Direct from BOOM Finance and Economics at the links below
Hat Tip to my colleague at: BOOM Finance and Economics who posts here: http://boomfinanceandeconomics.com/#/ AND COVID NEWS UPDATED DAILY: https://cmnnews.org/
BOOM seeks out the very best information from authoritative sources and strives for consistency in its quality and trustworthiness. In evidence of this, BOOM has developed a loyal readership which includes many of the world’s most senior economists, central bankers, fund managers and academics. We strive to always have good relationships with our readers. If you want a real edge in understanding the complex world of finance and economics, subscribe to BOOM as a Follower on LinkedIn or as a Subscriber (Free) to the BOOM Newspaper at http://boomfinanceandeconomics.com/#/
THIS WEEK’S EDITORIAL
DITCHING THE DOLLAR: Doom and Gloom articles which are in abundance these days have been forecasting the collapse of the US Dollar and, recently, the collapse of the US banking system. Last week, BOOM explained that the US banking system did not seem to be on the verge of collapse. The rationale for this was based upon the delinquency rate of US bank loans being at a 40 year low.
BOOM also commented on the narrative of demise of the US Dollar as the dominant global “reserve” currency, suggesting that it may be a 50 – 100 year process before true currency multi-polarity can occur. But BOOM also warned that “it may be much shorter if the US continues to threaten other nations and isolate itself”. This begs the question – how much shorter? This week, we will examine the dynamics of the US Dollar to answer that question.
It is true that more nations are losing enthusiasm for using US Dollars in trade settlements. The global oil trade is worth looking at, in particular, where the so-called “Petro-Dollar” has ruled supreme. India, for example, which has a population of 1.5 billion people, has been steadily growing its trade with Russia in the last 12 months since the beginning of the war in Ukraine.
They are now importing more than 1.6 million barrels of oil per day from Russia. Meanwhile, India’s oil imports from the US have fallen by 38%. Surprisingly, it is the third largest importer of crude oil in the world after China and the United States. Some (but certainly not all) of the oil taken from Russia is being paid for using the currency of the United Arab Emirates, the Dirham. In the past, such trade would have all been settled using US Dollars.
That all sounds ominously consequential for the US Dollar. However, bear in mind that global demand for crude oil amounts to about 100 million barrels per day. Thus, 1.5 million barrels is just 1.5% of global demand.
Think of it the other way, 98.5% of global oil trades that occur outside India are not easily switched to currencies other than the US Dollar. The volume is the problem, both the volume of the oil being traded and the volume of a readily available trusted currency to be used for settlement.
At a US Dollar price of $75 per barrel, 100 Million barrels of oil per day is equivalent to US$7.5 Billion per day of currency settlement. In annual terms, that is US$2,737 Billion per year, or US $2.737 Trillion. There is that problem again – the volume problem.
And 100 Million barrels of oil a day, in annual terms is 36 billion barrels per year. Does that sound like another volume problem? Yes, it does.
US DOLLAR COLLAPSE INSIDE THE US: Despite these realities in relation to the energy trade, many commentators and “experts” continue to predict the rapid collapse of the US Dollar, both in settling external, global trade transactions and inside the US itself.
BOOM is not a fan of such forecasts as they simply defy reality. Inside the US economy, there is no other currency in circulation apart from the official one. Thus, currency collapse inside the US simply cannot happen. For that to take place, there would have to be a suitable, alternative currency in free circulation to switch to after US citizens have lost all trust and faith in their government and banking system.
Other frequently read “experts” predict that a “Hyperinflation” event will soon occur in the United States, often using the Hyperinflation event in the Weimar Republic of Germany in 1923 as an example. They ignore the fact that for such super high inflation to occur — a Hyperinflation event — there must be a collapse in confidence and use by American citizens of the local currency in their trade and capital settlements. And that can’t happen if there is no readily available alternative currency. So the stories preaching that Hyperinflation will occur inside the US appear to be a gross exaggeration.
In regard to external trade settlements, America will not accept any currency other than US Dollars in return for its exported goods and services. And it is equally reluctant to pay for any imports using any other currency. The same can be said regarding any capital settlements.
If US real estate, stocks or bonds are purchased by foreign investors, then they must pay for them with US Dollars. That is as plain as day to understand. And if foreign investors sell those US assets, then they will be equally forced to accept US currency for settlement.
