Jim Richards mentioned ICE9 project where imf sdr will superceed USD and it’s documented by IMF!
As of today there is a quota imposed on each nation how much sdr they can buy
For nations who want to avoid their T bills getting confiscated overnight like Russia investing in Gold followed by government bond of China India and sdr would be better option
Re: Perspectives on the global economic changes
Posted: 23 Jul 2018 10:00
by nandakumar
The problem about investing foreign exchange surpluses in SDRs is that the backer of that paper is IMF. Now, IMF lending is to chronic borrowers with dodgy political and economic situation. Think Argentina, Pakistan etc. This results in chronic rescheduling of old debts into ever larger newer loans. The whole thing rests on a premise that no country dare default on an IMF obligation. The problem is the country in question may not deliberately want to do so. They simply might be incapable.
Re: Perspectives on the global economic changes
Posted: 23 Jul 2018 10:39
by Austin
nandakumar wrote:The problem about investing foreign exchange surpluses in SDRs is that the backer of that paper is IMF. Now, IMF lending is to chronic borrowers with dodgy political and economic situation. Think Argentina, Pakistan etc. This results in chronic rescheduling of old debts into ever larger newer loans. The whole thing rests on a premise that no country dare default on an IMF obligation. The problem is the country in question may not deliberately want to do so. They simply might be incapable.
Well then you will have to go back to Gold Standard for Sound Money but the guys with fiat would try to play this as long as they can.
For a summary indicator, look at flows of foreign direct investment (FDI) into the United States in the first quarter of 2018 (the latest data available from the US Bureau of Economic Analysis) and in the same quarter of 2017 and 2016. In the first quarter of 2016, the total net inflow was $146.5 billion. For the same quarter in 2017, it was $89.7 billion. In 2018, it was down to $51.3 billion. This decline was not driven by changes in Chinese investment, which flows both ways and so contributes little to changes in the net figure. (In the first quarter of 2016, the United States saw a small net inflow of $4.5 billion from China, and in the same period in 2018, it saw a small net outflow to China of $300 million.)
The falloff is a result of a general decline in the United States’ attractiveness as a place to make long-term business commitments. The overall trend in FDI shows the same picture. A four-quarter moving average of net FDI inflows to the United States shows that this year, it has fallen back to its postcrisis lows of 2012 (see chart).
The situation is even worse than this picture shows. The massive fiscal stimulus passed by Congress should have boosted investment incentives by cutting the corporate tax rate and making the tax code more favorable to production, thereby increasing US growth prospects. Chinese and other companies worried about future access to the US market should be deciding to get as many deals done as possible before Congress shortly passes the Foreign Investment Risk Review Modernization Act, which will toughen inward investment rules—as well as to get behind looming tariff walls. Yet despite all these positive pressures, net inward FDI fell.
Re: Perspectives on the global economic changes
Posted: 27 Jul 2018 17:14
by chetak
twitter
That pile of cash is the Venezuelan equivalent of one US dollar. Behold the power of socialism.
Ever since I have been on this board I was always told GDP PPP was benchmark to measure by that as per WB GDP PPP last year with China $23.3 trillion, followed by the United States with $19.4 trillion , So China is full $ 4 trillion GDP ahead of US !
If China manages to grow atleast 5-6 % in next 10 years this gap will seriously widen and likely even India will catch up in PPP and we are No 3 now.
Re: Perspectives on the global economic changes
Posted: 30 Jul 2018 03:49
by Neshant
Austin wrote:
If China manages to grow atleast 5-6 % in next 10 years this gap will seriously widen and likely even India will catch up in PPP and we are No 3 now.
PPP begins to make sense as a measure of national economic power once the country is past the subsistence phase.
If most of that PPP is simply a hand to mouth existence with no surplus capital being generated for investment, then its has less meaning.
China is well past that subsistence stage (which India is still in) - so its PPP has more meaning than India's.
That's my opinion anyway.
Meanwhile, here is a presentation from Dr. Peter Navarro who leads US trade policy against China. The 5 minute intro is given by Michael Pillsbury - another China analyst. Both are in the Trump govt. He outlines how China uses its heft to compel transfer of technology, brand names, to outright IP theft to build up their industry. US is lucky to have these guys sounding the alarm and more so with Trump in govt. Hillary would have slept through the issue as US economic power declined further. Trump is forestalling America's decline as the foremost global power but he has to do more than hit the "Pause" button if US is to stay #1.
He needs to use America's great advantage over China which is that US has large/strong allies.
All China has right now are large/strong enemies.
Guns of the Navarro..
