patrick.net

One indicator that there is not runaway debt accumulation is debt to GDP ratio. At least it has steadied around 120%.

It was about 105% from 2016 to the start of the pandemic in early 2020.

If the ratio drops to 110% within the next 2 years then the risks of a debt crisis are further reduced, hence this defeats the argument that the US federal government is destroying or abandoning the dollar.

https://fred.stlouisfed.org/series/GFDEGDQ188S

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The question is how liquid and valuable is the US dollar ? If you have a dollar, then how easy is it to buy services and goods ?

Russia is being paid in Indian currency for oil it exports to India. How easy is for Russia to use that India currency to buy goods and services that it needs ?

buy rice, coffee, mangoes and software services from India ?

.

"Saudi Arabia officially joins BRICS - Saudi state TV announced that the kingdom had officially joined BRICS... Prince Faisal said the BRICS group was "a beneficial and important channel" to strengthen economic cooperation. The BRICs bloc previously included Brazil, Russia, India, China, and South Africa, but is set to double with Saudi Arabia joining the United Arab Emirates, Egypt, Iran, and Ethiopia as new members." https://www.reuters.com/world/middle-east/saudi-state-tv-says-kingdom-officially-begins-membership-brics-bloc-2024-01-02/

ad says

Russia is being paid in Indian currency for oil it exports to India. How easy is for Russia to use that India currency to buy goods and services that it needs ?

Not good. Russia tried to buy stuff from India with rupees they got from selling oil to them. The Indians but the brakes on that real quick.

Let that settle in: India doesn't even want their own money for exports they sell.

Indians won't take yuan the Russians have, either.

So the Russians fly cargo planes filled with gold to pay for things.

BRICS = PR bullshit

UkraineIsFucked says

Confused. Does that have to do with taxation too?

General ambivalence to the shit state our economy is in.

NuttBoxer says

UkraineIsFucked says

Confused. Does that have to do with taxation too?

General ambivalence to the shit state our economy is in.

In other words, nothing.

UkraineIsFucked says

Not good. Russia tried to buy stuff from India with rupees they got from selling oil to them. The Indians but the brakes on that real quick.

Let that settle in: India doesn't even want their own money for exports they sell.

Indians won't take yuan the Russians have, either.

Then they got to demand payment in sugar, grain, etc that can be stored in warehouses in Russia.

They have to make it a barter trade if they can't use the India currency. For example, this would be two pounds of sugar for 1 gallon of oil.

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NuttBoxer says

General ambivalence to the shit state our economy is in.

That ambivalence won't last for long.

"Just don't raise the wages and make the working poor absorb 30% increases in groceries"

ad says

Then they got to demand payment in sugar, grain, etc that can be stored in warehouses in Russia.

They have to make it a barter trade if they can't use the India currency. For example, this would be two pounds of sugar for 1 gallon of oil.

'demand'?

UkraineIsFucked says

ad says

Then they got to demand payment in sugar, grain, etc that can be stored in warehouses in Russia.

They have to make it a barter trade if they can't use the India currency. For example, this would be two pounds of sugar for 1 gallon of oil.

'demand'?

Okay, negotiate instead of demand.

Another possibility is to give the Indian rupees to Russian tourists who can then exchange rupees for Turkish currency when visiting Istanbul.

So pay Russians in rupees who then can use it abroad such as in Turkey, Thailand, etc.

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I wish people would drop the "S" part of BRICS.

South Africa is a shithole, the only surprising thing is that it's still in freefall and hasn't turned into cannibal anarchy yet.

AmericanKulak says

I wish people would drop the "S" part of BRICS.

South Africa is a shithole, the only surprising thing is that it's still in freefall and hasn't turned into cannibal anarchy yet.

Yeah, its still benefiting from what existed during its Apartheid past, but that can only last for so long. I've seen economic data and it seems since the late 1990s that South Africa has slowly been in a decline.
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UkraineIsFucked says

NuttBoxer says

UkraineIsFucked says

Confused. Does that have to do with taxation too?

General ambivalence to the shit state our economy is in.

In other words, nothing.

It's a piece. Just one of the tools in the banker's arsenal.

Ppl, if you're absolutely worried that the USD is going to hell within let's say the next ~5 yrs, here's a way to assuage one's fears ...

Take whatever 'cash equivalents' you have ... let's say that that's 20% of your account, and split it into 40% commodity ETFs (but not gold [ I only buy gold if it's in a crash situation ]) and then 40%, among Aussie (FXA), Canadian (FXC), and Swiss Franc (FXF), and keep the rest in highest rate US based CDs.

That should help if the BRICS goes nuts on the Forex, for some inexplicable reason like suddenly ... [ sarcasm mode ] MSNBC says that 'the Chinese Silk Road Gold Bourse is legitimate and won't rip off foreign investors' [ sarcasm off ] ... in other words, a pump/dump on the dumb money.

