In _Naked Captialism_ yesterday (or a few days ago), Yves Smith and MIchael Hudson discussed what they called the zugzwang facing the US. "Zugzwang" means a move forced by the rules but which is disadvantageous (sometimes catastrophic) for the mover; this situation often occurs in games like chess and checkers. In this case, according to the authors, the flooding of the US economy with funny money to inflate rich people's asset prices has led to a situation in which the Fed is damned if it does and damned if it don't. As some of you may have noticed, when the interest rates were raised, several banks failed. The intention seems to have been to punish labor and some owners of capital from being too productive and thus supporting inflation, but this move failed; the economy refused to go into recession, which means the Fed will have to try harder to get worse results. I thought this might eventually affect the propensity of the government to throw money at its Ukrainian war project which in turn will affect the future of that project; see above where I speculate about the scorched-earth tactic of using cluster bombs.
The BRICS have not issued their currency yet, it will take significant time for it to impact the dollar. The majority of commerce is still conducted in dollars and will be for years to come. Like you I look forward to the dollars destruction as the only means of removing the cancer in DC from power. They can still print dollars even if its not the reserve currency it will just devalue much more quickly
Yes. And devalued will mean inflation to the level seen in Germany pre-ww2. So yes, they can print, but it won’t work to keep us afloat. Also, it won’t get us out of our foreign debt which is the real test of empire. Also, BRICS operates in local currencies so no 1 currency can take over the world. It doesn’t need to replace the dollar to destroy the dollar. Also China is buying up all the gold it can find and I’m waiting to see what that does. I share your fear that the empire won’t crash fast enough, but I’m chalking that up to a benevolent Universe which will maybe protect the poor a little as the elites fall on them. Perhaps if it’s in slow motion, they can get out from under.
The poor has never survived inflation by retaining value of their money, they have always survived by being the producers of food and raw materials. The urban poor will be wiped out, this is exactly what happened in Rome when Nero debased the dinerious.
Except that oil runs the world, especially the world of trade, and both Russia and Saudi Arabia have scads of it. So now that we’ve lost Saudi Arabia to the Chinese and Europe has lost Russian oil from NordStream we have to chase gas all over the world and don’t have the military to do it and Europe has to go to India and pay in rupees to get Russian oil and gas at twice the price Russia was selling it to them for before we blew up the pipeline. The smartest men in the room have got us into a lose-lose situation. Empires don’t recover from such zugzwang. I give it 6 months. 🤓
The bond markets are purely synthetic, the price is not driven by investors or even markets but governments and central banks. Judging the health of the dollar based on bond rates is like judging the ethics of a prostitute in church on Sunday morning.
Bond markets don’t listen. Any more than oil giants. Nearly every respectable responsible economist is documenting the crumbling dollar. But in disaster capitalism, crumbling means a chance to make big bucks. Bond markets are the vultures.
If the largest, most sophisticated and liquid securities market in the world doesn't listen, you should be able to make an easy killing as an investor.
"The market can stay irrational longer than you can stay solvent."
As documented in The Big Short, the guy who bet heavily on the mortgage crash didn't make as much as you would think, largely because the market was rigged.
The Federal Reserve dominates the bond market. The stock market is largely artificial due to the formerly illegal practice of stock buybacks combined with Congress shoveling money to the stocks they themselves own. Covid comes in, the economy tanks, and stocks soar. What's wrong with this picture?
Yes. For awhile. That seems to be the driving idea behind all of the US’s policy decisions now. No, we can’t win Ukraine but we can bilk trillions out of the economy. No we can’t stop global warming so we might as well dig and extract and chase $$$$ until we die. It is as you say, a killing. They’ll prop up investments until it’s time to take the winnings and run, at which time the soaring inflation will eat up all the profits they have so assiduously chased these last years of empire. They may go for gold, but since China is there ahead of us buying it up like crazy, there won’t be much place left to hide their ill-gotten gains and boo hoo, they’ll just have to start another war to steal it from someone somewhere.
It does? Someone ought to tell the bond markets....
In _Naked Captialism_ yesterday (or a few days ago), Yves Smith and MIchael Hudson discussed what they called the zugzwang facing the US. "Zugzwang" means a move forced by the rules but which is disadvantageous (sometimes catastrophic) for the mover; this situation often occurs in games like chess and checkers. In this case, according to the authors, the flooding of the US economy with funny money to inflate rich people's asset prices has led to a situation in which the Fed is damned if it does and damned if it don't. As some of you may have noticed, when the interest rates were raised, several banks failed. The intention seems to have been to punish labor and some owners of capital from being too productive and thus supporting inflation, but this move failed; the economy refused to go into recession, which means the Fed will have to try harder to get worse results. I thought this might eventually affect the propensity of the government to throw money at its Ukrainian war project which in turn will affect the future of that project; see above where I speculate about the scorched-earth tactic of using cluster bombs.
Don't kid yourself. The Empire in general and the war on Ukraine in particular are sacred cows, and at the same time, labor must be brought to heel.
if the Fed has to offer an unlimited backstop to the banks, wipe out savers, print unlimited free money, whatever, they will do it in a heartbeat.
If we learned nothing else from the GFC, it is how far The Powers That Be will go to get what they want.
They can’t print money if the dollar is no longer the world currency. And BRICS is seeing to that.
The BRICS have not issued their currency yet, it will take significant time for it to impact the dollar. The majority of commerce is still conducted in dollars and will be for years to come. Like you I look forward to the dollars destruction as the only means of removing the cancer in DC from power. They can still print dollars even if its not the reserve currency it will just devalue much more quickly
Yes. And devalued will mean inflation to the level seen in Germany pre-ww2. So yes, they can print, but it won’t work to keep us afloat. Also, it won’t get us out of our foreign debt which is the real test of empire. Also, BRICS operates in local currencies so no 1 currency can take over the world. It doesn’t need to replace the dollar to destroy the dollar. Also China is buying up all the gold it can find and I’m waiting to see what that does. I share your fear that the empire won’t crash fast enough, but I’m chalking that up to a benevolent Universe which will maybe protect the poor a little as the elites fall on them. Perhaps if it’s in slow motion, they can get out from under.
The poor has never survived inflation by retaining value of their money, they have always survived by being the producers of food and raw materials. The urban poor will be wiped out, this is exactly what happened in Rome when Nero debased the dinerious.
World trade is still largely denominated in USD. What slack there is has mostly gone to EUR.
Except that oil runs the world, especially the world of trade, and both Russia and Saudi Arabia have scads of it. So now that we’ve lost Saudi Arabia to the Chinese and Europe has lost Russian oil from NordStream we have to chase gas all over the world and don’t have the military to do it and Europe has to go to India and pay in rupees to get Russian oil and gas at twice the price Russia was selling it to them for before we blew up the pipeline. The smartest men in the room have got us into a lose-lose situation. Empires don’t recover from such zugzwang. I give it 6 months. 🤓
Europe pays India USD for Russian oil. Otherwise, it pays USD for US LNG, but nobody in the US or Europe cares that Europeans suffer.
Oscar Pistorius, German Foreign Minister, put it in black and white.
The bond markets are purely synthetic, the price is not driven by investors or even markets but governments and central banks. Judging the health of the dollar based on bond rates is like judging the ethics of a prostitute in church on Sunday morning.
If you really think that, then there's easy money to be made.
Bond markets don’t listen. Any more than oil giants. Nearly every respectable responsible economist is documenting the crumbling dollar. But in disaster capitalism, crumbling means a chance to make big bucks. Bond markets are the vultures.
If the largest, most sophisticated and liquid securities market in the world doesn't listen, you should be able to make an easy killing as an investor.
"The market can stay irrational longer than you can stay solvent."
As documented in The Big Short, the guy who bet heavily on the mortgage crash didn't make as much as you would think, largely because the market was rigged.
The Federal Reserve dominates the bond market. The stock market is largely artificial due to the formerly illegal practice of stock buybacks combined with Congress shoveling money to the stocks they themselves own. Covid comes in, the economy tanks, and stocks soar. What's wrong with this picture?
Without going into the details of what you wrote, what happened during COVID was "free money".
Yes. For awhile. That seems to be the driving idea behind all of the US’s policy decisions now. No, we can’t win Ukraine but we can bilk trillions out of the economy. No we can’t stop global warming so we might as well dig and extract and chase $$$$ until we die. It is as you say, a killing. They’ll prop up investments until it’s time to take the winnings and run, at which time the soaring inflation will eat up all the profits they have so assiduously chased these last years of empire. They may go for gold, but since China is there ahead of us buying it up like crazy, there won’t be much place left to hide their ill-gotten gains and boo hoo, they’ll just have to start another war to steal it from someone somewhere.
The value of the dollar is already deteriorating as evidenced by marked domestic price increases and the drop in bond values.
Massive foreign capital outflows have triggered the collapse of large banks
https://science1arts2and3politics.substack.com/p/world-strategy-today
Enough to say that you'll need to see a lot more than that to mean anything.