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The US Dollar Is About To Inflict Carnage All Around The Planet
Submitted by Raul Ilargi Meijer via The Automatic Earth blog,
Jack Delano Brakeman Jack Torbet at Atchison, Topeka & Santa Fe Railroad March 1943
As I watch the euro losing another 1.3% against the dollar today, it’s now at $1.25, and down from close to $1.40 recently, it’s getting clearer all the time: the greenback is busy eating currencies and economies alive.
There is of course the fact that Abenomics in Japan is living up to its longstanding promise of utter failure. And there is Mario Draghi torn between two lovers, one the one hand the Germany/Austria camp – with France as a surprise third – who don’t want the ECB to buy up junk paper, and on the other hand those EU members whose sole road to survival inside the EU is for Draghi to buy up anything that even looks like it was once toilet paper.
But Japan and Europe have been in the economic doghouse for a long time. It wasn’t until the Fed pulled the trigger on the dollar steamroller that they started paying the real price for it.
Japan, at least as long as it chooses to cling to the growth fairy, has nowhere to turn but to something in the vein of Abenomics, i.e. huge money and credit expansion. But it’s not the money supply, no matter how it’s defined, that is the problem, it’s that people refuse to spend. And if people don’t spend, no government or central banks has a way to boost inflation. Why they should want to in the first place is another question.
Europe has the added problem of disagreement on how to escape the walls that are closing in. And the more they close in, the less comfortable the shared living space on the old continent becomes. With a bit of imagination, you can see different people, different cultures, different languages, and different economies, all forced to live in the same ever shrinking – economic -space.
There’s less of everything to go around, and no-one wants to give up what’s theirs. Still, at the same time we already saw that two-thirds of Greeks live at or below the poverty line, and that Naples is even worse than Greece. Where do you personally think that will go? With a dollar that is set to make lots of things, not the least of which is oil and gas, more expensive?
It’s not just that for Europe, the growth fairy is evasive, their economies are bound to shrink a lot more still. And then what is Draghi, or his successor, supposed to do? The eurozone, and the EU itself, has already become a straightjacket with a noose attached to it, and that noose will start to tighten as we go forward. Brussels and Frankfurt can spin all they want – and do they ever -, but they can’t squeeze milk out of a deceased goat.
No matter what side of which fence you’re sitting on here, you have to give it to the Fed and Wall Street, though: their timing is impeccable. Victim no. 1 of the "Dollar is King"-move are the emerging markets:
Emerging Stocks Pummeled as Weak Yen Boosts Japan
The yen’s slide to a six-year low is amplifying a rout in emerging-market stocks as investors shift their focus to Japanese companies with earnings in dollars, according to Morgan Stanley. The MSCI Emerging Market Index tumbled 7.6% in September, the most since May 2012, led by China and Hong Kong. That compares with a 3.8% drop for the Topix Index in the period. The yen depreciated 5.1% versus the dollar to the weakest level since August 2008 last month, while a gauge tracking developing-nation currencies retreated 3.8%. “Asset allocation away from emerging markets was in part because Japan was back and that yen weakness is a positive catalyst,” Jonathan Garner, Hong Kong-based head of Asia and emerging-market strategy at Morgan Stanley, said by phone on Sept. 25.
“We don’t have a large export-industrial dollar earnings sector for EM, while Japan’s corporate-sector earnings responded positively to yen weakness.” Japan’s exporters are benefiting from a weaker currency, which boosts overseas income when repatriated, while developing-nation assets have come under pressure as the prospect for higher Federal Reserve interest rates dents demand for riskier assets. Toyota, the world’s biggest carmaker by market value which derives most of its revenue from the U.S., rallied 9% last month. Net inflows to U.S. exchange-traded funds that invest in emerging-markets tumbled 82% to $977.9 million in September, led by a 90% decline to China and Hong Kong, data compiled by Bloomberg show.
And the weak yen has long since stopped boosting Japan in a net, overall, sense:
Japanese Stocks Have Crashed Over 1000 Points Since Friday
After ticking just above 110.00, USDJPY has been a one-way street lower and that means only one thing… Japanese stocks are cratering. From Friday’s highs, The Nikkei 225 has crashed over 1000 points (despite Abe’s promises yet again of more pension reform buying of stocks). Of note, perhaps, is that, Japanese investors bought a net $3.6 billion of foreign stocks last week – the most since January 2009 – perfectly top-ticking global equities… Well played Mrs. Watanabe.
And:
Japan Inc. Begins To Turn Against The Weak Yen
When the Japanese yen began its long descent in late 2012 — around the time it became clear Shinzo Abe would be elected to another prime-ministership — the executives running Japan’s top corporations seemed to believe that the lower the currency, the better, regardless of all else. But since then, the yen has trekked steadily, inexorably downward against the dollar, with the greenback rising from around ¥78 two years ago to ¥110 earlier this week. And, at least according to a Nikkei news survey out Friday, some senior corporate officers are having second thoughts about the race to the bottom for forex. [..] … not a single CFO said they wanted to see the dollar breach above ¥115.
And also:
Yen’s Steepest Decline in 20 Months Spreads Unease in Japan
The yen’s steepest decline in 20 months is prompting concern in Japan that the central bank’s support for a weaker currency may hurt consumers and companies. Monetary authorities intervention to curb the slump is “possible,” according to Hirohisa Fujii, a former finance minister and member of the opposition party, after the currency’s steepest drop last month since January 2013. Some companies are suffering from the weaker yen, Nobuhide Minorikawa, Japan’s vice finance minister said this week [..] The chorus of dissent against the Bank of Japan’s accommodative monetary policy [..] is growing louder, as consumer prices remain depressed and growth is anemic. The weaker yen puts Japan at risk of recession, Kazumasa Iwata, deputy governor of the central bank until 2008, warned last month.
“The whole notion of devaluing the currency has been a bad policy,” Robert Sinche, a global strategist at Pierpont Securities, said. [..] BOJ Governor Haruhiko Kuroda said last month, after the dollar rose above 109 yen, that he didn’t see any big problems with current movements in exchange rates.