You are a bit behind the curve here, that advise was good maybe 10 years ago..

https://wolfstreet.com/2024/01/02/the-incredibly-ballooning-us-government-debt-spikes-by-1-trillion-in-15-weeks-to-34-trillion/

NuttBoxer says

It's a piece. Just one of the tools in the banker's arsenal.

No it isn't. Banks don't levy taxes.

The Dollar Milkshake Theory (aka The BRICs Is Bullshit Theory)

https://youtu.be/xxzy3sLs4Bs?si=RBkV980peMlDsQUB

UkraineIsTotallyFucked says

BRICS isn't going anywhere anyhow. It's been around for 20 years, and they've done nothing. I think it's been setup as a fallback, not as a challenger.

richwicks says

BRICS isn't going anywhere anyhow. It's been around for 20 years, and they've done nothing. I think it's been setup as a fallback, not as a challenger.

It's a PR vehicle for domestic political consumption. Ppl outside America hate the dollar. But nations can't dump it w/o hurting themselves. System is designed that way.

And when the US prints more dollars, there is debt interest attached that isn't printed until the next round of monetary expansion.

Thus every dollar created has built-in demand.

ALL dollar debtors (especially Eurodollar debtors) have to scramble to pay that interest. So they print their own currencies up to buy the necessary dollars. That makes their currency depreciate against the dollar, which means they have to sell more of their currency in order to be able to at least buy the same amount of dollars as they did before, etc.

The central bank gold hoarding going is the Plan B for when THEIR currencies are worth such shit that they can't PAY EACH OTHER in Eurodollar system. When the dollar actually blows up is going to be later.

Yes, eventually the US dollar will become toast too. But only after the Euro, Yen, etc. are totally fucked first. Between now and then, the dollar's value against those other currencies will soar.

The BRICS Fluffers' lube is running dry. Poor @indc

@UkraineIsTotallyFucked

https://twitter.com/PamphletsY/status/1767226842258510315

China's housing minister says real estate developers must go bankrupt if necessary.

Do you think this can happen in USA?

indc says

UkraineIsTotallyFucked

https://twitter.com/PamphletsY/status/1767226842258510315

China's housing minister says real estate developers must go bankrupt if necessary.

Do you think this can happen in USA?

Why does it matter? Many went under in 2009 and many will go under in the future. Businesses in the US go bankrupt all the time.

What does that have to do with the subject at hand? The Magical Bullshit that is BRICS having a currency that will supplant the dollar?

UkraineIsTotallyFucked says

The Dollar Milkshake Theory (aka The BRICs Is Bullshit Theory)

https://youtu.be/xxzy3sLs4Bs?si=RBkV980peMlDsQUB

Interesting, but dated. Inflation DID occur, and Saudi Arabia does not restrict the oil trade to dollars.

HeadSet says

Saudi Arabia does not restrict the oil trade to dollars.

Did it claim that they didn't?

UkraineIsTotallyFucked says

Did it claim that they didn't?

Yes.

HeadSet says

UkraineIsTotallyFucked says

Did it claim that they didn't?

Yes.

No, they did not.

They only mention Saudi as part of a international transaction example. No mention of Saudi Arabia not restricting - or restricting - anything.

UkraineIsTotallyFucked says

They only mention Saudi as part of a international transaction example. No mention of Saudi Arabia not restricting - or restricting - anything.

Listen:


He directly says they need dollars to buy oil from Saudi. That makes sense because pricing oil in dollars had long been Saudi policy and why Biden went to Saudi Arabia last year to try and keep it that way.
https://geopoliticaleconomy.com/2023/08/10/us-saudi-arabia-sell-oil-dollars-chinese-yuan/

UkraineIsTotallyFucked says

Why does it matter? Many went under in 2009 and many will go under in the future. Businesses in the US go bankrupt all the time.

What does that have to do with the subject at hand? The Magical Bullshit that is BRICS having a currency that will supplant the dollar?

It matters because can kicking can have consequences. If other major economies do not buy treasuries and ignore dollar for most of their transactions then interest rates cant go low and USA economy will enter death spiral.

indc says

UkraineIsTotallyFucked says

Why does it matter? Many went under in 2009 and many will go under in the future. Businesses in the US go bankrupt all the time.

What does that have to do with the subject at hand? The Magical Bullshit that is BRICS having a currency that will supplant the dollar?

It matters because can kicking can have consequences. If other major economies do not buy treasuries and ignore dollar for most of their transactions then interest rates cant go low and USA economy will enter death spiral.

It all started around 2008 where the Federal Reserve can buy enough US Treasuries and mortgage backed securities to provide the needed demand to keep the 10 Year Treasury below 5%.

This helped with all that deficit spending during 2009 to 2012 as far as ZIRP.

