are unlikely to take off because the US would probably not want to see its currency losing its special status. Moreover, leading nations might not agree on how to cede their currency-issuing power to the IMF. What these reformers miss is that the natural substitute for a non-national reserve currency is not another artificially designed standard but the historical candidate, gold. Gold is the only form of currency that cannot be printed by governments or mined through algorithms. If we cannot trust politicians, national governments or central bankers to manage our money, then a transparent gold market may be able to price fiat currencies that float against each other and against gold. The US is running increasingly larger fiscal deficits – currently 7 per cent of gross domestic product – and trade deficits – now 3.1 per cent of GDP. It also ran up net foreign liabilities of US$26 trillion by the end of 2024. The US dollar was considered a solid safe-haven asset until recently, when the bond market wobbled even as the equity market corrected, drawing comparisons to how emerging markets behave. The shift out of dollars is already happening; central banks have reduced the share of dollars in their foreign exchange reserves from over 72 per cent to about 58 per cent over the past two decades. Central banks have added 1,000 tonnes of gold to their reserves for three years running, and hold more than 36,000 tonnes of gold. The spectacular rise in gold prices to a peak of US$3,434 per ounce this week suggests a fundamental de-dollarisation not into other fiat currencies, but into gold. In other words, Trump’s financial engineers have tried to use a single weapon – tariffs – to reset the system and inadvertently pushed the system back towards a gold standard. Central banks cannot fight higher gold prices by selling precious reserves or setting higher interest rates, the last thing heavily indebted governments need. Between American financial engineers and gold, it’s in gold I trust.