You have to like the suggestion that “The weaker yen puts Japan at risk of recession”. Tokyo may want to pick whatever stats they like, but it should be obvious that Japan, like the EU, is in a recession, not at risk of one. Take a look:
What 110 Yen to the Dollar Means for Japan’s Consumers
The weakening yen is starting to squeeze Japanese consumers as prices rise for everything from Burgundy wine to instant noodles, threatening Prime Minister Shinzo Abe’s plans to revive the country’s economy. The currency slid to 110 yen to the dollar yesterday, the lowest level in six years, making imported goods and materials more expensive. Though inflation is one of Abe’s monetary goals, the yen’s sharp slide undermines steps to boost consumer spending and endangers public backing for his economic program.
[..] The success of Abe’s plans for a sustained economic recovery after two decades of stagnation depends on consumers, since they account for about 60% of GDP. They’ve turned cautious as the sales tax rose and companies, including many that profited from the weaker yen, have failed to raise wages enough to keep up with inflation.
Supermarket sales fell for a 5th straight month in August, following an April jump in the consumption tax to 8% from 5%. Wages adjusted for inflation fell 2.6% in August from a year earlier, the 14th straight monthly decline …
Nissin Food Products, inventor of the world’s first instant noodles, is increasing their price in January and Ueshima Coffee Co., Japan’s biggest supplier of beans to retailers, will sell them for 25% more from November
[..] Abe, who must decide whether to raise Japan’s sales tax to 10% as planned next year. The increase this April plunged the economy into its deepest contraction in five years as the government tries to cap gains in the developed world’s highest debt burden.
Japan’s biggest employers, including Toyota, Hitachi and Panasonic, have benefited from the yen’s drop. A weaker currency makes their exports more competitive and increases the value of overseas earnings when converted into yen. Japanese companies’ pretax profit rose to a record 17.5 trillion yen ($161 billion) in the quarter ended March 31, according to figures from the finance ministry.
In the five years prior to Abe’s call for unprecedented monetary easing, the Japanese currency averaged 85.69 yen to the dollar and never rose above 93.03 yen, prompting manufacturers to move production out of the country and fueling declines in consumer prices.
The yen’s drop since Abe started his campaign to become prime minister helped fuel a 23% gain in the benchmark Nikkei 225 Stock Average in 2012, followed by a 57% surge last year, the biggest annual gain since 1972.
Abe’s failure so far to broaden the recovery beyond the direct benefits of a weaker currency and unprecedented monetary easing has damped enthusiasm, leaving the Nikkei down 1.3% this year, as of yesterday. Fast Retailing, which is Asia’s largest clothing retailer and accounts for 8.9% of the Nikkei, has fallen 15% this year. Aeon Co., the nation’s largest retailer, is down 22%.
Japan’s GDP shrank an annualized 7.1% in the April-to-June period, the most since the first quarter of 2009.
“The impact to the overall economy is not necessarily all positive; rather, negatives may be outweighing,” Kazumasa Iwata, the BoJ deputy from 2003-2008, said.
Japanese consumers have started to expect that imported foods will become too pricey. “I don’t go to import food shops much recently,” said Kazuha Hemmi, who works in the overseas section of a company in Tokyo. “Some of them stopped selling bargain products.”
“Not necessarily all positive”. Now there’s a dead spin. Any country that sees a 7.1% drop in GDP, no matter what sales tax changes, is in very serious trouble. The nation’s largest retailer is down 22% (!) Want to try that on for size at WalMart?
And then there’s Europe. Where plenty folk probably think they’re in some lower euro honeymoon still. Today, EU exchanges are up 1% or so. While the euro loses big. I suggest these happy shiny people should check on Japan to see what’s in store.
European Stocks Plunge Most In 16 Months As Draghi Disappoints
Broad European stocks plunged into the red for 2014 today as a rattled Mario Draghi disappointed a hungry-for-more risk market. Bloomberg’s BE500 index dropped its most since June 2013 to 2-month lows led by weakness in Italian banks. UK stocks underperformed (-3.6%) but Spain, Italy, and Portugal all tumbled 2-3%. The selling pressure interestingly stayed in stocks as bond spreads rose only modestly and EURUSD roundtripped to only a small rise from pre-ECB. Notably, US equities are cratering as they are so used to the pre-EU-close pump that did not happen.
Draghi’s plan to buy Toilet Paper Backed Securities is dead is a dead in the water as it is on dry land:
France’s Noyer Is Third ECB Dissenter Against ABS Buying Plan
France’s Christian Noyer joined European Central Bank policy makers from Germany and Austria in opposing a program to buy asset-backed securities, according to two euro-area officials. His dissent leaves President Mario Draghi facing a clash with policy makers from the region’s two largest economies, albeit for different reasons. While Noyer disapproved of the way the purchases will be conducted, Austrian central bank Governor Ewald Nowotny shared Bundesbank President Jens Weidmann’s view that the measure involves too much balance-sheet risk, said the people, who asked not to be identified because the talks are private.
Draghi unveiled details of the program yesterday, pledging to buy both covered bonds and ABS before the end of the year. He shied away from a definitive goal for the plan, saying total stimulus may fall short of the 1 trillion euros ($1.3 trillion) he had signaled in September. Noyer opposed the design of the program because it will exclude national central banks from its implementation …
And there’s more to that:
Mario Draghi’s QE: Too Little For Markets, Too Much For Germany
European stocks have suffered the steepest one-day fall in 15 months after the European Central Bank retreated from pledges for a €1 trillion blitz of stimulus and failed to clarify the scale of quantitative easing. The sell-off came amid a mounting political storm in Europe as leading German economists and jurists reacted with fury to the ECB’s first asset purchases, denouncing the move as monetary debauchery, and threatening a blizzard of lawsuits in the German courts. “Our worst fears are being fulfilled,” said Hans Werner Sinn, head of Germany’s IFO Institute. The Milan bourse tumbled almost 4pc, led by sharp falls in Italian banks counting on fresh ECB liquidity. [..]
Mario Draghi, the ECB’s president, seemed unable to secure backing for far-reaching measures from Germany’s two ECB members or from the German finance ministry, forcing him to play down earlier hints for a €1 trillion boost to the ECB’s balance sheet. As he spoke inside a renaissance palace in Naples, riot police doused crowds of protesters on the street outside with water cannon. The city has become a political cauldron, with the highest “misery index” Europe. Youth unemployment in Italy’s Mezzogiorno is still rising, topping 56pc in the second quarter. Mr Draghi said the ECB would start to buy covered bonds and asset-backed securities (ABS) as soon as this month, but gave no concrete figure and deflected all questions on the scope of stimulus.