Re: Perspectives on the global economic changes
Posted: 30 Jul 2018 05:58
by RoyG
Neshant wrote:
They have succeeded. They are ahead of the US now overall and will catch up in the next 5-10 years in a few critical high tech sectors. I've said this before - China and Russia are very focused on not only displacing the US, but breaking it from within and with it the Anglo-Saxon alliance. This is the long term strategy. If China can show India that it is amenable in its dealings with Pakistan and essentially throw into the bullpen to get fcked up by India and Afghanistan it is GAME OVER for the USA. India will quickly pivot toward SCO. This is proly a big trump card that they can use to also placate Russia.
This is because of 7 years of QE and Near Zero Interest rate policy , The savers has been wiped out.
Thankfully they are not yet on Negitive Interest as few Europen countries are
In real terms, its been negative for a long time.
They are lieing their ass off about the real rate of inflation which is way more than the 1.x% central bankers claim.
Now if the REAL rate of inflation (as opposed to the bogus inflation number put out) is 5% and the interest rate is 0.5%, then it's a net loss of -4.5% to the saver.
Idiot economists meanwhile will argue inflating (which is really wealth destruction of productive society) is a good thing.
The entire banking "industry" subsists off this theft of wealth from productive society.
Re: Perspectives on the global economic changes
Posted: 30 Jul 2018 13:59
by Viv S
Austin wrote:This is because of 7 years of QE and Near Zero Interest rate policy , The savers has been wiped out.
Thankfully they are not yet on Negitive Interest as few Europen countries are
US inflation has averaged <2% over the last few years, so even if the 'savers' put all their money in US treasuries @2%, they'd be sitting even. Retail borrowing rates have been about the same. Stock market & real estate is of course a difference story, at least over the last 7 years.
Borrowing rate being ~100 bps below the lending rate.
Re: Perspectives on the global economic changes
Posted: 30 Jul 2018 16:46
by A_Gupta
The Trans-Pacific Partnership that Obama was pursuing was supposed to help provide a united front against China.
Re: Perspectives on the global economic changes
Posted: 31 Jul 2018 16:26
by A_Gupta
On cryptocurrencies versus regular currencies, Paul Krugman writes (emphasis added):
In normal life, people don’t worry about where the value of green pieces of paper bearing portraits of dead presidents comes from: we accept dollar notes because other people will accept dollar notes. Yet the value of a dollar doesn’t come entirely from self-fulfilling expectations: ultimately, it’s backstopped by the fact that the U.S. government will accept dollars as payment of tax liabilities – liabilities it’s able to enforce because it’s a government. If you like, fiat currencies have underlying value because men with guns say they do. And this means that their value isn’t a bubble that can collapse if people lose faith.
Austin wrote:This is because of 7 years of QE and Near Zero Interest rate policy , The savers has been wiped out.
Thankfully they are not yet on Negitive Interest as few Europen countries are
US inflation has averaged <2% over the last few years, so even if the 'savers' put all their money in US treasuries @2%, they'd be sitting even. Retail borrowing rates have been about the same. Stock market & real estate is of course a difference story, at least over the last 7 years.
Borrowing rate being ~100 bps below the lending rate.
US inflation figures does not account of food inflation if that is added then the inflation numbers are quite high.
Even if one were to take the less than factual inflation figures , @ 2 % its just penuts what they will earn and likely they are in negative territory if other factors like food inflation is added.
Allan Greenspan had said that interest rates should be at 4-5 % and that been historical figures since many centuries or rather roman era if Fed wants to balance Savers and Lenders.
So that leaves only the Stock Market to invest in and that is quite risky for pensioners and savers.
The key question now is how to deflate the bubble that has been caused by years of QE from Fed and ECB/JCB etc without causing things to collapse.
Re: Perspectives on the global economic changes
Posted: 01 Aug 2018 08:13
by Viv S
Austin wrote:US inflation figures does not account of food inflation if that is added then the inflation numbers are quite high.
Even if one were to take the less than factual inflation figures , @ 2 % its just penuts what they will earn and likely they are in negative territory if other factors like food inflation is added.
The CPI does include food inflation. But even if it didn't, or they understated it - since consumer household spending on the food is ~10% of the total budget - a food inflation rate of 5%, would still only lead to a net inflation of ~2.2% in any given year. Which a good high yield savings account would match.
Allan Greenspan had said that interest rates should be at 4-5 % and that been historical figures since many centuries or rather roman era if Fed wants to balance Savers and Lenders.
So that leaves only the Stock Market to invest in and that is quite risky for pensioners and savers.
