The dollar drop the last few weeks

Cohete Rojo · Sep 15, 2012

Northside Storm said: ↑

The whole brouhaha over inflation is ridiculous namely for this reason. Yes, high inflation is to be avoided, but the simple fact is that deflation would hurt more than inflation. Look at American debt profiles and low savings rates. Inflation punishes savers, but there are precious few of those in America, and if 2008 and the consequences don't produce more, nothing will. Deflation punishes debtors---and there are a hell of a lot of those.
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The money supply is being inflated and it can hurt real-wages. Yearly average oil prices are at their highest. Gold has been gaining every year. Rise in oil is a sign of increase demand and lower available net export growth, and gold has been a good hedge against rising commodity prices. Is it possible for the US dollar to be such a presence in the world markets; might some other currency be better?

Dubious said: ↑

But in America, good steady stable income is never enough. People want to be rich, so our business leaders push the more volatile 'creation' type of economy that by the rule of the greater fool is almost always a Ponzi scheme that is doom to fail once the fools are enthusiastically on board.

Everybody gets hooked on the easy money and when it ends, reality looks like a recession.
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Are you still mocking Northside?

Northside Storm · Sep 15, 2012

Cohete Rojo said: ↑

The money supply is being inflated and it can hurt real-wages. Yearly average oil prices are at their highest. Gold has been gaining every year. Rise in oil is a sign of increase demand and lower available net export growth, and gold has been a good hedge against rising commodity prices. Is it possible for the US dollar to be such a presence in the world markets; might some other currency be better?
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Steady, low-moderate inflation is a hell of a lot better than deflation, which is what you would get with more constrictive monetary policy.

I'm not saying there aren't any downsides, though, just that the downside of deflation is much larger than even the potential risks of out-of-control inflation (unlikely with debt deflation) combined with the downside of inflation.

Hell, I'd argue that if you're running with a COLA (cost-of-living adjustment clause that mitigates inflation and keeps a constant real wage), and a whole load of debt, I'd say inflation is nothing but sunshine for you, unless you're buying non-core products in wholesale quantities (mostly tamped up and down by speculation of all kinds anyways).

The US dollar will pretty much be the world's reserve currency until that unshakeable faith in Treasuries, and the sheer size of the American production tamps down (basically, until a world revolution or war). Some are going to be using currencies like the CAD and maybe Yen instead (notably something Iceland's central bank has proposed with regards to the Canadian dollar), but every currency has its' problems. The Euro isn't looking too hot as a reserve currency these days, just as the easiest example.

MourningWood · Sep 15, 2012

China's powerful economic play last week certainly has something to do with it:

http://www.examiner.com/article/dol...rrency-as-china-begins-to-sell-oil-using-yuan

On Sept. 11, Pastor Lindsey Williams, former minister to the global oil companies during the building of the Alaskan pipeline, announced the most significant event to affect the U.S. dollar since its inception as a currency. For the first time since the 1970's, when Henry Kissenger forged a trade agreement with the Royal house of Saud to sell oil using only U.S. dollars, China announced its intention to bypass the dollar for global oil customers and began selling the commodity using their own currency.
Lindsey Williams: "The most significant day in the history of the American dollar, since its inception, happened on Thursday, Sept. 6. On that day, something took place that is going to affect your life, your family, your dinner table more than you can possibly imagine."

"On Thursday, Sept. 6... just a few days ago, China made the official announcement. China said on that day, our banking system is ready, all of our communication systems are ready, all of the transfer systems are ready, and as of that day, Thursday, Sept. 6, any nation in the world that wishes from this point on, to buy, sell, or trade crude oil, can do using the Chinese currency, not the American dollar. - Interview with Natty Bumpo on the Just Measures Radio network, Sept. 11

This announcement by China is one of the most significant sea changes in the global economic and monetary systems, but was barely reported on due to its announcement taking place during the Democratic convention last week. The ramifications of this new action are vast, and could very well be the catalyst that brings down the dollar as the global reserve currency, and change the entire landscape of how the world purchases energy.