“I wouldn’t want to emphasise the balance sheet size per se,” he said. Sovereign bond strategist Nicholas Spiro said the ECB was “backtracking” on earlier pledges and seemed to be losing confidence in its ability to halt deflation at all. “Mr Draghi is facing a severe credibility problem,” he said.
It’s not just Draghi, the entire EU leadership has a severe credibility problem. With – seemingly – nothing left on the economical front that member nations can agree on, other than there’s a huge and imminent disaster waiting in the wings, what ways forward are available? There’s only one, really: split up the whole caboodle in as amicable a divorce as you can muster, and then try to stay friends.
But even that doesn’t seem likely, at all. A split-up of the EU would obviously be grossly costly, and the lion’s share of those costs would have to be borne by the richer north. But the richer north, too, is getting poorer fast. So what campaign slogan do you think will win out in the next election in Germany, France etc?
Will it be: let’s pay for Greek debts, so they can have a good life again? Or will it be: let them cook in their own fat, so we can party on for a while longer in Berlin and Paris?
I think you know the answer. So does Albert Edwards. And he includes the US, and China, in his dark panorama for good measure. And he’s right of course
Albert Edwards Says Watch Japanese Yen and Be Very Afraid
The Japanese yen goes into freefall. China’s fragile economy tips over the edge. A wave of profit-crushing deflation comes washing over the U.S. and Europe. Investors panic. That’s the view of perennial pessimist Albert Edwards. The London-based analyst and his team at investment bank Societe Generale SA have been ranked No. 1 for global strategy in surveys by Thomson Reuters Extel every year since 2007, even with a history of saying unpleasant things that few want to hear. “My role is to step back from the excessive enthusiasm that builds up in the market, and to just say, ‘This is wrong. This is going to go horribly wrong,’” the 53-year-old said by phone last week. The cliche is that when the U.S. sneezes, Japan catches a cold. Edwards says Japan is just as apt to lead the way.
When the Internet bubble burst in 2000, Japan’s tech-heavy Jasdaq index started to slide weeks before the Nasdaq. Japan also pioneered the deflation that now threatens the West. In 1997, it was a plunging yen that helped trigger Asia’s currency crisis. With the yen’s drop this week to a six-year low of 110 versus the dollar, Japan’s currency may once again be the first domino to fall in a chain of events that could be bad for everyone, according to Edwards. The U.S. stock market rally has been going for 66 months since the financial crisis bottomed in March 2009, a streak that’s already a year longer than average. A disconnect between buoyant equity prices and corporate profit growth in the low single-digits makes the situation especially precarious. “Almost 100% of investors think we’re at the start of a long recovery,” Edwards said.
“It’s already a long recovery. Forget about starting from here.” In an hour-long interview, during which he made the global economy sound like a game of Mousetrap, Edwards explained why investors should be watching Japan for clues about what may happen in the next big trouble-spot: China, whose economy is already headed for its slowest full-year growth since 1990. The argument was this: if the yen falls, it will take other Asian currencies down with it. Eventually China will be forced to weaken the yuan, by adjusting its trading range and expanding its money supply, to keep its exports competitive. That will squeeze developed economies that have yet to fully recover from the financial crisis.
[..] In 2006, when the S&P 500 was rising ever higher and then-Fed Chairman Alan Greenspan was being feted as “the Maestro,” Edwards called him “an economic war criminal.” Two years later financial markets were in crisis. Edwards’ aversion to equities stems from watching the experience of Japan, where the market took more than two decades to find a bottom after the 1989 bust. According to Edwards’ view, it’s a template for the extended bear market that will unfold in the U.S. and Europe, as stocks recover only to crash again and plumb ever-new lows. “What happened in March 2009, when the S&P 500 touched 666, that was just a brief stop,” he said. “We will go lower than that.” The structural bear market ends when equities are dirt cheap.”
More Albert Edwards:
• “When Bad News Becomes Bad News Again”: Albert Edwards (Zero Hedge)
Inflation expectations in the US have just followed the eurozone by plunging lower. Until very recently, the Fed and the ECB had been quite successful at keeping inflation expectations in their normal range – this despite their clear failure to control actual inflation itself, which has consistently undershot expectations. Investors are beginning to realise that contrary to their confident actions and assurances, the Fed and the ECB have failed to prevent a dreaded replay of Japan’s deflationary template a decade earlier in the West.
The Ice Age is once again about to exert its frosty embrace on markets as investors wake up to a new and colder reality. There were two key parts to our Ice Age thesis. First, that the West would drift ever closer to outright deflation, following Japan’s template a decade earlier. And second, financial markets would adjust in the same way as in Japan. Government bonds would re-rate in absolute and relative terms compared to equities, which would also de-rate in absolute terms. [..]
Another associated element of the Ice Age we also saw in Japan is that with each cyclical upturn, equity investors have assumed with child-like innocence, that central banks have somehow ‘fixed’ the problem and we were back in a self-sustaining recovery. Those hopes would only be crushed as the next cyclical downturn took inflation, bond yields and equity valuations to new destructive lows. In the Ice Age, hope is the biggest enemy.
[..] “amid the inevitable impending global economic and financial carnage, when people, like Queen Elizabeth ask, as she did in November 2008, why no-one saw this coming, tell them that many did. But just like in 2006, before the Great Recession, investors once again chose to tilt their ears towards the reassuring siren songs of the Central Bankers and away from the increasingly hysterical ramblings of the perma-bears and doomsayers.”
Down the line, the insane debt levels all around the globe will do in everyone. That goes for, in order of appearance, Japan, Europe, China and the USA. An order that can still be shaken up by various kinds of unrest and other black swans. Hong Kong protests, Catalunya, a country voting to leave the EU, there are too many options to mention.
But aside from these, Japan looks the furthest gone, with 400%+ debt to GDP and rapidly rising. Europe is a good second, because of debt levels AND the difference in wealth between rich and poor member nations AND all the other differences between rich and poor member nations.
China is a bit of an odd one out, it has room to move, but it also committed to $25 trillion in new debt in just a few years, without anything solid to show for it except apartment buildings that can only go down in price and bridges to a nowhere nobody wants to go to. And then there’s dozens of emerging nations with nowhere to go but down.