Well unless they're stupid, nobody invests all their savings in one asset class. You spread them across gilt bonds, mutual funds, real estate and other investments. Any half decent spread would provide a +ve rate of return, and even a highly conservative one would retain 90% of its value over 7 years (which isn't a "saving wipe-out" by any stretch of the imagination).
Re: Perspectives on the global economic changes
Posted: 01 Aug 2018 10:58
by Austin
The issue is more complex than that ,here is a good write up with stastics how QE has ripped off savers
The more I think about where the “monetary policy community” of academic elites has brought us, the angrier I get. It’s been a long time since I’ve been this passionately upset about something.
Almost everything the Fed did to us since 2008 falls into two broad categories: interest rate repression and quantitative easing.
Here’s the federal funds rate from 2007 to 2016. The shaded area is what we now call the Great Recession.
The Federal Open Market Committee entered 2007 with the rate target at 5.25%. They started lowering it in August of that year—months before the economy went into recession. Why was that? Recession or not, many folks weren’t doing well. Even then, there was talk of banks having difficulty… though the worst was yet to come.
Look how fast rates fell. In July 2007, savers could buy Treasury bills, certificates of deposit, or other principal-protected savings instruments and enjoy a 5% or better risk-free yield. Longer-term fixed-income products offered even higher yields.
A year and a half later, the fed funds rate was bumping the zero bound, and savers could make nothing without taking on market risk. Very few wanted to do that at the time because iconic brands were blowing up everywhere.
The Fed ignored demographics
Here is the great irony and possibly the most harmful part of the Fed's monetary policy initiative. They wanted investors to move out on the risk curve. But did they bother to look at the demographics of this country?
We have a huge bulge of Boomers—retirees and near-retirees—who do not need to be moving out on the risk curve at this time in their lives. They need Steady-Eddie returns, and they need to be reducing their risk, not increasing it.
A sober look at the current economic environment reveals overvalued, overbought, and illiquid markets everywhere. Ultra-low and negative interest rates have created an environment of risk that is looking more and more like a bubble in search of a pin.
By reducing the incomes of retirees and terrifying near-retirees, the Fed successfully reduced economic activity. Hopefully, that was not their intent, but that is what happened.If and when the economy bursts, it will take the retirement dreams of millions of Americans with it.
This policy error will affect hundreds of millions of people
From the Fed’s viewpoint, super-low interest rates were economic stimulus. With borrowing costs so low, we were all supposed to race out and buy stuff.
What did happen was the opposite of stimulus, at least for those who were not the direct beneficiaries of quantitative easing. That would be the people who actually wanted to be prudent and save and put money in fixed-income and certificates of deposits.
Remember when you could invest in a CD at 5% to 6%? What a quaint notion.
Companies should have expanded and hired more workers. Homebuilders should have been incentivized to build more McMansions in the suburbs, knowing that qualified buyers would appear like magic. What was supposed to happen was a normal recovery. What we got was the weakest recovery on record.
Not only that, the Fed destroyed the retirement hopes and dreams of tens of millions of my fellow US Boomers. When we include the effects of the destructive policies of the rest of the world’s central banks, the number becomes hundreds of millions.
The secure and protected world our central bankers live in is far removed from that of the American or European middle class retiree. The purity of their theory and the clarity of their economic thought is clearly far more important to them than people’s wellbeing.
unlikely since the stock market, like inflation numbers, are rigged and have been so since March, 2009
You speak like the Guy with a Bow Jim Grant he said something like the Inputs to the Market is Distorted by Fed hence the output too is distorted , what what we see now as the market is not the real one but a distorted view
Re: Perspectives on the global economic changes
Posted: 04 Aug 2018 09:03
by Neshant
Austin wrote:The issue is more complex than that ,here is a good write up with stastics how QE has ripped off savers
The whole idea of some "wise man" central banker sitting up in an ivory tower dictating interest rates (aka price fixing) and printing money (aka counterfeiting) is absurd.
What part of this capitalism.
Re: Perspectives on the global economic changes
Posted: 04 Aug 2018 17:50
by Austin
Jim Rickards July 22, 2018: Special Economic Discussion
Re: Perspectives on the global economic changes
Posted: 04 Aug 2018 19:51
by Austin
Neshant & Pandurang do watch this presentation from Jim Rickards
^^ In any normal economic condition and yard stick the top 10 country in that list should be a Text Book Case of "How Not To Run Your Economy" but thats to unlimited money printing and no liability or accountability , Debt has become a virtue.
