patrick.net

Trollhole says

Not to mention that article doesn't prove the dollar is toast as the world's reserve currency.

why does the world need a reserve currency? why does the world need to use a currency that only 1 country can print without limit? why does the world need to sell their merchandise for paper that is just printed out of thin air?

komputodo says

why does the world need to sell their merchandise for paper that is just printed out of thin air?

Why do you sell your labor for paper that is printed out of 'thin air'? Why do your creditors accept that paper? Why does the dude running a hit dog stand sell his merchandise for it?

Why even ask this question?

komputodo says

why does the world need a reserve currency? why does the world need to use a currency that only 1 country can print without limit? why does the world need to sell their merchandise for paper that is just printed out of thin air?

There has to be a medium of exchange if there is no bartering. So what currency is used ?

If an importer in Brazil wants to buy a container of Chinese made laptop computers, then how do they pay for them based on what they are worth to both the seller and buyer ? Is it in Chinese currency or Brazilian currency ?

If they buy in US dollars, then they have to have access to US dollars such as in a savings account. Most who do this, keep US dollars saved in Treasuries like 1 year (or less) US Treasury notes. So if they have less need to US dollars, then they will not buy as much US Treasury assets like bills and notes.

I remember bitcoin being considered a medium of exchange such as for buying homes, but price volatility of bitcoin made it not as viable.

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Trollhole says

komputodo says

why does the world need to sell their merchandise for paper that is just printed out of thin air?

Why do you sell your labor for paper that is printed out of 'thin air'? Why do your creditors accept that paper? Why does the dude running a hit dog stand sell his merchandise for it?

Why even ask this question?

First of all, this post is about reserve currency, not fiat money. If I live outside the US, I can accept a different fiat currency for my labor. I don't have to accept US dollars.

ad says

There has to be a medium of exchange if there is no bartering. So what currency is used ?

If an importer in Brazil wants to buy a container of Chinese made laptop computers, then how do they pay for them based on what they are worth to both the seller and buyer ? Is it in Chinese currency or Brazilian currency ?

In this instance, the chinese central bank would set the currency exchange rate for the Brazilian Real v. Chinese yuan. Now the Brazilian can pay for the laptops with his domestic currency. Therefore cutting the us dollar out of the deal.

komputodo says

In this instance, the chinese central bank would set the currency exchange rate for the Brazilian Real v. Chinese yuan. Now the Brazilian can pay for the laptops with his domestic currency. Therefore cutting the us dollar out of the deal.

Okay, so the Chinese would want to get paid in Brazilian Real.

The concern is the stability of the currency so if they get a X amount of Real, then the value of it will remain stable between when the deal is being negotiated and when payment in Real is received.

I guess having everything priced in US dollars is just convenient as far as processing import and export transactions. It consolidates instead of having many currency exchanges (Real to Yuan).

The BRICs don't own a lot of US Treasury assets and are not buying them as much compared to non-BRIC countries so I don't think its going to cause a major drop in demand for US Treasuries.

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ad says

I guess having everything priced in US dollars is just convenient as far as processing import and export transactions. It consolidates instead of having many currency exchanges (Real to Yuan).

yeah it's convenient until you upset the usa and they confiscate your US assets....financial and physical.

komputodo says

yeah it's convenient until you upset the usa and they confiscate your US assets....financial and physical.

Its does not matter as a large majority of the purchases of US Treauries are from non BRICs and US investors.

They are not being seized for your political strawman reason.

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ad says

Its does not matter as a large majority of the purchases of US Treauries are from non BRICs and US investors.

It may have once been like that but lately the main buyers have been china, saudi arabia...BRICS MEMBERS, and the federal reserve bank as buyer of last resort. Which is kinda funny...the fed create money, then loan it with interest to the usa treasury to sell treasuries back to them.

komputodo says

It may have once been like that but lately the main buyers have been china, saudi arabia...BRICS MEMBERS, and the federal reserve bank as buyer of last resort. Which is kinda funny...the fed create money, then loan it with interest to the usa treasury to sell treasuries back to them.

That is not true. The main buyers of US Treasuries are not these countries. Again, China has been reducing its holdings of US Treasuries and Saudi Arabia is not even in the top 10 for US Treasury asset owners.

The foreign ownership of US Treasuries is about $7.4 trillion and there are a total of approximately $25 trillion in outstanding US Treasuries.

https://ticdata.treasury.gov/Publish/mfh.txt

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komputodo says

First of all, this post is about reserve currency, not fiat money.

You brought up the fiat stuff, not me

?????

ad says

I guess having everything priced in US dollars is just convenient as far as processing import and export transactions. It consolidates instead of having many currency exchanges (Real to Yuan).

also consider that major holders of USD are countries that are forced to buy oil priced in USD. If they weren't forced by the usa to buy oil with dollars, they probably wouldn't be holding so many.

komputodo says

also consider that major holders of USD are countries that are forced to buy oil priced in USD. If they weren't forced by the usa to buy oil with dollars, they probably wouldn't be holding so many.

yes, but again the BRIC countries are not major holders of US Treasuries

and foreign ownership of US Treasuries is only about $7.4 trillion out of $25 trillion

and a vast majority of those holding the US Treasuries are Japan and other ally countries like Cayman Islands

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ad says

and a vast majority of those holding the US Treasuries are Japan and other ally countries like Cayman Islands

Cayman's are just a eurodollar holder for other players. The entire eurodollar market is for non-US holders of dollars that can be transacted with others likewise.