Ironically, since Sept. 6, the U.S. dollar has fallen from 81.467 on the index to today's price of 79.73. While analysts will focus on actions taking place in the Eurozone, and expected easing signals from the Federal Reserve on Thursday regarding the fall of the dollar, it is not coincidence that the dollar began to lose strength on the very day of China's announcement.

Since China is not a natural oil producing nation, the question most people will ask is how will the Asian economic power get enough oil to affect dollar hegemony? That question was also answered by Lindsey Williams when he pointed out a new trade agreement that was signed on Sept. 7 between China and Russia, in which the Russian Federation agreed to sell oil to China in any and all amounts they desired.
Lindsey Williams: "This has never happened in the history of crude oil. Since crude oil became the motivating force behind our (U.S.) entire economy, and everything in our lives revolves around crude oil. And since crude oil became the motivating factor behind our economy... never, ever has crude oil been sold, bought, traded, in any country in the world, without using the American dollar."

"Crude oil is the standard currency of the world. Not the Yen, not the Pound, not the Dollar. More money is transferred around the world in crude oil than in any other product."
"On Friday, Sept. 7, Russia announced, that as of today, we will supply China with all of the crude oil that they need, no matter how much they want... there is no limit. And Russia will not sell or trade this crude oil to China using the American dollar." -Interview with Natty Bumpo on the Just Measures Radio network, Sept. 11

These duo actions by the two most powerful adversaries of the U.S. economy and empire, have now joined in to make a move to attack the primary economic stronghold that keeps America as the most powerful economic superpower. Once the majority of the world begins to bypass the dollar, and purchase oil in other currencies, then the full weight of our debt and diminished manufacturing structure will come crashing down on the American people.

This new agreement between Russia and China also has serious ramifications in regards to Iran, and the rest of the Middle East. No longer will U.S. sanctions against Iran have a measurable affect, as the rogue nation can simply choose to sell its oil to China, and receive Yuan in return, and use that currency to trade for the necessary resources it needs to sustain its economy and nuclear programs.

The world changed last week, and there was nary a word spoken by Wall Street or by politicians who reveled in their own magnificence as this event took place during the party conventions. A major blow was done on Sept. 6 to the American empire, and to the power of the U.S. dollar as the world's reserve currency. And China, along with Russia, are now aiming to become the controllers of energy, and thus, controllers of a new petro-currency.
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Also ties into the Libya situation, as many believe the ongoing currency tug o' war played a major role in NATO's decision-making:

<iframe src="http://www.youtube.com/embed/GuqZfaj34nc" allowfullscreen="" frameborder="0" height="315" width="420"></iframe>

Northside Storm · Sep 15, 2012

MourningWood said: ↑

China's powerful economic play last week certainly has something to do with it:
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er...

while it might be true that OPEC nations quote exclusively in US dollars, the notion that oil only could be exclusively traded in USD is patently false. Euros and other currencies are used to trade for oil as well. As a quick example, Iran has been doing all sorts of fun little things to trade oil in Euros or Yuan before the "announcement".

http://business.financialpost.com/2012/05/08/iran-accepts-chinese-yuan-in-exchange-for-oil/

Iran accepts Chinese yuan in exchange for oil

Reuters | May 8, 2012 8:18 AM ET

In any case, the sea change you are looking for is when OPEC decides to stop exclusively quoting prices in USD; that might peg the USD down one notch or two. But it still won't override demand for the vast assortment and scale of American products, or Treasuries.

Cohete Rojo · Sep 15, 2012

Iraq. Don't forget Saddam diversified Iraq's reserve currency through non-dollar oil deals. The UAE central bank president has also expressed favor in diversifying oil pricing in only US dollars. I'm not so sure that all OPEC and non-OPEC oil is sold in US dollars but certainly almost all of it is priced in US dollars.

The increase demand in oil leads to an increase demand in currency which has been supplied by an increase in the money supply - inflation. Gold then becomes a good hedge against this inflation - the global gold standard. The US dollar acts like a gold standard in many commodity sales.

Dubious · Sep 15, 2012

The dollar is backed by an 11 carrier fleet navy.

I couldn't mock Northside; I'm like his idiot uncle. I babble and he comes in and explains.

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