Wasn't familiar. I had to read some Jeff Snider just now. Thanks for that. I'll have to read more on him and get back to you on that. But the Fed's inability to control the growth of debt denominated in US dollars is a sign that gold (PM) & Yuan aren't up to the task. Isn't it strange how we've taken for granted (me too) the ability to denominate trade with a reliable currency? This war proves that I'm going to want my arms denominated in Rubles, but my assets denominated in dollars. When Covid first started, the bankers talked about how the dollar was going to kill all the small currencies in the world. I think that's still happening.
I think there is going to be a financial crisis. How could there not be at this point? But by playing the delay game, inflation has become the crisis and solution. Devalued US debt, and also increased nominal US GDP. When commodities surged in dollar denominated prices, consuming countries using Eurodollars got clobbered. Now that the opposite is occurring, there's supposed to be pressure to ditch the dollar zone? I am left with this hunch that the dollar is still destroying smaller currencies in the world and that China's bilateral trade moves is an attempt to offer an alternative.
I'll do a Jeff Snider deep dive and see if he makes me think any original thoughts. If not, I'll try to keep my reply to this thread.
Again, thanks for the thoughtful reply. I love short questions that make me spew.
Tom Luongo has maintained that the Powell Fed is at war(ish) with the ECB, and wants to regain control of the $US, and is slowly starving the Eurozone of $US, picking friends/allies to save along the way. Credit Suisse and SNB were an important battle in his view (Fed won).
I'm not really seeing how Jeff Snider's thesis is original. Eurodollars started when the Europeans started getting a trade surplus with the US. Instead of importing more from the US, the banks started lending it out to encourage dollar use internationally. Standardizing its use necessarily means some currency zones will collapse. The dollar eats them. Those currency zones weren't really sovereign to begin with. The idea that commercial banks are more powerful than central banks is hardly earth-shattering.
The idea that the Dollar is like a Yuan is false. There is no free exchange. The Chinese want the hot money to come in, but not to leave. The US hot money leaves, and then in times of crisis, it comes back. China wants people to use the Yuan as a unit of exchange, but as my follow up article analyzes, the Yuan is a piece of crap. Ultimately, China is for Chinese and they will not be able to make it an appealing place for others. This limits how widely it will be used. Harvard bills in dollars. Peking University does not take outsiders. Just because you have money in China doesn't mean you can spend it. China doesn't capitalize businesses started by outsiders. China measures success by metrics that don't map reality. If GDP was a reason to be the dominant currency, the Pound would not be a reserve currency. But people want to live in London. So London real estate is a reserve asset. People do not want to live in HK anymore, so HK real estate is NOT a reserve asset.
The Dollar has crushed almost every other currency. This attempt to make a currency union centered around China is doomed to failure. The Economist once described the Soviet Ruble like a token. That now describes the Yuan. Russia stockpiled Yuan because it's stockpiling everybody's currency. That's how you become a market maker. China wants Russian cash and credit to fix its wrecked banks. Why would Russia do that? Russia needs to import capital goods to upscale its economy. A wrecked China that can't export to America anymore becomes a cheap way to solve that problem.
What is your take on Jeff Snider’s theory of Eurodollar, and Feds inability to control the growth of debt denominated in US dollars?
Wasn't familiar. I had to read some Jeff Snider just now. Thanks for that. I'll have to read more on him and get back to you on that. But the Fed's inability to control the growth of debt denominated in US dollars is a sign that gold (PM) & Yuan aren't up to the task. Isn't it strange how we've taken for granted (me too) the ability to denominate trade with a reliable currency? This war proves that I'm going to want my arms denominated in Rubles, but my assets denominated in dollars. When Covid first started, the bankers talked about how the dollar was going to kill all the small currencies in the world. I think that's still happening.
I think there is going to be a financial crisis. How could there not be at this point? But by playing the delay game, inflation has become the crisis and solution. Devalued US debt, and also increased nominal US GDP. When commodities surged in dollar denominated prices, consuming countries using Eurodollars got clobbered. Now that the opposite is occurring, there's supposed to be pressure to ditch the dollar zone? I am left with this hunch that the dollar is still destroying smaller currencies in the world and that China's bilateral trade moves is an attempt to offer an alternative.
I'll do a Jeff Snider deep dive and see if he makes me think any original thoughts. If not, I'll try to keep my reply to this thread.
Again, thanks for the thoughtful reply. I love short questions that make me spew.
Tom Luongo has maintained that the Powell Fed is at war(ish) with the ECB, and wants to regain control of the $US, and is slowly starving the Eurozone of $US, picking friends/allies to save along the way. Credit Suisse and SNB were an important battle in his view (Fed won).
https://tomluongo.me/
Thank you for the reply, Aaron.
Here is a short introduction to this theory by Robert Barns, it starts @ 1:32:42.
https://www.youtube.com/live/Bp3U6JSgqY4?feature=share
I'm not really seeing how Jeff Snider's thesis is original. Eurodollars started when the Europeans started getting a trade surplus with the US. Instead of importing more from the US, the banks started lending it out to encourage dollar use internationally. Standardizing its use necessarily means some currency zones will collapse. The dollar eats them. Those currency zones weren't really sovereign to begin with. The idea that commercial banks are more powerful than central banks is hardly earth-shattering.
The idea that the Dollar is like a Yuan is false. There is no free exchange. The Chinese want the hot money to come in, but not to leave. The US hot money leaves, and then in times of crisis, it comes back. China wants people to use the Yuan as a unit of exchange, but as my follow up article analyzes, the Yuan is a piece of crap. Ultimately, China is for Chinese and they will not be able to make it an appealing place for others. This limits how widely it will be used. Harvard bills in dollars. Peking University does not take outsiders. Just because you have money in China doesn't mean you can spend it. China doesn't capitalize businesses started by outsiders. China measures success by metrics that don't map reality. If GDP was a reason to be the dominant currency, the Pound would not be a reserve currency. But people want to live in London. So London real estate is a reserve asset. People do not want to live in HK anymore, so HK real estate is NOT a reserve asset.
The Dollar has crushed almost every other currency. This attempt to make a currency union centered around China is doomed to failure. The Economist once described the Soviet Ruble like a token. That now describes the Yuan. Russia stockpiled Yuan because it's stockpiling everybody's currency. That's how you become a market maker. China wants Russian cash and credit to fix its wrecked banks. Why would Russia do that? Russia needs to import capital goods to upscale its economy. A wrecked China that can't export to America anymore becomes a cheap way to solve that problem.