Notice its hard to find the statistic of debt payment as a percentage of the total federal budget ? I think it was 8% in 2022.

Let's hope that US Treasuries don't go to krazy krazy next time around and the Federal Reserve can help keep the cost of borrowing money low for the federal government.

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HeadSet says

He directly says they need dollars to buy oil from Saudi

Yes. That does not translate as Saudi only takes dollars.

indc says

It matters because can kicking can have consequences. If other major economies do not buy treasuries and ignore dollar for most of their transactions then interest rates cant go low and USA economy will enter death spiral.

That has nothing to do with WTF is happening in China regarding real estate developers. And it REALLY has nothing to do with US real estate developers that go bankrupt or not

What planet are you on?

UkraineIsTotallyFucked says

Not good. Russia tried to buy stuff from India with rupees they got from selling oil to them. The Indians but the brakes on that real quick.

Let that settle in: India doesn't even want their own money for exports they sell.

How do you convince someone to sell you their products for your pieces of paper (rupees) and then tell them that you won't accept those same pieces of paper (rupees) to buy their exports????

UkraineIsTotallyFucked says

Yes, eventually the US dollar will become toast too. But only after the Euro, Yen, etc. are totally fucked first. Between now and then, the dollar's value against those other currencies will soar.

really? when will it start soaring against MXN? its down about 15% since 2 years ago.

UkraineIsTotallyFucked says

indc says

It matters because can kicking can have consequences. If other major economies do not buy treasuries and ignore dollar for most of their transactions then interest rates cant go low and USA economy will enter death spiral.

That has nothing to do with WTF is happening in China regarding real estate developers. And it REALLY has nothing to do with US real estate developers that go bankrupt or not

What planet are you on?

INDC was posting about de-dollarization, which means foreign exchanges are not going to hold as many or any short term US Treauries which can be easily converted to dollars. They don't need to since the dollar won't be used as much for their international commerce.

So if they buy less US Treasuries then that reduces the demand, and likely causes US Treasury interest rates to increase to make them more attractive to the fewer foreign buyers.

All this does not matter Bubba, since 2008 the Federal Reserve has this role of being the buyer of US Treasuries via Quantitative Easing (QE).

Look at what The Wolfman at Wolf Street wrote, he says the floor or bottom is around $5 trillion for the Federal Reserve balance. sheet. He does not see them getting lower than that if they continue Quantitative Tightening (QT).

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AD says

INDC was posting about de-dollarization

WTF do real estate developers going out of biz have to do with any if this?

Nothing.

AD says

to hold as many or any short term US Treauries which can be easily converted to dollars.

(Sigh)

Way more debt in dollars is not held by those the US owes or those that owe the US. It is held by foreigners who owe other foreigners.

That drives up demand for dollars. That in turn makes treasuries more valuable vis a vis their currencies and others.

Some are trying to find alternatives because they are losers who find it increasingly expensive to aquire dollars for that. But because of the above vicious cycle, they are pissing in the wind.

They also can not trade if the US Navy starts seizing or even sinking their shipping, should it come to being serious.

UkraineIsTotallyFucked says

WTF do real estate developers going out of biz have to do with any if this?

Nothing.

It has everything to do with economics. Dollar was supreme because everyone was kicking the can. Now china is sending strong message no more kicking the can. They dont care what US is doing with its money. It will trade in its own currency. And stable currency is an attractive currency. The froth china created by being slave to US for 40 yrs will be completely destroyed before it will grow again with its own characteristics.

UkraineIsTotallyFucked says

They also can not trade if the US Navy starts seizing or even sinking their shipping, should it come to being serious.

Can you guess why US is letting in so many illegals?

indc says

UkraineIsTotallyFucked says

They also can not trade if the US Navy starts seizing or even sinking their shipping, should it come to being serious.

Can you guess why US is letting in so many illegals?

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UkraineIsTotallyFucked says

So the Russians fly cargo planes filled with gold to pay for things.

That's good news if so.

Of course it would be more efficient to have a trustworthy institution like the old Amsterdam Wisselbank, which could simply move gold around within its vaults.

https://www.beursgeschiedenis.nl/en/moment/the-bank-of-amsterdam/

With the sole option of using coins, it was physically difficult to complete share transactions that involved several thousands of guilders. Therefore, every exchange trader that mattered had an account at the Wisselbank. The Wisselbank introduced a book-entry system that enabled customers to settle payments with other account holders. ...

The customers of the bank felt secure about the fact that their capital was being kept in the basement of the city hall and that the city of Amsterdam guaranteed their assets. The former entrance of the Wisselbank in the old city hall on the Dam Square – the current palace – is still marked by an image of Mercury, the Roman god of trade.

Partly because of the Wisselbank, that would continue to exist until 1820, Amsterdam could develop into a global financial center.

indc says

Can you guess why US is letting in so many illegals?

Why bother?