Same for treasuries, I suppose. Although the big boys hold them directly as you note.

ad says

komputodo says

also consider that major holders of USD are countries that are forced to buy oil priced in USD. If they weren't forced by the usa to buy oil with dollars, they probably wouldn't be holding so many.

yes, but again the BRIC countries are not major holders of US Treasuries

and foreign ownership of US Treasuries is only about $7.4 trillion out of $25 trillion

and a vast majority of those holding the US Treasuries are Japan and other ally countries like Cayman Islands

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Japan's official stash of $1.11 trillion represents 4.4% of the total market, also a record low, while China's $835 billion stash is around 3.4% of the total, the lowest in over 20 years. In contrast, the Federal Reserve holds $5 trillion, or 20% of the overall market.

Dollar, the best looking horse in glue factory and all that. Perhaps it belongs to prediction thread but I do not see another currency which will be as convenient as USD for international transactions. And I would trust Chinese or Russian government even less than US gubbermint with respect to asset confiscations.

komputodo says

Japan's official stash of $1.11 trillion represents 4.4% of the total market, also a record low, while China's $835 billion stash is around 3.4% of the total, the lowest in over 20 years. In contrast, the Federal Reserve holds $5 trillion, or 20% of the overall market.

Yes, as I was referring to the vast majority of the foreign holdings are non-BRICs. Japan is one example, as well as other countries like Grand Cayman.

Yes, its called financial engineering as far as how the Fed has operated since 2009 with quantitative easing (QE). Look at how they bought mortgage backed securities to prop up the housing market.

All the stimulus money (especially third or fourth round with Birdbrain Biden) as well as QE and ZIRP (zero interest rate policy) has finally caused the chickens to come home to roost.

I hope no later than next summer that PCE and CPI are steady and below 0.3% monthly increase and below 3.25% annual increase, and the Fed keeps the Fed Funds rate at or below 5.5%.

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I could see places like Lebanon, Argentina, Zimbabwe, etc adopting the US Dollar.

Soo, the Cretin of Kremlin sold his oil to India to the tune of $38B. Is there a problem? Yes, there is: he sold all that oil not for actual $38B but for $38B worth of Rupees which he can't convert to anything else and can't spend anywhere outside India. Except he doesn't want or need anything India has to offer and India doesn't offer anything he wants/needs. Seeing his conundrum Indians have graciously offered to allow the Cretin of Kremlin to invest in some Indian companies and at least get some dividends.... drumroll.... in Rupees!

Hooray for BRICS!!! Hooray for de-dollarisation!!!

Yup. Exactly right, Eric Holder.

Same problems arise with the Brazillian real, Chinese yuan (although in that case the Chinese simply refused to redeem for the Russians) and South African rand.

https://www.politico.eu/article/india-has-russia-kremlin-over-crude-oil-barrel/

How about that, @indc the Indian rupee isn't even worth much to desperate Russians. Can still be used as toilet paper when Indians squat beside the road tho, I am sure.

@komputudo ^^one of the reasons why the world needs a reserve currency. Doesn't HAVE to be the dollar, technically. But any decent level of global trade requires one.

Trollhole says

Doesn't HAVE to be the dollar, technically.

But it will need a deep well of liquidity and a large bond market like uhhh, we have.

just_passing_through says

But it will need a deep well of liquidity and a large bond market like uhhh, we have.

Bingo! And don't forget non-bond assets, like R/E.

This was why the Japanese were buying up golf courses, most of Hawai, Rockefeller Centre, etc, Then 15 years later, it was the Chinese.

UK, Canada and Oz/NZ are next up, pretty much in that order. But Canada recently started to limit foreign R/E purchases and NZ stopped it about 5 years ago.

Europe was on track until around 2008 when they raided foreign deposits in a Cypress bank to bail out the European owners. Until then, the euro was on track to at least challenge the dollar for reserve currency status.

Eric Holder says

allow the Cretin of Kremlin to invest in some Indian companies and at least get some dividends

They can invest in companies that export to Russia like electronic equipment, machinery, and fruits and vegetables.

https://tradingeconomics.com/india/exports/russia

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ad says

Eric Holder says

allow the Cretin of Kremlin to invest in some Indian companies and at least get some dividends

They can invest in companies that export to Russia like electronic equipment, machinery, and fruits and vegetables.

https://tradingeconomics.com/india/exports/russia

Yeah, rest of the world are not investor friendly to foreigners like the Anglo-American sphere is.

Even first tier nations like Japan and Germany.

Trollhole says

Yeah, rest of the world are not investor friendly to foreigners like the Anglo-American sphere is.

Even first tier nations like Japan and Germany.

Can Russia buy stocks of Indian companies ? If not owning directly, then buy shares of companies on the stock market in India.