For the US, it’s now shooting fish in a barrel – but just for now. The three-pronged plan the Fed has started to execute is plain for everyone to see:
1) Stop QE. This hauls back in to the US dollars from around the planet, from a million parties that owe debt denominated in USD. Already happening at a frantic pace, though no-one involved would advertize it.
2) Raise the value of the greenback. This makes it that more expensive for all parties under 1) to pay off their debts. They have to offer ever more just to stand still. And when they can’t, assets will be confiscated.
3) Raise interest rates. The final blow. It will make life much harder on the US government too, but they’ll have trillions of dollars flowing in to cope with that. It’ll put millions of Americans into the equivalent of medieval torture instruments, and out of their homes and cars and jobs, but that too will be initially softened by the dollars coming home to papa. Crucial take home: they’ve given up on the US real economy, likely a long time ago.
And it will have the rest of the world begging for mercy. In that regard, it’s funny to see Britain planning to raise its rates too. Do be careful what you wish for there, lads.
The full taper of QE means everyone needs dollars, and most who do are leveraged to the hilt, while the combination of higher interest rates and higher dollar value means the buck will come much more expensive.
It’s going to be carnage out there.
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What I've been trying to tell y'all.
Fuck the world though.
Give me cheaper lead, silver and gold.
Fuckin-A brother.
This is kicking the shit out of Russia.
When was the last time oil dropped while a fresh middle east war was getting started?
Expect a deflationary crash then a run to cash and finally a panic into gold when the realization hits that all currencies are unsustainable.
John Exter warned us about this many years ago:
http://en.wikipedia.org/wiki/John_Exter
http://www.goldmoney.com/research/research-archive/a-banker-for-all-seasons-the-life-and-times-of-john-exter-champion-of-sound-money
http://www.goldmoney.com/research/research-archive/A-BANKER-FOR-ALL-SEASONS-PART-II
http://www.goldmoney.com/research/research-archive/a-banker-for-all-seasons-part-iii
War. War will be the result of this.
Perhaps Ebola and war.
Can't let the Fed face up to any responsibility for what has happened.
Everything was looking good but then, you know, Ebola. Err Marburg.
p.s. expect interest rates to rise from dumping of bonds.
Meh. I liked the graphic on the main page better than the article.
Shitload of Gold and Silver will be acceptable payment along with your farms, factories, mines and anything else we want...and don't even THINK about asking us for Ebola assistance... This is war and it's going to be bloody bloody BLOODY...
the greenback is busy eating currencies and economies alive.
These bozos actually make a living writing this shit up ? well, i guess is all about disinformation ...
It is ridiculous to assume that the dollar strength is based on difference in economic fundamentals between Europe, Japan and the US except if you believe the fake statistics for the US. In this kind of "markets" one must not confuse a price ( for the dollar or stocks etc )with a fundamental case supporting that.
It's just a damn shame few understand the inverted pyramid and that the kids are going to suffer because of that lack of knowledge.
1) Stop QE.
2) Raise the value of the greenback.
3) Raise interest rates.
#3 Won't happen when the USA has to roll-over $8 trillion of its debt every year...
The bankers don't care about #3. They only care about the destruction the world will endure before that. Completely failed nation states will be the norm, with their assets going to the elites for pennies. This is all about the elites destroying nations to control more assets to eventually build their New Feudal World Order.
ditto gold and silver as the next five years will demonstrate.
Listen Farmboy.
Understood, but the "FUNDAMENTAL CASE" is the basis for the "PRICE" when "VALUE", the perception of, is buoyed by the paper-magicians.
No one covets their own "PERSONAL" deflation so "WE'RE" all true believers. Evangelistic in some cases, begrudgingly in others.
Seriously.
War is coming. Interest rate spike. Debt markets in turmoil. Global liquidity crisis*. Yadda yadda yadda.
Tell me something I haven't known for half a decade. It's not the end game that I wasn't sure of, it was the course the various participants were going to take that was unknown.
*Yes money will exist in some form or another, but how sound will most money be?
Devalued, hyper devalued ultimately. Velocity erratic and unpredictable in the mean time...
@NoDebt
Conditioned to love tyrannical depictions of worlds colliding, feeding our deep-seated bloodlust of vengeful conquest.
sarc
or is it?
Just today Mrs. Futs decided on her own to transfer about 50k to three different banks in different counties where we can withdraw and buy PM's now when the price is low. She asked me my opinion and I responded that she was the woman for me and I loved her dearly. She is ignorant of the reasons all of this is happening but understands the need to diversify.
As has been stated by many, and I only repeat: "currencies are on a race to the bottom and the last one to be complete shit wins big".... Forgive me, I paraphrase. I believe the dollar will be the winner, but only through ruthlessness and dishonor. I guess Mrs. Futs doesn't want to be a part of that. God bless her.
Darling you know that I'm nucking futs for you.
Love your perfect almonds and your sweet cashew.
You are saltier than a pistachioo.
And each day I get more nucking futs for you.
(Sorry. Couldn't resist. :-)
Second ‘blood moon’ of tetrad linked to Israel prophecy Oct 8th: 2000 dead in Gaza since first
http://wtfrly.com/2014/10/05/second-blood-moon-linked-to-israel-prophecy...
Nice, it's all good
"She asked my opinion, and I responded that she was the woman for me and I loved her dearly." Wise man! :-)
And, of course, you and the Mrs will be filing the proper paperwork with Uncle Sugar since your foreign holdings now exceed $10K USD, right? No, well no worries then, those foreign banks will do the filing for you...
We are fucked.
No, buy buying a mix of SA, US, Canadian and Austrian at each transaction at under 10K a transaction. No need.
Would exchanging gold over that amount via barter for property work?
He wrote "counties", not "countries". Not sure whether that was a typo -- but your point still stands.
Wow, all this last week.
Was I in a coma for the last 6 fucking years?
seems like 6 years since I read a good old fashioned "intelligent" doomer porn piece like that on ZH ....love it
You weren't, the world was.
The final wake-up call is getting ever closer...
Perhaps Ebola and war.
1914 all over again. Then it was European War and the Flu Pandemic. This time it will be another World War with nukes, chemical weapons, and plague. These fuckers are just uping the ante to destroy everything to enable them to pick up the pieces at bargain rates and enslave anyone left.