Re: Perspectives on the global economic changes
Posted: 13 Aug 2018 06:25
by Neshant
Austin wrote:Neshant & Pandurang do watch this presentation from Jim Rickards
Not sure if i agree with his comments on crypto currencies.
He seems intent on promoting gold whereas I think the market (i.e. people who earn the wealth) should get to choose what they want to use as money. Ultimately it is an agreement between buyer and seller how they wish to transact. The market figures out the most efficient way to do so on its own without parasitic middlemen.
One major downside of gold is that it is increasingly harder to move across borders. The reason crypto-currencies arose was to address this weakness of gold - which Rickards simply skips right over.
Re: Perspectives on the global economic changes
Posted: 15 Aug 2018 20:54
by Austin
John Rubino – No Pain Free Option When You Borrow Too Much Money
Re: Perspectives on the global economic changes
Posted: 19 Aug 2018 03:13
by panduranghari
Neshant wrote:
One major downside of gold is that it is increasingly harder to move across borders. The reason crypto-currencies arose was to address this weakness of gold - which Rickards simply skips right over.
That's not strictly true.
You can move gold easily across borders after paying tax that's due.
Cryptocurrencies can be moved across the borders too and they incur tax too which most people gloss over. Failing to pay tax is a crime in all countries. Crypto currencies are considered in all jurisdictions as a commodity. So it has neither inherent protections that conventional assets like bank deposits have nor are they considered a legal tender. How can crypto currency guys glaze over this is ridiculous!
In the EU, gold is VAT free and certain gold coins like britannias, sovereigns, Thalers, Francs are also Capital Gains Tax free.
You can carry 10 1 oz Britannias from London to Berlin and the customs officer will not raise eyebrows. You could chose to not declare the cryptocurrency sale, but the authorities have the means to track you. It's very convenient that Satoshi came in vogue in 2009 and still is apparently unknown.
The disadvantages of crypto are myriad- excessive electricity consumption being a very critical one. And 10 investors control 90% of bitcoin market. At best, the current crypto currencies are the very first flying machines devised by Oliver and Wilbur Wright. They will become mainstream only when adopted by national governments. Libertarian ideals can go to hell in a hand basket.
Gold unlike crypto is owned globally by central banks and common people.
It does not need to have a functioning economy with governmental backing to function as money.
Also remember when silk route (eBay for extortion, drugs, contract killing) died, bitcoin was mysteriously born. We should know who is behind this. The 3 letter agency seems most likely.
Re: Perspectives on the global economic changes
Posted: 19 Aug 2018 07:49
by Austin
The Spectator Index
The Spectator Index
@spectatorindex
·
7h
Oil price needed to balance budget.
Think how a sine wave and cosine wave behave. The inevitable crash may be imminent. Who knows? But like markets go in cycles, I do not see how the new turmoil will be unleashed by the old problems. The problem with tracking only a few indices is those data points are already being monitored. And perhaps efforts are going into ensuring they do not repeat. Yeah they can try.
If oil price is what you are tracking to ascertain the break even price needed to balance the budget, then what are the factors which can throw a spanner in the works?
How can we be sure that $40 is the break even price for Russia to balance its budget? I do not believe it . Quite a lot of things are unknown unknowns. Black swans more like. I think we may even see a wedge of black swans coming our way with Wagner's Rise of the Valkyries in the background.
Re: Perspectives on the global economic changes
Posted: 19 Aug 2018 13:41
by panduranghari
Speculators are net short the most since 2001. Commercials who take the other end of the bet, are thus most net long.
Re: Perspectives on the global economic changes
Posted: 19 Aug 2018 17:38
by Neshant
panduranghari wrote:
You can move gold easily across borders after paying tax that's due.
The whole point of gold & crypto is to get out of govt/banker controlled fiat, not get into such schemes.
Out means out of govt/banker control and out of taxation which is increasingly just legalized theft.
Its the primary reason why tons of useless middlemen skimming cream in the fiat game see it as a threat.
There are already presidents set in the UK where the govt goes back 10 years and taxes what formerly was "tax free" with a quick change in the laws.
Anonymity is gold's only protection. Anonymity is increasingly being built into cryptos.
<quote>You can carry 10 1 oz Britannias from London to Berlin and the customs officer will not raise eyebrows.</quote>
You can't carry anything above a certain dollar amount through without having to declare it whereupon it becomes a permanent record.
They will become mainstream only when adopted by national governments. Libertarian ideals can go to hell in a hand basket.
You must be dreaming.
The reason cryptos exists is to cut out useless cream skimming middlemen, not introduce them.
Everything was moving in the direction of digitized govt/bankster controlled fiat money.