US DOLLAR COLLAPSE OUTSIDE THE US: Outside the US, when dealing with nations other than the US, external nations cannot easily switch to using currencies other than the US Dollar in their trade and capital settlements. To do so, they would have to find sufficient volumes of non-US currency. Total Global trade is estimated to be around US Dollar value of $32 Trillion per year. That does not include global capital movements for the purchase (and sale) of assets.
$ 32 Trillion is a big number – the Volume problem arises again.
The Russian Ruble currency and the Chinese Yuan currently make up less than 2% of global foreign currency holdings in central banks. That is a tiny number; not much more than the Australian Dollar representation.
The fact is that the US Dollar is dominant in volume in central bank currency holdings (60%) and therefore, it is the currency of convenience used to settle most international transactions — even with Russia and China. The Euro currency holdings amount to another 20%. However, the Euro is often seen as a US Dollar Proxy so, together, they amount to 80% of foreign currency holdings. That is currency dominance right there, in plain sight.
People who say “the US Dollar will soon collapse” simply don’t understand that currency volume, availability and convenience are critical features of the so-called “reserve currency” status. It is impossible for the Chinese Yuan to replace it quickly or even match it. Boom estimates that it will be a 50 – 100 year project, if not longer.
China’s central bank currently holds about US$2.3 Trillion in foreign currency reserves. Russia holds almost US$600 Billion. These are huge amounts but they are held principally in US Dollars. China has the largest holdings of all nations and Russia is number 6 on the list. These high ratings reflect their exports and thus their reliance on the US Dollar.
So the narrative that states “the US Dollar will soon collapse” simply cannot happen inside the US and will not happen quickly outside the US.
EURODOLLAR VOLUMES: There is another matter to consider in regard to US Dollar dominance in global trade and capital settlements. And that concerns Eurodollar volumes. Eurodollars are US Dollars outside the United States which reside on the balance sheets of the commercial banking systems of many nations. In other words, they are outside of the control of the US regulatory bodies.
And, by the way, most of those dollars have not been “exported” from the US. They have been created in offshore tax haven banks when US Dollar denominated loans are made to willing corporate borrowers. There is no strong demand for such loans to be denominated in other alternative currencies. Thus, this Eurodollar volume acts as a buffer to all other currencies globally. The dominance of the US Dollar is therefore very difficult to replace with other alternatives.
The next time you see an article stating that the “US Dollar is about to collapse” or “Hyperinflation is about to happen in the US”, please take time to consider these US Dollar dynamics — inside the USA, outside the USA and in Eurodollar volumes.
JUNK BONDS AND INSIDER BUYING: In the US last week, despite considerable Doom and Gloom, there was notable strength in the prices of Junk Bonds and in regard to insider buying of stocks. When these two combine, it usually indicates that asset prices will gather in strength. BOOM has been forecasting this renewed strength in financial asset prices since October last year. So far, that prediction has proved very accurate. BOOM is now expecting a recovery in US real estate prices as the year progresses. Watch for the turn-around in home prices in particular.
QB Explained: https://boomfinanceandeconomics.wordpress.com/2019/12/15/boom-as-at-15th-december-2019/ and
BOOM’s Perfect Economy: https://boomfinanceandeconomics.wordpress.com/2020/01/18/boom-as-at-19th-january-2020/
In economics, things work until they don’t. Until next week. Make your own conclusions, do your own research. BOOM does not offer investment advice.
SUBSCRIBE – FREE AT BOOM: http://boomfinanceandeconomics.com/#/
CLICK HERE FOR PODCASTS: OUR BRAVE NEW ECONOMIC WORLD
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY: LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans). https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how global banking systems really work.
AND Watch for 4 minutes, this Bank of England explanation: Money is essential to the workings of a modern economy, but its nature has varied substantially over time. This video describes what money is today.
Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models. EMAIL: gerry{at}boomfinanceandeconomics.com
DISCLAIMER: All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice. The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.
Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any neither securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research. Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.
Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.
Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.
Look at the numbers
?
I think it’s the circumference of each breast in millimeters.
But Playboy is American, Iska, and uses USA inches. It has to be the bra size:
https://www.evasintimates.com/blog/us-bra-sizes/ Take your pick from hundreds – mix & match 🙂
I was thinking April, 9 2023 or 493 or 49.3
Bank Holiday?
Bank holiday on April 9, hmmm…..
Is that Bruce Jenner?
What is that?
Biologically they are glands to feed young but men have been conditioned to respond to them as marriage bait (second base?). The Feminist game is meet, marry, financially butcher.