Not like your Daddy's war.
War is the excuse to in-debt (counterfeit, inflate) more. WW2 was invented just for that reason.
Expect a deflationary crash then a run to cash and finally a panic into gold when the realization that all currencies are unsustainable.
This will happen in a heartbeat or like a glacier moving uphill.
Interest payments will be impossible to make but your Gold will be acceptable until we foreclose on your country...
No it won't. It will take some time for the Debt Money Monopoly to unload their trillions in debt paper and trillions more in cash for real, hard goods.
They won't uberinflate until they are nearly out of cashola and debt paper.
Bank on it.
Don't be a schmuck and believe their lies about trying to save the very economy they engineered into demise.
They are ciminal, liars.
WWIII with a global pandemic will shorten the timeline by decades.
Robert "Conquer the Crash" Prechter has long predicted that the credit markets contraction would exceed the printing. His timing has been a bitch though.
The foreign use of dollars has been the savior, so far. That usage is declining, though(62%). So, the time is nearing.
Yeah. No one ever wrong... just early. Like 14+ years early and counting.
If poster's hypothesis is correct - then they'll be buying up gold to the detriment of others with their increasing valued USD... until it is time to make the switch.
Gold can (some coins already are) disappear at lower prices. Think GUM department stores in the USSR. Fixed prices, bare shelves.
Thats what ive been saying. The dollar is the last stop before gold. Get it while ya can.
Ot- is ww3 over already?
Seems that Russia could gain a double benefit by selling higher value tbonds at the new exchange rate.
Can't be good for U.S. multi-nationals profits either.
"About to". It's only been a century since the demon sperm "Federal Reserve" was unleashed.
spawn, Demon Spawn
Ysheeesh - not a typo ...
just plain ignorance.
SPERM, we meant sperm. "Spawn" is too obvious. Get a life. Did not junk you.
As far as the oil price, those of us in the Bakken say "your welcome"
"Escape Velocity."
Fakken the Bakken - yooo betcha
"You're welcome" - sincerely, grammar nazi
Bingo ! Not sure why all the down votes, maybe some don't understand how cheap oil hurts Putin. Last act of scoudrel if ya ask me.
<<3) Raise interest rates. The final blow. It will make life much harder on the US government too, but they’ll have trillions of dollars flowing in to cope with that. It’ll put millions of Americans into the equivalent of medieval torture instruments, and out of their homes and cars and jobs, but that too will be initially softened by the dollars coming home to papa. Crucial take home: they’ve given up on the US real economy, likely a long time ago.>>
This I'd like to see.
I also call bullshit on the end of "QE". They might stop that particular program, but they can't stop the print.
I agree that the dollar is going up, due to deleveraging, and I thought this was a good explanation of that.
Kind of a cute assumption that the Fed has any kind of control or plan here, though. I believe this is well out of the Fed's hands.
You're right, QE hasn't stopped at all. I guess he forgot about Belgium?
They raise rates in the US even modestly to 3%, it is game over.
Not for TBTF&Jail mega corporations tied directly to the wallets of the US tax payer.
However, for their competition it will be game over.
But isn't that what monopolists desire - to bankrupt their competition and seize all their business for the direct benefit of the Debt Money Monopoly?
So many people simply lack the imagination of the Debt Money Monopolists.
I don't think QE will ever stop because....it can't be allowed to. US Government debt is just too high and MOAR people are continually joining the FSA, not fewer. They might call it something else, but they will do anything to keep interest rates low. Just look at the 10 YR UST curve since 1980 or so...tells you everything you need to know. Yeah, you might see a temporary up blip, but the long-term trend is down, down, down. And a strong dollar just gives the Bastards more running room to lower rates, not less.
Is Moscow supposed to be victim No. 1
Nope. Victim #1 is all non-asset-owning peasantry, around the world. Especially the indebted kind.
Anyone that is paying back a loan in dollars is going to have a hard time coming up with the cash...
No. Victim mentality is a modern Western phenomenon. The Russians will just rip you a new one if you fuck with them.
deer in the headlight once again.....never ending shit all the time. WASF
what we need is peace on earth backed by gold and silver
unlimited printing means moar wars
Pegging to the USD has been a global disaster. People think pegging to gold was a bad idea. If you are not in America, what is the difference between pegging to gold an the USD? Zero. At least with gold you had hope of mining more and some kind of stability.
The new world currency wont be the Euro, it will be named "the Ebola"
But will it go "Viral" on Faceplant ? otherwise, you know, it's not "real".
This strong USD will hurt US exports . . . but since our main export seems to be death amd chaos these days, maybe not.
Exports haven't mattered for the US for quite some time except the export of dollars (possible of course because of the dollar reserve currency status) which is what keeps the US "economy" afloat. It would be interesting to see how much of the price of a big mac in the US is actually supported by the export/printing of dollars. My guess would be at least 15%, possibly as high as 30%. That means that some idiot abroad worked for a good part of the burger some fat fuck in the US is stuffing his face with at the moment - and accepted dollars conjured out of thin air at the Fed as payment (ehhh debt).
And since a seriously large part of debt in the world is denominated in dollars the Fed can totally control whether it shrinks or expands globally by tweeking the money supply. If the Fed hits the brakes and shrinks the money supply all hell will break lose. Make no mistake about it. All currencies will crash, dollar denominated debt will increase massively, interest rates will go up and every economy will go tits up - including Russia and China (which is the plan).
When all the dust settles from the coming bankruptcies, poverty and wars, our benevolant globalist banking overlords will appear on a white horse and offer salvation: One world currency which will liberate us from the evils of F/X fluctuations and freedom and independence in general. Forward!
/rant over
Coke and Hookers, Not a rant, just the same view I have on the role of "king dollar". This god of the modern economic world allows the USA to spend and consume far more that our wealth creation justifies. And yes, some poor thrid world fool did work his ass off to help put a big mack into the mouth of some fat fuck American who spends 20-30% more in consumption every year than his work produces. This is the "king dollar" bonus each citizen gets. But the benefit to Uncle Sam is even larger, that runs at 50%! Washington can spend every year 50% more than it takes in from all sources. A 50% bonus which allows a trillion dollar a year war and chaos machine. Just ask Ukraine, Libya, Syria, Iraq, Afghanistan, Yemen, Egypt and others.
