Perspectives on the global economic changes

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Austin
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Re: Perspectives on the global economic changes

Postby Austin » 23 Jul 2018 08:18

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

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Re: Perspectives on the global economic changes

Postby nandakumar » 23 Jul 2018 10:00

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.

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Re: Perspectives on the global economic changes

Postby Austin » 23 Jul 2018 10:39

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.

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Re: Perspectives on the global economic changes

Postby Austin » 27 Jul 2018 13:23

Does U.S. debt matter? | CNBC Explains


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Re: Perspectives on the global economic changes

Postby A_Gupta » 27 Jul 2018 17:07

https://piie.com/blogs/trade-investment ... ent-united
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).

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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.

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Re: Perspectives on the global economic changes

Postby chetak » 27 Jul 2018 17:14

twitter

That pile of cash is the Venezuelan equivalent of one US dollar. Behold the power of socialism.

Image

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Re: Perspectives on the global economic changes

Postby Austin » 27 Jul 2018 21:28

Jim Rickards -- July 2018


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Re: Perspectives on the global economic changes

Postby Neshant » 29 Jul 2018 00:52


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Re: Perspectives on the global economic changes

Postby Neshant » 29 Jul 2018 08:13



Austin
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Re: Perspectives on the global economic changes

Postby Austin » 29 Jul 2018 21:47

Neshant wrote:


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.

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Re: Perspectives on the global economic changes

Postby Neshant » 30 Jul 2018 03:49

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..


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Re: Perspectives on the global economic changes

Postby RoyG » 30 Jul 2018 05:58

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.

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Re: Perspectives on the global economic changes

Postby Austin » 30 Jul 2018 10:55

Neshant wrote:http://www.emigrantdirect.com

Image
0.5% interest !


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

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Re: Perspectives on the global economic changes

Postby Neshant » 30 Jul 2018 13:21

Austin wrote:
Neshant wrote:http://www.emigrantdirect.com

Image
0.5% interest !


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.

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Re: Perspectives on the global economic changes

Postby Viv S » 30 Jul 2018 13:59

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.

Image

Borrowing rate being ~100 bps below the lending rate.

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Re: Perspectives on the global economic changes

Postby A_Gupta » 30 Jul 2018 16:46

The Trans-Pacific Partnership that Obama was pursuing was supposed to help provide a united front against China.

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Re: Perspectives on the global economic changes

Postby A_Gupta » 31 Jul 2018 16:26

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.


https://www.nytimes.com/2018/07/31/opin ... eptic.html

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Re: Perspectives on the global economic changes

Postby Austin » 31 Jul 2018 20:36

Viv S wrote:
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.

Image

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.

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Re: Perspectives on the global economic changes

Postby Viv S » 01 Aug 2018 08:13

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).

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Re: Perspectives on the global economic changes

Postby Austin » 01 Aug 2018 10:58

The issue is more complex than that ,here is a good write up with stastics how QE has ripped off savers

The Fed Destroyed US Boomers' Retirement Dreams
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.

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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.

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Re: Perspectives on the global economic changes

Postby uskumar » 01 Aug 2018 17:58

China Slams U.S. ‘Blackmailing’ as Trump Weighs Higher Tariffs

Seems 25% tariffs on 200B goods are done deal. Interesting times.


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Re: Perspectives on the global economic changes

Postby Neshant » 02 Aug 2018 11:03




unlikely since the stock market, like inflation numbers, are rigged and have been so since March, 2009

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Re: Perspectives on the global economic changes

Postby Austin » 02 Aug 2018 19:45

Image

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Re: Perspectives on the global economic changes

Postby Austin » 03 Aug 2018 16:08

Neshant wrote:



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

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Re: Perspectives on the global economic changes

Postby Neshant » 04 Aug 2018 09:03

Austin wrote:The issue is more complex than that ,here is a good write up with stastics how QE has ripped off savers

The Fed Destroyed US Boomers' Retirement Dreams


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.

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Re: Perspectives on the global economic changes

Postby Austin » 04 Aug 2018 17:50

Jim Rickards July 22, 2018: Special Economic Discussion


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Re: Perspectives on the global economic changes

Postby Austin » 04 Aug 2018 19:51

Neshant & Pandurang do watch this presentation from Jim Rickards


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Re: Perspectives on the global economic changes

Postby Austin » 12 Aug 2018 13:13

Government debt as share of GDP.

https://www.instagram.com/p/BmXqbijF44C/


^^ 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.

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Re: Perspectives on the global economic changes

Postby Neshant » 13 Aug 2018 06:25

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.


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