Yes I agree those breast are crucial to the stability of the US dollar and a currency able to suspend , support and effectively present said breast does not exist. The dollar will be fine as long as we have big boobs in playboy magazines backed by the dollar and we don’t lose the availability of cash dollars to slip into G strings at the strip clubs so just chill.
Wrong, there is no amount of money that a working man can earn that will satisfy a high maintenance feminist head hunter (tree climber, gold digger, etc).
This is a good objective counter to all the hype , clickbait , doom porn out there
Financial news is ALWAYS exaggerated one way or another. Do you know why? Because it all comes directly from vested interests trying to influence what won’t.
The number of dollar transactions worldwide still dwarfs anything else – by like 100:1. That doesn’t mean the dollar will reign in perpetuity – it will just take a long time to dethrone. Global finance is much more complicated and interwoven than when the UK pound or Swiss Franc were displaced. US debt is huge and it’s one of the few places “money” can be parked. US’ creditors could be stiffed, but that risk is relative to other risks. Even gold has risk. The dollar probably won’t be totally abandoned as a reserve currency; it will become one of several.
In the long run, US wealth will be determined by its people. Life is an IQ test. Aw, crap.
Or perhaps it is its people’s brain power, Iska? And speaking of IQs I ave always said that with an average IQ of 100, 50% must be below it and they probably vote Democrat which is why our countries tend to be polarised into two groups: Dims (50%).
After I researched my assumption it seems this is a fairly good rule-of-thumb but there is more to it: https://www.vox.com/2016/5/24/11723182/iq-test-intelligence
And as ZH headlines: “On a long enough timeline the survival rate for everyone drops to zero”
If it was that simple, Republicans would win a lot more elections; Welfare and Blue Cities aren’t just tipping the scale, they have planted their fat commie asses on it.
True rhs jr it’s not at all simple, I was using an allegory – the detail is highly complex. In the final analysis IMHO, human nature is unchanging and therefore we go on repeating the same mistakes as one generation’s lessons are lost on the following ones – hence ‘The Fourth Turning’ of which Admin is so fond and I agree.
You know the game Jenga? That’s what we are living. One of these days that one piece will be pulled out and kablooey!
Lovely analogy Mary, thank you – a perfect picture. I often use the pile of sand – add one extra grain and the complex pile reduces to a less complex and smaller scale solution – it’s a phase transition. That’s where our hyper-complex civilisation is going and there is nothing we can do to stop it. Nature will take its course – our job is to aid adaption for those who are awake to the future – probably <10% but they will be the survivors.
Thus my epithet: 'Protect & Survive': https://austrianpeter.substack.com/p/the-financial-jigsaw-part-2-the-end?s=w
The dollar is at more risk than the author gives credit. For the dollar to collapse it does not have to lose all that many transactions. If, percentage wise, the dollar falls another 10-15%, the surplus U.S. dollars will create a cascading effect. It will be like a snowball rolling down the hill whose added weight keeps causing it to pick up more snow, thus becoming heavier. Also the lack of confidence does not come from the money itself but the perception the nation is not functioning properly. In other words a political reaction. On this front the United States, at present, is extremely vulnerable.
The strength of the U$D is ALL perception. What we are seeing is the beginning salvos of nations moving away from it. At some point, it will become a mad dash to dump dollars. Nobody wants to be the last country caught holding U$D
Doesn’t Peter address that?
Well I try, Ken – but we can’t predict when the tipping arrives – could be this year or next. I thought it would be soon after 2008 and thanks to the QE fraud we are still here and the markets are calm. Calm before the storm? Maybe – we can only guess – a dartboard might give you a clue better than the economists and the Fed!
I was in Cape Town in 2007 and saw the writing on the wall. I converted 80% of my capital into annuities at 7.8% and I was lucky to ride a low inflation environment for 10+ years, making a positive return (it is always luck how the cookie crumbles).
Now I am facing negative returns now (UK) and will be taking action soon as events unfold. My RSA assets are actually gaining at ZAR 22.30 /GBP and the SARB have gone up another 50bps – magic! It’s actually a great game of putting the tail on the donkey!
Quote: “Noun. ‘Pin the tail on the Donkey’ (uncountable) (games) A children’s game involving pinning a piece of material on a specified spot while blindfolded. (by extension) Any attempt to aim something somewhere while handicapped in doing so.”