The Federal Reserve runs the world until it get a nuclear bomb in its eye...
Overall brilliant summation.
There is this thing about true Gold holdings (in vaults and below ground) in various nation states. That could be a gane changer.
But you are mostly right, the plan is for everyone to get IMF'd!
Strong USD lets you buy up global assets cheap.
Like your export compeditors.
China will protect themselves by revaluing gold. Then all hell breaks loose.
Russia will follow suit. Both will challenge the US to prove its gold reserves. There will be months of propaganda, then a very large proxy war to start the chess moves to control real assets.
And as we all know, Obola and the Court of St. Looney Up the Cream Bun and Jam doesn't know how to play chess.
Just dreaming here.
The Russians know what's coming and are trying to decouple from the dollar reserve currency status along with the other BRICs. But I don't think that will be enough. Debt is what this is all about. As long as you pay your dollar debt in dollars you're not going to be able to escape this. I think this must be taken a step further: Countries that are serious about defending themselves against this must refuse to honor dollar denominated debt. Period. If you own debt in dollars, you won't be able to collect it in dollars.
This is the plan I would keep up my sleeve when shit hits the fan, and it will. The question is whether the BRICs and others have the stones to do it (and enough missiles).
yup. Russia could support this by demanding only gold or silver in exchange for oil - unless you have a paper currency of a country that has been supportive of Russia
Pentagon takes over Fed decision making eventually and dollar carnage ensues
It is an inevitability
It is the world that feeds an clothes US Military with real goods and services in exchange for defense of world trade routes, not the Federal Reserve
I'm sure Pentagon has made an offer the Fed can't refuse
We you living in the "land of the eagles" when they dropped a zero from the Lek? I lived there a few years later and all street transactions had to be first defined as being in new or old Lek. What a bitch it would be to have all of you wealth decrease 10%. I still have a few one Lek notes and explain to my children how fast such a thing can happen. How a pice of paper can have a lower value then a penny. A good lesson for my kids, very hard on folks there.
born in 1972
They still use old lek with one extra zero over there when they talk to each other
Born in 1971 in the US. Lived there 1995-96 during some of the troubles. Some of the greatest people I have ever known.
I had to look Lek up. That's the currency they use in Alabama.
No shit?
OMFG
In 1926, the National Bank of Albania introduced notes in denominations of 1, 5, 20 and 100 franka ari. In 1939, notes were issued denominated as 5 and 20 franga. These were followed in 1944 with notes for 2, 5 and 10 lek and 100 franga.
In 1945, the People's Bank of Albania issued overprints on National Bank notes for 10 lek, 20 and 100 franga. Regular notes were also issued in 1945 in denominations of 1, 5, 20, 100 and 500 franga. In 1947, the lek was adopted as the main denominations, with notes issued for 10, 50, 100, 500 and 1000 lekë.
gold, pure gold.
I have 2 pieces of those
My grandfather hid them underground for 45 years
No rust.
I know a story exactly like that around Pogradec with a family . To hide gold for 40+ years when your kids are hungry and shit generally sucks! is the bravest, smartest and hardest thing I can imagine.
pyramid schemes. "Glorious" times
Came to Toronto in 1999. Here ever since. I go back there every year
I am sure you saw much of the things as well. In Tirana things were not good. I jumped on a marine helicopter from the embassy compound under fire. All I felt was sorry for all of the friends I had made.
Now it's all fine. NATO member due to George Bush.
All quiet
If anyone does, those folks deserve some peace in there lives. And if not, they can rain hellfire on any invader. Are all of the bunkers still there or have the been removed?
I once had a gun drawn by a man I did not know on a stranger because he thought I had been disrespected in his establishment by the patron with the gun to his head. I explained that due to my poor grasp of the language there was a misunderstanding and the man should be sent on his way.
Good people, they protect a guest before their own family
Someday I would very much like to but you cognac and espresso when fate brings me to Toronto
:-) we'll do
I actually have some raki here :-)
:-) Some still are like that.
Foreigners are extremely respected.
Indeed......"How Fast Such a Thing can happen...."
3) Raise interest rates. The final blow. It will make life much harder on the US government too, but they’ll have trillions of dollars flowing in to cope with that. It’ll put millions of Americans into the equivalent of medieval torture instruments, and out of their homes and cars and jobs, but that too will be initially softened by the dollars coming home to papa. Crucial take home: they’ve given up on the US real economy, likely a long time ago.
Maybe the Fed isn't talking about things it can do. Only things it can't, or won't dare. That's why all the racket about raising interest rates here.
If, in fact, threat of deflation is what's scaring them, they may find .25 % rates negative.
What a mess. And they've almost sawn through the branch they are perched on.
Maybe the next Executive Order will be for Free Bubbleup and Rainbow stew?
seems to me the 4 horsemen are out of the barn
I think they were the 7 or 9 in Lord of the Rings.
We are approaching a Thomas Paine moment.
These will be the times that try men's souls.
There will be blood.
.
Yada yada, fkn yada. The world is awash in debt. Unless and until we disavow this monstrousity, the charade will continue.
Our productive nature has been reduced to a resource by the money-changing, New York, dual-citizen Jews that are not actual Jews.
Never mind the Londoners, who claim to be Jews when it is convenient.
Even if the story of the holocaust is true, which I doubt, there's still a shitload of Jews on this planet. From whence do they speak?
Brother Nathanael may have a clue- even if he is ultimately full of shit-https://www.youtube.com/watch?feature=player_embedded&v=3JaTjSKjJe0
Actually he s not full of shit...
You might be surprised mr one week and a day. I don't want to dismiss you summarily, but there's old heads here who would kick you to the curb. I am one of them.
Prove yourself, or be rightly fucked.
Have a nice day!
The world has entered into The Great Overpopulation Recession.
Think Global, and Act Local...
now if i can just figure out what that means, Personally I'm all Set..
It's hard to act globally if you don't own a private jet.
Try HSBC 'the world's local bank'. :D
the dax is starting to crash.
I don't know about you but I like to buy more gold and silver for fewer dollars. Might be a short window. Looks like we are entering turbulence. Got to catch the waves as they come in.
The FED must fight against the credibility of metals, at all cost. Still, I don't think they will ever shake any of it out of the Chinese hands. In fact, they have managed to give the Chinese the best buying opportunity, ever, since April 2013. The banksters appear to have 'Jumped the Shark'. At $1000/oz. it will become very scarce.
War. Voina. La Guerre. La Guerra. Der Krieg.
I'm out of languages but please feel free to add.
Isn't this stupid by the US TPTB if it is their gambit?
Aren't they going have to slam it into reverse....but I guess it is more fun when you build up more speed first. Here they are gunning it down the highway foot flat to the floor....then the cliff coming....slam it into reverse.....ouch.
Im thinking there is a bit of protecting USD strength in this game...a bit of panic.
BLAZES
Through the woods the winding crooked trail
And if there were no blazes on the trees
We would have lost our way beneath Lock Mountain
In the dark along the Alleghenies
Oblongs painted perpendicular
Wherever there’s a turning or an angle,
Seldom far away or out of sight,
Perceptible and comforting rectangles
On the other trails the blazes differ,
Some are true and others lead astray -
Who has painted falsehoods to deceive,
Confounding us to make us lose our way?
Sometimes they remove the trees themselves
To mystify and take us through a maze,
Apprehensive in the dusk we ask -
How long is it since last you saw a blaze?
Pavel
October 5, 2014
If the US has decided it needs to buy a lot of gold with a stronger USD....then that makes them one more whale in the pool looking for physical.....gonna be hard to find it these prices....all hands are strong hands now....except paper gold.
The strongest hands pan their own gold.
Nicole Foss' Automatic Earth has been proffering the same 'deflationary' stuff since 2008. They really get themselves in a lather when the $dollar makes a cyclical run, as it is doing now. What they (Refuse) to take into account - or admit, is that the Federal Reserve, in conjunction with the U.S. government, cannot 'afford' any prolonged deflationary event/s, because it is politically untenable to do so, by avenue of a stock market crash and all the downhill cascading associated train wreck that would ensue after about 90 days of it. These people just don't get it - even though the Exact same scenario has been playing out, over and over and over again for the past (7) years...
How can anyone not get it, at this point? When Greenspan cut rates to 1%, 10+ years ago, was the moment to get it.
What is "Politically Untenable" is Hyperinflation; and it is either that OR Deflation......""
"They" Cannot Inflate their Way Out, even if they Wanted To.
The United States has PROVED both in the 1870's and 1930's that Deflation Can and Will Run its Course.....
The "Stock Market" Ended 89 % Down.......
They said the same things then as well.......
"Past is Prologue"
It is all that Simple.
This is assuming that the rest of the world i.e. Russia, China, et al. will sit on their dead asses and just let this happen. Not with more than 25,000 tons of gold between them, it's not. The West has paper and the East has gold. Both have nukes. Things are never as they seem, and always drag out longer than expected, but this could go fast. It's getting that serious.
You have no idea what you are talking about. The U.S. is destroying credit dollars, thus the rise. Dollars are more dear than gold right now, adding gold to the market is not going t help that.
GOLD down to 1184 tonight, Sunday.
Silver traded down to 16.71
Both rising to meet the dawn. BTFD
Every now and then a very notable and important event occurs, sometimes it slips by without even being noticed. For months the major world currencies have traded in a narrow range as if held in limbo by some great force. This has allowed people to think we were on sound footing as central banks across the world continued to print and pump out money chasing the "ever elusive growth" that always appears to be just around the corner. Recently some currencies have made multi-year highs or lows depending on the match-up .
Because of weak demand for goods and most of this money flowing into intangible investments inflation has not been a major problem, but the seeds for its future growth have been planted everywhere. John Maynard Keynes said By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.
While there are not many Bond Vigilantes there are a slew of Currency Vigilantes and they are ready to make their presence known. Weakness in the value of the Yen, Pound, and Euro must not go unnoticed. More on why this may be a signal that currency trading is about to get very wild in the article below. Please note, this may also be sending a signal that the whole system is unstable and the stock market is about to drop like a stone.
http://brucewilds.blogspot.com/2014/09/caution-alert-currencies-may-get-wild.html
Canned Ravioli 4 Grade A Poon in the near future.......bitchez !!!
I'm buying a house in Asia in about 6 weeks so this is a bit of good fortune for me. Gotta roll with the bullets.
if you are in no rush, you might want to wait a bit more than 6 weeks, there may be further room for RE to fall in Asia yet.
and any possible rebound is not likely to occur anytime soon
Which country in asia are you planning to buy in?
Wait... I thought Asia was a country...
When the Fed raises rates that is you entre and cheaper prices. All property prices will go down.
Don't think it will play out that neatly. There will be an unavoidable cascade of defaults realted to Dollarised debt whose effect will be to flow back into US institutions. Many of which have dubious balance sheets. It only needs one large default to get the ball rolling.
The outcome for all parties is not a good one. Arrogant of the US to think it is control of a runaway train.
As long as the US held steady, wouldn't you expect the Euro to fall since the ECB is at zero or below zero interest rate. Who wants to hold a Euro when the economies there are terrible. Also Russia is out and other oil exporting countries. Japan has been out for a long time and that only leaves China, south korea and a few emerging market economies that are doing something. The us dollar for now is becoming the currency to hold until something else starts to look bettter. That maybe a some time because the difficulties are going to start to emerge not in the USA but in Euorpe again, Russia and Japan. China??? Not sure about that but they just started to ease their lending restrictions for real estate after five months of declining prices and increasing existing loan strains. Municipalities in China have their revenues drying up... I think for now its the dollar. I have no crystal ball about the future...so give this trend some room to stretch and I will keep looking for reality to change for a different assesment...
I got a little lucky and went to all cash in us dollars. So I am relatively up a bit above 8%. US based international corporations could get squeezed here with a strain on earnings...especially if interest rates creap up.
With the dollar increasing, there is less likelihood of inflation in the us, but that is not the case in other countries where they will be saddled with higher real debt payment situation (overall)... The next couple years will tell us how fragile the world economy really is, but I see some significant creative financial destruction that is long over due. My hope now is that we see a tax reducing congress and president emerge for the next election period and then after the next downturn we will see a for real roaring strong economy in 2018.
There are one or two municipalities in the US that are a tad parched also.
As long as the US held steady, wouldn't you expect the Euro to fall since the ECB is at zero or below zero interest rate. Who wants to hold a Euro when the economies there are terrible. Also Russia is out and other oil exporting countries. Japan has been out for a long time and that only leaves China and a few emerging market economies that are doing something. The dollar for now is becoming the currency to hold until something else starts to look bettter. That maybe a some time because the difficulties are going to start to emerge not in the USA but in Euorpe again, Russia and Japan. China??? Not sure about that but they just started to ease their lending restrictions for real estate after five months of declining prices and increasing existing loan strains. Municipalities in China have their revenues drying up... I think for now iths the dollar. I have not crystal ball about the future...so give this trend some room to stretch and I will keep looking for reality to change for a different assesment in the future...
Who knows the real story of how the dollar is moving all of a sudden. The result will be dollars will be harder to get so work-a-rounds will be found, like gold thats easier to finds and simple to get a loan with.
These so called market prices arent real, but they may work as real if you are positioned well. This just comes down to tree shaking time thats all. Trends are trends untill they are broken with applause.
good points...it may also be oil that is also assisting the dollar. Its hard to discount the reality of the reality...i.e. market prices as you say... the nature of the difficulties is more likely to cause money printing outside the us boarders imho Lets see if any of those non us countries take the bait or the easy way out vs. the counter intuitive approach of raising rates to counter inflation in a weak economy...that is if this trend continues for a year and longer and no global financial crisis emerges.
A JOKE
Who was that black swan I saw you with last night?
That was no back swan, that was my wife.
If you guys liked Obama's recent "false flags", you're going cream over the "false black swans" he's going to spring on the world.
Don't even try to guess what they are. Surprises are much more fun.
bla, bla, bla,
China does not nedd Dollars nor the EU nor Russia nor India nor Iran nor Turkey, nor Brasil, nor Argentina, nor South Africa in case the US is going to tighten he screws.
There exist already alternatives to the DOLLAR thats why the US is in danger to overplay its hand. More pressure from the US = Dollar is getting more and more avoided. ok Japan might be doomed and many banks are going to be bankrupt soon. But not in Euroland. It is for such a scenario that Draghi has prepared unlimited amounts of Euros whenever needed.
Cash is King and the king is dollar!
Metal bugs already learned this last time before/during the last crash right.. so I bet they were prepared this time.... buy by the kilo when them bitch's bottom out you can make a wall of the rocks to stop the obolaz or something
"...the insane debt levels all around the globe will do in everyone."
That's the one sentence that sums it up.
It was an underlying overload of debt (govt, corporate and personal) that caused the 2008 crash and nothing has been done to fix it. Add to that the casino games played by the banksters.
EU & US governments have carried on spending and increased their debt levels. France's latest budget runs at 4.3% deficit against an EZ rule of 3% deficit maximum. In the UK, the two empty suits - PM Cameron & Chancellor Osborne - blather on about economic recovery and austerity whilst fiddling the stats, increasing the national debt and making promises of future tax cuts (funded by more debt) to buy votes. Doubtless Cameron already knows that his tax cut promises will unlikely ever come to fruition because they'll be overtaken by events.
I can only see one outcome of all this: widespread economic collapse. That will trigger widespread civil unrest, a massive rise in societal crime and the introduction of martial law/fascist governments to protect those who were responsible for causing the mess in the first place.
It's not the temporarily strong dollar that's causing havoc. It's how the criminal financiers (Rothchilds, Soros etc) are using the currencies which is devastating.
It's time for a return to national and community soverignty -- setting up new local currencies and credit unions, renouncing the vast piles of debt. This will put the said criminal financiers out of business and allow real people to build a new world without privately owned banks.
Does anyone have a good reason for the 1,500,000,000 Euro cost of the new ECB temple in Frankfurt ?
http://www.ecb.europa.eu/ecb/premises/html/index.en.html
Half of the ENA elite in France/EU circles is clapping when they see the $ climb and Euro descend.
As they feel this helps the real economy of France.
The other half, representing the banking clique, are crying at the thought of the strain this will put on the financialised economy.
An ass's body with two heads.
Welcome to a new breed of world leadership: schizophrenic asses !
(we see the same phenomenon in MIC plays in Syrac : We hate ISIS but we hate Isis's enemy, Assad, more!)
The main problem seems to be there are more people working in finance, trying to suck money out of the real economy, than the real economy can actually stand.
The five people left in the West producing anything useful are getting a bit fed up.
If the US thinks it's going to be the winner by the Dollar going up. think again. Boing will loose a lot of Aircraft orders as Airbus can make them a lot cheaper with the new extra low Euro. Who is going to buy US Goods that will cost far to much. All those Dollars coming back will push up inflation, with jobs being lost because the export industries not finding any Buyers, Wages flat and even Burger Flippers looking for new jobs that are not there, who will be the winner? No one, we are all stuffed, thanks to the bonzi Money Printers.
Stop QE... So stocks will crash I assume? Taking all pension funds down with them?
nearly fell asleep reading this. Just an outline of what is happening in front of us. Tells us nothing about the larger picture.
The USDX will continue to go up and up and up then it will revert and basically die. settle around the 60 mark. At that point, the US will see all the bad karma it sowed through the dollar come washing back though global rejection. Not long now.
"If the US thinks it's going to be the winner by the Dollar going up. think again. Boing will loose a lot of Aircraft orders as Airbus can make them a lot cheaper with the new extra low Euro"
No... cos (believe it or not) us stupid enslaved Europeans sell our Airbus planes in.. Dollars!
Yes all our EU leaders deserve the firing squad for treason!
Mario Draghi has only one lover.... Goldman.
The dollar is currently defying all laws of economics. I know of no economic expert who can really explain why this is happening. Do you?
Ilargi is on fire here with great writing and a carefully-curated selection of outsanding snippets. I rated this article 5. Also, I liked the photo.
Fire Angel
I don't think the Fed can raise interest rates when such a high percentage of the GDP is government expenditures. Plus, if the USA gets into another Near East war, add those expenditures.
The dollar looks like it is near the top of its short-term cycle.
Japan doesn't need the dollar's help to destroy Japan. Japan just needs another Fukushima. Japan seems to be in the same interest rate position the USA is in. Can't raise interest rates when such a high percentage of the GDP is government expenditures. Thank Goodnesss that at least Japan's population is declining, so Japan doesn't feel it needs to start another empire to feed all those new Japanese.