That is until cryptos came along throwing a monkey's wrench in the plans.
Whether cryptos are a CIA plot or not, its certainly evolving well beyond the original concept with a mind of its own.
That above all is the primary concern of cream skimmers who need skim cream to make a living.
How else could they survive producing nothing of value in society
Re: Perspectives on the global economic changes
Posted: 20 Aug 2018 04:00
by Neshant
This could be India's window of opportunity to kick start manufacturing if only babus make the right move.
Alas it will be squandered..
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As Maersk Sounds Trade War Alarm, Walmart Tells Some Suppliers To Look Outside China For Sourcing
While many middlemen are bad, not all of them are. What you are mixing up is the intent of the middlemen and permissiveness of the system to let it happen.
Substitute fiat for crypto, the assessment is identical.
Banks=coinbase
nodes=middlemen (cream skimmers as you call it)
But fiat=/=crypto, though crypto wants to replicate the effect of fiat by substituting fiat becoming the main means of exchanging time.
Money is after all time.
All being equal do you perceive the current system would change in any way if fiat was substituted by cryptocurrency? Not that I can see it.
Middlemen will always be there and they need to be there to make the system more responsive and smooth running. When the middlemen control the economic fortunes and dont suffer down days (JPM has had zero down days since 2010), thats when they become parasitic. How will cryptocurrencies make the system less parasitic? One group of middlemen will be replaced by another group. Thats that.
For all its goods and bads, crypto is becoming more like a giffen good than a freely traded currency.
Cryto fanboys mistakenly believe changing the currency supply will change the world wrongs. That is naive. Its the same thoughts that gold standard supporting gold bugs keep on harping about. Changing currency does not solve the systemic issues. If it was that simple, USA in 1971 could have just raised the gold price from 35$/oz to 100$/oz. But that was just a band aid option. It did not address the systemic concerns as to why this problem arose to begin with.
What crypto fan boys want is all global assets to be denominated in BTC or tether or the latest iteration of some punk coin. All these thoughts of anonymity are over blown issues which truly do not affect the common man.
The world as we know it is changing and even if you say ,"Everything was moving in the direction of digitized govt/bankster controlled fiat money." I doubt any cryptocurrency can stop this. The government/banksters will end up controlling the next global version of cryptocurrency, whether you like it or not.
I prefer to live in the here and now. Utopia is not a realistic option while I am awake.
Re: Perspectives on the global economic changes
Posted: 26 Aug 2018 08:36
by Austin
panduranghari wrote:Austin,
Think how a sine wave and cosine wave behave. The inevitable crash may be imminent. Who knows? But like markets go in cycles, I do not see how the new turmoil will be unleashed by the old problems. The problem with tracking only a few indices is those data points are already being monitored. And perhaps efforts are going into ensuring they do not repeat. Yeah they can try.
There is a human tendency to think old problem is solved and we wont see this the next time , Track the old crashes they are all rooted in the same core problem but manifested in different ways.
You may well know that 2008 crises was never solved but the can was kicked further by priniting exponontially more money at the cost of rising debt and little growth.
If oil price is what you are tracking to ascertain the break even price needed to balance the budget, then what are the factors which can throw a spanner in the works?
It depends on how one looks at it , Some countries consider 2-3 % budget defict ok and there is no need to balance the budget .
Some countries like Russia have conservative approach and they dont want to increase Public Debt and want to balance the budget as far as possbile taking a tightening approach to every thing , which has come from 1998 rouble crisis.
Its about the philosophy of each country and what budget deficit , debt at cost of growth means to them.
As to what will throw spanner in the work , Demand and Supply Plus major crisis like 2008 .......The current high oil prices is due to OPEC + Russia deal to manage the prices ( by artifically cutting production ) which was reaching rock bottom just 2 years back.
OPEC ~ 80-90 % of budget revenue comes from Energy Sources while for Russia it is ~ 40 % of budget revenue but all have vested interest in high oil price , Mainly the corporate because they need long term investment in Energy to keep production going , To the Share holders of these companies , To Shale Oil which needs oil prices etc
How can we be sure that $40 is the break even price for Russia to balance its budget? I do not believe it .
It is not a matter of faith to believe or unbelieve , The budget documents are there and Russias have 3 years budget cycle and Oil prices for 2018 to 2020 is based on Ural Blend at $ 40 with 2 % indexation each year. http://intersectionproject.eu/article/e ... et-2018-20 .If the Oil prices are high then extra money is divided into 3 differnt fund National Welfare Fund , Reserve Fund and Forex