Still have to liquidate them in Indian rupees. But India does export to Russia as far as electronics, machinery, and agriculture products.

ad says

Can Russia buy stocks of Indian companies ? If not owning directly, then buy shares of companies on the stock market in India.

Don't know. Doubt it. India is corrupt as hell and foreigners get burned.

This is why the rupee isn't a viable alternative to the dollar as a reserve currency or as part of a basket of other loser currencies used to set up some sort of BRICS currency.

ad says

But India does export to Russia as far as electronics, machinery, and agriculture products.

But there is only so much of that Russia needs or India is allowing Rissia to buy.

Again: R-E-A-D

https://www.politico.eu/article/india-has-russia-kremlin-over-crude-oil-barrel/

Yes Trollhole, I read it : "New Delhi needs to give approval for larger transactions, and so far it's not doing that for its oil spending. Instead, India has reportedly offered an unconventional solution — reinvesting rupees into its own economy. "Our Indian partners have assured us that they will suggest promising areas where they could be invested,” Lavrov said."

This is a similar arrangement to China "investing" in Central America and Africa.

ad says

Yes Trollhole, I read it : "New Delhi needs to give approval for larger transactions, and so far it's not doing that for its oil spending. Instead, India has reportedly offered an unconventional solution — reinvesting rupees into its own economy. "Our Indian partners have assured us that they will suggest promising areas where they could be invested,” Lavrov said."

This is a similar arrangement to China "investing" in Central America and Africa.

1) thank you for reading it.
2) forcing Russia to do with its rupees what it doesn't want to do just proves why the rupee is never going to be a reserve currency.

Trollhole says

2) forcing Russia to do with its rupees what it doesn't want to do just proves why the rupee is never going to be a reserve currency.

Yes India has total leverage over Russia in this case. They are getting a major boost to their economy from this due to the sanctions on Russia.

Russia better send its brightest and best down there to monitor their investments. But I think the way India's economy is growing, I don't think it will be bad investments for Russia.
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ad says

But I think the way India's economy is growing, I don't think it will be bad investments for Russia.
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Oh, they will rip them off via fraud big time:

Economic crime and fraud continue to be a significant challenge for Indian companies, with 66% of organisations experiencing at least one form of economic crime in the past two years as per the first edition of the report.

https://www.pwc.in/press-releases/2023/economic-crime-and-fraud-continue-to-plague-indian-companies-pwc-india.html

Another reason the Indians are doing this I bet: they don't want the Russians to cause price increases in certain areas in the Indian economy, like food or copper/iron, etc.

PedoIwog says

ad says

But I think the way India's economy is growing, I don't think it will be bad investments for Russia.
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Oh, they will rip them off via fraud big time:

Economic crime and fraud continue to be a significant challenge for Indian companies, with 66% of organisations experiencing at least one form of economic crime in the past two years as per the first edition of the report.

https://www.pwc.in/press-releases/2023/economic-crime-and-fraud-continue-to-plague-indian-companies-pwc-india.html

Another reason the Indians are doing this I bet: they don't want the Russians to cause price increases in certain areas in the Indian economy, like food or copper/iron, etc.

Good point that India is going to benefit the most from Russia selling it oil and then putting restrictions on payment for that oil.

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The solution to all currency problems is simply to use silver or gold by weight once again, as was done for thousands of years.

Physical shipment is not necessary if there exists at least one trustworthy bank in the world. Amsterdam's Wisselbank fulfilled this role for centuries before finally defaulting.

Patrick says

The solution to all currency problems is simply to use silver or gold by weight once again, as was done for thousands of years.

Yeah a family member told me many years ago that a one ounce gold coin use to buy a very nice three piece suit with socks, shoes, white shirt and tie.

He said the same coin should continue to buy the same quality suit and accessories.

That is how gold is suppose to maintain its purchasing power.

Patrick says

The solution to all currency problems is simply to use silver or gold by weight once again, as was done for thousands of years.

Deprives the banking system of absolute power, and the government is under the banking system, and is bribed by it.

ad says

Patrick says

The solution to all currency problems is simply to use silver or gold by weight once again, as was done for thousands of years.

Yeah a family member told me many years ago that a one ounce gold coin use to buy a very nice three piece suit with socks, shoes, white shirt and tie.

He said the same coin should continue to buy the same quality suit and accessories.

That is how gold is suppose to maintain its purchasing power.

One person's nice suit is another's cheap rags he won't be seen dead in.

One of the nations getting ready to dethrone the dollars:

https://m.youtube.com/watch?v=Iiny1GrfhYM

It's a good thing the Globalists and the West have those HAARP and DEWs to surreptitiously destroy the BRICS malfeasors. Otherwise, we might have to nuke them.

RWSGFY says

One of the nations getting ready to dethrone the dollars:

https://m.youtube.com/watch?v=Iiny1GrfhYM

Yes. Notice how the nations involved are mostly Loser Nations?

PumpingRedheads says

RWSGFY says

One of the nations getting ready to dethrone the dollars:

https://m.youtube.com/watch?v=Iiny1GrfhYM

Yes. Notice how the nations involved are mostly Loser Nations?

Indeed.