Yes, the illusion is complete TNP, for now – “at some point” the US$ will crumble and CHS explains it well IMHO: http://charleshughsmith.blogspot.com/2022/05/what-happens-when-complexity-unravels.html
Musical chairs come to mind and didn’t one big CEO in 2009 say we all keep dancing until the music stops? Your call! 🙂
All true Matthew and I agree. Nobody can determine the tipping point and you may well be right about some 10% starting an avalanche, like I explained to Mary as a pile of sand. In any event, we can be sure it will collapse because whatever humans do to intervene which can’t overrule physics – the math will always win out in the end.
If the dollar dies then the US will turn into a dystopian third world shit hole country. If the dollar doesn’t die then the US will end up turning into a dystopian third world tyranny run by woke Marxist trannies.
There is the third option taken by the Spanish Christians and Traditionalist in 1936 that results in none of the Blue City, Cuban, Zimbabwe, Venezuela, Congo, North Korea, Haiti, etc, options.
LOL – yes indeed rhs jr – over the target as usual! 🙂
There’s a great novel about all this Warren – I am reading it now – very instructive, I recommend:
Peter makes great points as always , this time supporting the (volume) strength of the US dollar which is already recognized to be the biggest most magnificent sandcastle built on a financial Ponzi Beach. I bet similar confident analysis were common early 1929; October 29 didn’t have to happen, but banks did call in loans. Today, nobody seems to be working harder to destroy the dollar and replace it with FedCoins than the Federal Reserve Bank System itself (part of the Rothschild private system not our government, per se). Yellen was their Fed Chief and then she was moved to become our US Treasury Chief (to implement FedCoins to replace all US dollar cash, all other cryptos, even barter, with FedCoin dollars with attached programmed spyware that will Social Control how you can spend your FedCoins). FJB signed EO 14067 (about 100 pages of mombojumbo) that the Fed says means FedCoins will be fully implemented by Jul2024, when the US Treasury wants to be paying everything in FedCoins (not US dollars). Florida, Texas, Missouri etc are taking this serious and have bills to ban retail FedCoins. Things are bad enough with flocks of Black Swans overhead (esp Operation Sandman, the Grand Solar Minimum, an American communist coup, the world past peak oil and fertilizer, etc) , the Global Banksters are working hard to create a Tyrannical Financial Tsunami and my 2 nuts are my Socrates computer and they say it ain’t 50-100 years, it ain’t 5 years; Oct/Nov 2024 TSHTF? PS: I was totally fed up with Warp Speed Narcissist whoremonger do-nothing Trump but the communist will put him in the White House again but it won’t be by the SCOTUS or the Electoral College.
Yes, rhs jr – I am with you all the way. And I am noticing how banks and others are pushing us into smart phones for all our transactions: https://www.dailymail.co.uk/news/article-11850157/Pay-parking-machines-set-removed-city-streets-leaving-motorists-using-30-apps.html
It’s happening all over as they work towards retail CBDCs – FedNow is base camp. The onslaught is interminable and IMHO my only defence is to move away and I have options fortunately with dual residence, and a UK passport: “The British passport is currently ranked 5th place on the Guide Consultants Passport Ranking Index. It provides visa-free access to 189 countries. This makes it one of the most desirable passports in the world with a very high mobility score.” No idea why?
AND – “What has more power a British or American passport? The short answer is that for your average person that wants to live in their country, and visit other countries as a tourist for short amounts of time, there is no significant difference.” Residence is another matter.
Let me make myself perfectly clear. If the Federal Reserve Banksters can knock off (bump off, kill, make illegal) the US Treasury Dollar in all forms, kill all other cryptos, all silver and gold for Trade, and all barter, and then make their Federal Reserve Bank crypto FedCoins ( which are programable & tagged with spyware) the only legal money for Trade in the USA, then the Federal Reserve Banksters will “own” Americans as virtual Financial Slaves. John Kennedy probably would have had a better chance of getting back to WDC from Lyndon Johnson’s Texas alive in 1963 than the US Dollar has of surviving 2023. PS: What the Fed and it’s Minions are doing is Major First Degree Treason, no ifs ands or buts about it; no sweet double talking bull shit about improving the economy and crime prevention can cut through The God’s Truth.
It will no more die a natural death than Harpy’s friends and lovers, or Herod’s or any Psychos supposed enemies or gangster’s real opposition . The dollar has enemies foreign (in allegiance) and domestic (in the sense if residency); say no more, wink wink. Any body reading this?
I am, I always follow you keenly, rhs jr, thank you for your wisdom 🙂 Wink, wink: